Skip to main content

Pot Calling the Kettle Rich

A popular refrain in the ongoing debate about the cost of health care in the United States accuses health insurers of making record profits at the public's expense. During a press conference last year, President Obama put it this way:
"There have been reports just over the last couple of days of insurance companies making record profits, right now. At a time when everybody's getting hammered, they're making record profits, and premiums are going up."
The inaccuracy of that statement is pretty easy to prove, but let's take it at face value for now and agree with the assertion that record profits are a bad thing, especially when the customers who fund those profits are hurting economically. (Let's also agree that President Obama doesn't really think we're all staggering around drunk when he says "everybody's getting hammered".)

What then should we make of the fact that the Federal Reserve just announced record profits of $47.4 billion in 2009? The Fed is not a for-profit venture, but it makes money on the Treasury securities that it holds. More interesting, though, is the fact that the Fed made $20.4 billion in interest in 2009 from all of the mortgage-related debt and securities it has purchased in order to bail out banks and shore up the financial markets. I wonder if a rewrite is in order.
"There have been reports just over the last couple of days of the Federal government making record profits, right now. At a time when everybody's getting hammered, we're making record profits, and mortgage payments are going up."
Keep in mind where the profits are coming from. They're coming from people paying their mortgages and the US Treasury paying interest (i.e. redirecting taxes) to cover all the money it's borrowed. Aren't those groups among those "getting hammered"? Contrast that with the "record profits" in the health insurance industry last year. In 2009, the top 11 health insurance and managed care companies made a combined profit of $12.8 billion. That's about a fourth of what the Fed made, and the Fed wasn't even trying.

Some good news. All those profits don't line the pockets of government officials. Instead, they are transferred to the Treasury so the Treasury can pay more interest to the Federal Reserve so the Federal Reserve can pay profits to the Treasury so that the Treasury.... It's enough to make your head spin. Maybe I am feeling a little bit hammered.
Labels:

Comments

Clarissa Johnson said…
Thanks for writing such interesting stuff Adam. If I were smarter, I could comment more intelligently . . . but, I am not. This is actually Marianne by the way. I could sign in as me but then it would erase this comment and it is so amazing, I wouldn't want to do that.
April 25, 2010 at 2:57 PM
Post a Comment

Popular posts from this blog

Sons and Daughters unto God

Lately, I find myself reciting in my mind portions of The Living Christ: The Testimony of the Apostles . I memorized it years ago when our family was studying it at Easter. It has been a constant source of strength and perspective in my life. For all the scripture and sermon that exists about Jesus Christ, I’m not sure there is a more succinct and beautiful treatment of who he is and why it matters. There is one passage that repeats D&C 76. Referring to Jesus Christ, the Prophet Joseph wrote, “We saw him, even on the right hand of God; and we heard the voice bearing record that he is the Only Begotten of the Father— That by him, and through him, and of him, the worlds are and were created, and the inhabitants thereof are begotten sons and daughters unto God.” ( D&C 76: 23-24 ) I find in these truths evidence of Jesus Christ’s sweeping love and grace. Because of the universal atonement of Jesus Christ, he brings every inhabitant of every world he has ever created back into t...
Post a Comment
Read more

Three Wonders

I know the tradition began earlier, but I associate it with the Carmen Red Oldsmobile station wagon. There was also the Toyota van, but the Oldsmobile days were the magic ones. Over the river and through the woods to grandmother's house we would literally go. (Also through the valley, past the waterfalls, over the hill, and along the lake.) Neilan family Christmas at Grandma and Grandpa's house. The house where my mom was raised, where aunts, uncles, and cousins were just a few houses or blocks away. The two story house where on any ordinary day you entered directly into the kitchen, sat at the kitchen table, and just listened to my mom and her parents talk as an assortment of her brothers would inevitably call or stop by. But on Christmas Eve, the house was already packed to the brim with family, presents, food, and laughter. So much laughter. It was a wonderland as a child to be surrounded by people who loved you and were excited to see you. The house was warm and the large w...
2 comments
Read more

Driving East

I will wake up tomorrow morning, on Father’s Day, alone in Cheyenne without my family. I say this matter-of-factly. Designated days have only a light hold on me. An unexpected business trip that means being gone on Father’s Day? No problem. I'm not much for ceremony. More than once we have marked Father’s Day by splurging for a hotdog at Costco while filling up the minivan on a road trip. (Surely, Cheyenne has a Costco.) If I wake up emotional tomorrow morning, it's not because I'm alone on Father’s Day. It will be because of the cocktail of emotions I drank today. —— Driving across Wyoming was beautiful. Everything below the horizon looked groomed and green. The grass, the hills. the forests. A sea of green dusted with flecks of distant snowfields and antelope. (So many antelope.) Above the horizon, wild white and stormy black scratched across brilliant blue. The kind of sea and sky that softens your heart and tricks your mind.  I pulled off the highway at Little America f...
2 comments
Read more