Are Insurance Company Profits the Real Problem?

There's been a lot of argumentation from the left decrying both insurance company profits and insurance company CEO pay. I concede the point. The profits are very high, and CEOs make an obnoxious amount of money.

I just don't think it matters.

Here's why:

http://www.nchc.org/facts/cost.shtml

This is the sort of information liberals use to bolster their case. The problem statement they point to here is correct, and most people seem to know this. We have a provably inefficient system.

Then there's this:

http://wonkroom.thinkprogress.org/2009/08/05/are-health-insurers-making-too-much-money/

This one is kinda funny. In trying to prove their point, Think Progress inadvertently makes the case for the other side. They say that the industry is "hiding" their profits by comparing them to the overall size of the market instead of to their own revenue. Maybe so. But in pointing this out, the Think Progress folks are conceding that profits by these companies, however obnoxious, are only 1% of the overall heathcare problem. That means that you can take all of the numbers in the NCHC piece above and simply subtract 0.5% (I assume we're not saying they can't make any profit) to get the net effect of "solving" both the outrageous profit problem and the outrageous compensation problem.

Doing the math, if "outrageous" profits are cut in half, that $12,700 per family cited in the NCHC report would drop by $63. If the profits were eliminated entirely, the cost would drop by $127. Is this really the piece we need to fix?

I think people with other agendas use these profit and compensation numbers to get people riled up so that they will ignore the other, more important issues.