On Dec. 1, 2005, D.C. City Council member David Catania, an at-large representative, heaved a substantial but usually unasked question at the commissioner of the D.C. Department of Insurance, Securities and Banking. In a hearing devoted to health care reform legislation pushed by then-Mayor Tony Williams, Catania asked Commissioner Thomas E. Hampton, “Do you know what was the rate of return the insurance companies received in 2004?” D.C. was and is one of the largest health insurance markets in the nation, Catania pointed out. “I want to know how much money they made” on health policies the companies wrote in the District.
Hampton replied that he did not have those figures. The DISB, charged with regulating insurance in the national capital, was not privy to insurance industry operating revenues or its net profit. Catania complained, “We are attempting to craft policy affecting the medical community and the legal community” and the public, “where we don’t have the underlying data to enforce anything.”
If transparency, accountability and the rule of law are desiderata in forming public policy, in a powerful sector of the US economy they run up against a missing number: our government does not compile figures on how many hundreds of billions the gigantic insurance industry receives every year, nor how much it pays out in claims.
Like other government entities at the federal, state and local levels, the D.C. City Council was up against the keystone in the insurance sector stonewall. How could D.C. effectively push for regulation, reforms or rate caps in health and disability insurance or in malpractice insurance, when the insurance companies did not divulge their operating revenues or their net profits in the District?
On the other hand, where insurance companies do not divulge their grosses or their costs, on what grounds do they resist regulatory changes and caps on rates, and how do they justify raising premiums?
While the occasional jury award gets headlines, no federal agency posts regular and accessible numbers on nationwide revenues in insurance. Data showing how many people are buying insurance in the US, at any given moment, are evidently not considered one of the leading economic indicators. The government does not provide a reliable and regular nationwide breakdown on total revenues for the insurance companies in life insurance, health insurance, automobile insurance and property insurance.
The US Census Bureau surveys revenue and operating expenses for all types of American businesses, every five years. But the most recent survey, 2002, lists five industries for which the Bureau states that data will not be released because Census Bureau quality standards were not met. Among these are Securities and Insurance.
Some inferences are possible from other official statistics. Enterprise Statistics from the Census Bureau for 1992, the most recent year available, reported 2 million employees for insurance carriers and another 639,000 employees for insurance brokers, with a total payroll of $86 billion.
Enterprise Statistics for 1992 showing the value of US businesses, defined as the total of sales, receipts, value of shipments, etc., placed the total value of all industries at $11.6 trillion. The total value of the finance, insurance and real estate industries was placed at $1.6 trillion, about one-tenth the value of all business. Total value for insurance carriers and brokers in 1992 was placed at $783 billion. At that time, the value of life insurance totaled $314 billion, health and medical insurance $112 billion and other insurance $301 billion.
The US economy has grown every year since then. Unfortunately, Enterprise Statistics was not funded in 1997, under the Clinton administration, and current enterprise statistics are not forthcoming under the Bush administration.
The Statistics of US Businesses for 2004 place the total number of employees in Insurance Carriers and Related Activities at 2.4 million and annual payroll at $134.7 billion.
SUSB figures do not include total receipts, so they again do not indicate revenues for the industry. However, comparing SUSB figures to the earlier Enterprise Statistics suggests that total employment in insurance declined or remained flat from 1992 to 2004, while total payroll for the industry increased by less than the cost of living.
Business for the insurance industry, on the other hand, has expanded for the past two decades, so its profits must have increased. The Census Bureau reports that while the number of people without health insurance rose to 47 million in 2006, the number of people with health insurance also rose to 249 million.
If the value of finance, insurance and real estate was one-tenth the value of the US economy in 1992, it is at least that now. But the government seems less than eager to share exact numbers with the general public. Even Census payroll figures do not show how much of payroll goes to insurance.
Meanwhile, partial figures compiled by the Insurance Information Institute in New York, funded by the insurance industry, show the total value of all kinds of insurance increasing every year from 1997 through 2004. Total assets for 2004 are placed at $1.3 trillion.
If anything would seem to call for high-powered investigations, congressional hearings and foot-stomping campaign speeches, the insurance industry is it. But so far, public discourse about health policy has not poked the 800-pound gorilla. Even most Democratic contenders for the White House are currently calling for health insurance for all, rather than health care for all, as though we owe the insurance companies a living.
Margie Burns is a Texas native who now writes from Washington, D.C. Email margie.burns@verizon.net. See her blog at www.margieburns.com.
From The Progressive Populist, December 1, 2007
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