Do health insurance companies make a profit?

Answer 1

Of course health insurance companies make a profit. And since they are publicly held companies, it's easy to see figure this out. The key figure to watch is called "medical benefit ratio." Simply put, this figure measured how much is paid out for each dollar of premium they collect. Ideally, if you pay $1 of premium, they would pay you a full dollar in benefits. But since the insurance companies have overhead, processing costs, fraud, profits, etc, it works out to be less than $1. Aetna, one of the largest insurers in the US, routinely publishes this number, and it's usually somewhere around 81.5%. This means, for every dollar you pay them in premiums, they pay 81.5 cents back out to doctors and hospitals, and they keep 18.5 cents for their efforts. The per-capita health care expenditure for a person the in US is about $6000. If they private health companies did their job for free, that figure would drop to about $5000.