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HEALTH PLANS: Embarrased non-profit insurers still trying to hide the money

A long time ago (1993)  in a universe far, far away pharma companies were somewhat concerned about public perceptions of their profits. Bob Leitman (long time at Harris, now at Greenfield) told me how, on a visit to a pharma company long subsumed into a bigger one, he went to the bathroom in the new building. He was staggered at the quantity of marble inside. When he remarked as much to his client, the reply he got was “well we had to hide the money somewhere!”

Apparently lots of non-profit insurers are now having the same problem

Blue Cross of Northeastern Pennsylvania said it will spend $175 million to bolster health care systems in the region and support a proposed medical school in Scranton, though the use of the money drew fire from critics of the health insurer’s expected $420 million surplus.

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Hang on, these two cases are NOT comparable. The Pharma company was truly hiding excess profits in two different ways (1) the money was spent to avoid having profit in the first place, and (2) the public was not supposed to know about it. In addition, this was a purely selfish expenditure (a private bathroom that only employees and guests would see). The insurance companies are not hiding excess profits in ANY of these ways. They are not finding extra expenditures in order to lower profits. Instead they make the profit transparently, then give away some of it. They are… Read more »