Written by Julia A. Seymour
The debate over health care legislation has raged for months. One line of attack coming from liberal politicians on the network news is that insurance companies simply make too much money.
From "The Chris Matthews Show" to network appearances by Democrats like Howard Dean and President Obama "Outrageous profits" was the theme of anti-business critics.
Chris Matthews showed his distain for the companies' profits on NBC Sept. 6 saying: "I'd regulate the insurance companies like public utilities, and squeeze them down to a reasonable profit level." He asked his guests that day, "Why don't they do that? That's the solution."
Katty Kay, BBC's Washington correspondent, replied, "Well, you'd stop the insurance companies making outrageous profits."
But do insurance companies really make the massive profits suggested by Matthews and others? No, but the networks rarely contradicted the notion.
In July, Obama claimed in a speech that the insurance companies were making "record profits, right now." A few days after Obama's comment, Sen. Harry Reid claimed "there is no business in America that makes more money than the insurance industry."
Too bad neither of those claims was true. Worse still that only one of the three broadcast networks reported that Reid was wrong.
On Sept. 20, Obama appeared on "Face the Nation" with Bob Schieffer. The president continued his criticism of insurers' profits saying "those insurance companies, even during these down years, have been making terrific profits." Schieffer offered no rebuttal and actually switched topics to the "tenor" of the health care debate.
An Associated Press "Fact Check" released Oct. 25 examined the numbers for health insurance companies and found something very different from what people were hearing from Washington politicians and the networks.
"Health insurance profit margins typically run about 6 percent, give or take a point or two. That's anemic compared with other forms of insurance and a broad array of industries, even some beleaguered ones," AP wrote.
Since Aug. 1, 83 percent (19 to 4) of network news reports mentioning profits of health insurance companies omitted that fact that the companies' do not make "obscene" or "immoral" profits, even compared to their own industry. Only 17 percent (4 stories) explained that fact. CBS reporter Anthony Mason denounced Reid's claim in two stories, while an Aetna representative was included in one other story. In one ABC segment George Will called the claim of "obscene [insurance company] profits" "nonsense."
Berating the Bottom Line
Obama's claim that insurance companies were making record profits "right now" July, 22 2009 was contradicted the very next day by PolitiFact, a Pulitzer Prize winning fact check run by the St. Petersburg Times.
Neither the claim, nor the fact that it was WRONG was reported by the three networks. But when the shoe was on the other foot and the insurance industry said something that jeopardized White House plans for health care reform, all three networks pounced on the story and included the White House rebuttal.
Nancy-Ann DeParle, Obama's health care czar, went after America's Health Insurance Plans (AHIP) on the networks after the organization released a cost estimate of health care legislation that predicted rising costs as a result of health care reform, not lower costs.
DeParle criticized AHIP's motivation telling CBS Oct. 13, "I think though, that maybe they've gotten worried. As we get close to really getting reform done, um, they've gotten more worried about their profits." She made similar comments on NBC and ABC.
The 'Obscene' 2 Percent
According to AP, critics attacking insurance companies over profits "are on shaky ground."
Insurance company profits "barely exceeded 2 percent of revenues in the latest annual measure," AP explained.
Many industries do better than health insurance. "Farm and construction machinery, Tupperware, the railroads, Hershey sweets, Yum food brands and Yahoo" are all more profitable than health insurance companies, according to AP.
Insurance companies ranked only 35 on the Fortune 500 list of top industries. Even the most profitable, HealthSpring, posted only 5.4 percent profit, coming in behind Tupperware, Clorox bleach and Molson and Coors.
With few exceptions, the networks were remiss in not explaining this information for viewers who frequently heard left-wing attacks on insurance companies as the debate over reform dragged on. Out of 23 stories discussing insurance companies' profits, only 4 contradicted those arguments.
Patricia Farrell, of insurance company Aetna, told CBS Evening News "For every dollar we take in, we pay about - we make about five cents in profit. Pay about 84 cents in medical claims."
CBS's Anthony Mason exposed Senate Majority Leader Reid's falsehood in two reports, saying flat out that Reid's claim was "not true." Mason explained that the health insurance companies "made $11 billion in profits in 2008, but other medical industries made far more. The top five drug companies, for example made $35 billion."
The other networks didn't criticize the Senate Majority Leader for his error.
The omission won't come as a shock to many since the networks regularly attack businesspeople for making money. "Big Oil" and Wall Street have come under particular attack in the news media for making "record profits" or "staggering" salaries and bonuses.
Many news organizations actually have much higher profit margins than insurance companies and even oil companies. In 2006, CBS's profit market was 11.6 percent of their total earnings of $14.3 billion. David Carlson, former president of the Society of Professional Journalists, has said that "many newspapers turn an annual profit greater than 25 percent."
Julia A. Seymour is an assistant editor/analyst for the Business & Media Institute. She edits daily stories, writes trend pieces for BMI's weekly newsletter, The Balance Sheet, and has co-written Special Reports including Debt: Who'$ Responsible?, Global Warming Censored and UnCritical Condition.
Seymour has appeared on Fox Business Network, the Christian Broadcasting Network and has been a guest on the G. Gordon Liddy Show. She has also done over a hundred interviews on a wide-range of topics with radio stations in 23 states as well as nationally syndicated programs.
Her work has appeared or been mentioned by radio host Mark Levin, The Drudge Report, WorldNetDaily, USA Today, CNBC.com, MSNBC's Motley Fool and "Ted, White and Blue" by Ted Nugent. Prior to joining BMI in 2006, she was a staff writer for Accuracy in Academia where she wrote daily articles about bias in lower and higher education and contributed to the book "The Real MLA Stylebook." She holds a B.S. in Mass Communications: Print Journalism from Liberty University. Seymour lives in Northern Virginia.