In the health care “reform” debate, the favorite villain of the “reform” forces has been the health insurance industry. The argument runs something like this: health insurance continues to increase in price because the insurance companies are for profit entities. In their quest to maximize profits, the insurance companies continually raise premiums, then deny coverage on the slightest pretext. If only we could find a way to trim their outrageous profits, then we could afford to extend coverage to more people.

Here’s a quotation from House Speaker Nancy Pelosi:
“I’m very pleased that (Democratic leaders) will be talking, too, about the immoral profits being made by the insurance industry and how those profits have increased in the Bush years.”

Immoral profits. Those rapacious bastards!

There is only one problem with this argument. Well, okay, there’s lots more than one problem with that argument, but here is a big one: it turns out that the health insurance industry isn’t all that profitable. According to a report by the Associated Press, the profit margin of the insurance industry hovers around 6%. In 2008, that level of profitability dropped down to 2.2%.

So, if ALL of the medical care in this country was paid for by insurance companies, AND ALL of those companies were for-profit, AND ALL of those companies were replaced by a non-profit government entity that operated with perfect efficiency, we might be able to reduce health care costs by an average of 6% a year.

Health care’s share of the national economy is currently about 17%. If we drop that by 6% of the total, you go all the way down to … 16%. Hardly an earth shattering change.

Insurance companies are big faceless organizations. It is easy to find stories of people who have been denied coverage because of pre-existing conditions in the face of massive medical expenditures. These two conditions make the health insurance industry a good whipping boy in the current debate. After all, everyone likes to root for the underdog.

But the people who are advocating rearranging one sixth of the economy, and creating a humongous new entitlement should be honest about why they want to do that. It doesn’t seem to be about saving money.