Democratic hopefuls take aim at insurer and pharma profits

WASHINGTON» Sen. Bernie Sanders and other progressives seeking the Democratic presidential nomination are zeroing in on pharmaceutical and insurer profits, money they say would be better spent providing health care for everyone under “Medicare for All.”

Their idea: Health care dollars from government programs, employers and families that are going into the pockets of investors instead could be used to pay for services. If people want a health care system that will not bankrupt them, “the answer is to get rid of the profiteering of the drug companies and the insurance companies (and) move to Medicare for All,” Sanders said during the recent Democratic debates.

But research by The Associated Press suggests those dollars might not go so far. While there’s no single ledger for drugmakers and insurers, the AP found major companies had about $97 billion in profits last year. That wouldn’t even cover a couple of weeks in a health care system that costs $3.6 trillion a year.

“My view is that we are having a debate in fantasy world,” said Marc Goldwein, senior policy director with the nonpartisan Committee for a Responsible Federal Budget. “Insurer profits and excess drug costs are large in dollar terms but small relative to the size of national health expenditures.”

To be sure, Sanders and other Medicare for All advocates also acknowledge the need to raise taxes to pay for the plan. It would offer comprehensive medical care to every U.S. resident with no premiums or deductibles, and virtually no copays.

But Sanders’ legislation does not specify new revenues. Instead, the Vermont independent provides a separate list of “options” that include higher taxes on the wealthy, corporations and employers while promising the middle class will be better off.

In a statement, Sanders’ office said he believes that “guaranteeing health care for all Americans as a right requires ending the profit motive of the insurance industry.”

It added that Sanders “sees a role for pharmaceutical innovation, but opposes a rigged system that allows corporations to use their monopoly power to charge Americans ... more for the exact same lifesaving drugs that can be purchased in Canada, the UK, France, Japan, and Germany.”

For its estimate, the AP reviewed the financial statements of the eight forprofit, publicly traded health insurers in the U.S. and found they made around $26 billion total last year. Their profit margins averaged a little more than 4%. The list included UnitedHealth, Anthem and Humana.

Some major insurers outside this group are nonprofit and plow their earnings back.