Health Insurer Profitability

Are health insurers profitable?  Yes they certainly are, even the nominally non-profit ones.  Mark Farrah Associates issues information on the level of profitability.  (MFA Report) Many insurers are public so you can see profitability in their released financial statements.  They all have to file statutory reports with state insurance commissioners which detail revenue and costs.  2020 was an odd year in health care, but even then the insurers made lots of money.  The individual segment is the most challenging for insurers, with high sales and marketing costs and some adverse selection by consumers, but even that segment was profitable in 2020.  The insured group segment picked up a couple of percentage points of profit, as medical costs declined due to care avoidance.  Medicare Advantage business experienced a 2.5 percentage point profit improvement and managed Medicaid a 3.5% one.  Do health insurers make too much money?  How would that be determined?  If you think the market is competitive, you would accept that profits are at the level competition determines.  It is only quasi-competitive, however.  Do health insurers deliver value?  Probably, they have improved many quality of care measures over the years and they probably have controlled spending better than a completely wild west of fee-for-service plans.  But I think consolidation has gone too far and the lack of real competition means that health plans don’t really try very hard to control provider prices or premiums.