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Profit is Not a Dirty Word!

June 22, 2009
Chris Garlasco, Owner & Managing Partner - Founders Insurance Group

Chris Garlasco, Owner & Managing Partner - Founders Insurance Group

In the era in which we currently live, profit, to many folks has become a dirty word. Corporate greed and profit are often interchanged as one in the same in conversation. The vast majority of the time, that simply is a false analogy.

In past blog entries, I have indicated that I will be speaking on the topic of health insurance as I recently did in my blog entry “It’s the Principle of it.” As the health insurance question is hotly debated, I often hear loud cries from some that profit is the root of what ails the health insurance industry. It’s a simplistic answer to a far more complicated problem.

Here’s the fact about the health insurance industry, its competitive, very competitive. I know this first hand as a partner in a firm with a substantial health insurance department. One company will gladly take customers from another company at any available opportunity. If a company greedily grabs too much profit, the very competitive nature of the health insurance business will cause the next competitor to take those customers away. We deal with this on a daily basis. It is competition that has kept the insurance costs as low as they can be. The ability to earn a profit is what fosters competition, not just in health insurance, but in most industries.

The cost of the insurance is reflective of the cost of the care. If the cost of the care goes down, the completive forces in the market will drive down the cost of the insurance. I have a lot to say about those culpable in increasing costs, including what insurance companies are going to contribute to that problem. I will be speaking about that in a near future blog. However, anyone that claims that profit is the issue has not done their homework.

As always, thanks for spending your valuable time with me!

Chris Garlasco

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3 Comments leave one →
  1. June 23, 2009 11:44 pm

    I’ve worked on the inside of the pharmacy business, and I beg to differ. Insurance companies have invented all manner of creative ways to maximize profits at the expense of patient care. From PAs to Tier IIIs to outright non-coverage, I’ve seen a thousand ways insurers get between a doctor and a patient. It happened dozens of times a day, right before my eyes, and in about 95% of those cases there was no good reason for it AT. ALL.

    ‘Profit’ is not a bad word. But do you really want Milton Friedman involved in your health decisions? I don’t.

  2. Chris Garlasco permalink
    June 24, 2009 1:37 pm

    Hi Matt; Thanks for the comments. I was speaking about health insurance as it relates to the actual care. As far as the drug business is concerned, in many ways, I agree with you. There are some big issues concerning the drug companies. Those of us that deal with health insurance don’t always have them on our Christmas list.

    As far as Milton Friedmen is concerned, the answer is yes, I want him very much involved. America’s continued ability to create a better “mousetrap” and be rewarded for it has been the cornerstone of American prosperity and improved product. Whether we want to admit it or not, health care is a product. The medical world has been immune from competition and the results speak for themselves. The government will further remove them from competition. Currently, the lack of medicare reimbursements are driving doctors to refuse patients. A system like that would cause shortages of doctors, and rationing of care. Canada is an excellent example of my point. In the end, the government will have to adhere to insurance mathematical principles in order to sustain coverage. To date, in every program that the American govenment has created, health care or property and casualty, has been deeply underfunded, subject to coverage rationing, and subject to bloated costs.

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