That 2-3% is for the insurance layer, not the parent organization.
Consider CVS Health which owns Aetna (an insurer), Caremark (a PBM) and CVS (a pharmacy). Aetna is required to spend 80% on premiums whereas Caremark and CVS face no such constraints on their profit margins.
There's a reason why there's so much M&A in this space while consumers are simultaneously facing higher premiums.
The 3% to 5% profit margin is for the whole company. For all the hate health insurers get as profiteering parasites, their owners sure aren’t pocketing much.
Similarly, Anthem at 4.22%, CVS at 3%, Cigna at 3.38%, Humana at 5.58%, Molina at 4.57%, Centene at 2.12%.
The reason there’s so much M&A in this space is because there’s no margins, so it’s either go big and win in economies of scale, or go home and go out of business. And people face higher premiums because more people are getting more access to healthcare. There’s no lifetime benefit maximums or pre existing condition exclusions anymore. And the highest premiums are capped at 3x the lowest premiums.
https://www.fiercehealthcare.com/payer/industry-voices-why-i...