Thinking About Thinking

Just How Profitable are Healthcare Insurers?

Posted in Economy by larrycheng on March 8, 2010

After reading this blog post on healthcare and hearing the rising volume against healthcare insurers – I wanted to understand more clearly the profitability of healthcare insurers.  So, I went to Google Finance, searched for Aetna, got a list of their competitors – and researched their net profit margins.  Here they are:

2009 Net Profit Margin of Healthcare Insurers

I’m not here to defend or attack healthcare insurers.  But, 3.7% median net margins seems relatively pedestrian to me – not obviously indicative of an industry gouging its customers.  For example, if you look at the profitability of Google and its competitive set, here’s what it looks like:

2009 Net Profit Margin of Internet/Tech Companies

Given all of the noise around healthcare insurers being the bad actor in the healthcare delivery equation – I would have thought they’d be more profitable.  But, to be fair, profitability margins are only one variable in the complex analysis on our healthcare challenges.  We hope that our portfolio companies like Redbrick Health and Ventana can help be part of the solution.