The Profit Margin of Health Care Insurance Companies
Profit Margin is the percentage of each dollar the company takes in via sales that ends up as profit after all expenses including taxes have been paid. Here are the profit margins of the five major Health Care Insurance companies. These came from SmartMoney data
Aetna 3.9%
Coventry Health Care 1.8%
Humana 2.8%
United Health Group 4.1%
WellPoint 4.1%
Thus, Aetna makes only 3.9 cents profit on each dollar of premiums your employer or separate individuals pay in premiums. Coventry Health Care makes only 1.8 cents per dollar of premiums.
In contrast, other industries have pretax profit margins of 15 and 20%. Some industries have profit margins as high as 40%. That means they make 40 cents on every dollar of sales---a good business to be in.
So---how have the profits of Health Care Insurance companies grown in the past 5-years? The cost of health care has certainly gone up and health care insurance rates have definitely increased. Below I have listed the five companies' average earnings growth rates over the past 5 years.
Aetna 2.4%
Coventry Health Care 0.83%
Humana 24.73%
United Health Group 8.26%
WellPoint 11.5%
I don't even consider a company worth investing in unless it can grow it earnings on an average of 15 to 18%.
It doesn't appear to me that Health Care Insurance companies are getting that rich on our premium dollars.
8:58:15 PM 
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