I was unaware that mutuelles are non-profit. Are profits hidden as salary or other business costs, do you think? I ask this because by coincidence I know two retired people who operated small (under 6 employees) assurance businesses and another family still very much in the Assurance Malade business, again small. The striking thing about them all is their wealth.
As a small businessman most of my life, I learned that there is a mechanism that powerfully levels the remuneration for almost all small businesses. Join a well- established business group- restaurant, plumbing, Glazier- and after time weeds out the unlucky, the indolent or incompetent, your gross will fall within a fairly narrow range, with an upward bump for the strikingly creative. I could go into more detail, but the process is pretty obvious. Yet this relationship does not apply to the Assurance Malade buinesses with which I am familiar, here in Paris. Perhaps it's just coincidence. I don't think so.
This end-of-the-curve return suggests a technique to game the system to me, as well as the all too familiar chamber of commerce bleatings about the evils of taxation and the sad necessity to raise rates due to unavoidable additional costs, of course.
What am I missing? Capitalism searches out the darkest corners of human potential, and mainlines them.
But now, by extension, mutuelle means "health complement insurance" for many people ; and private insurers have a fair share of the market. I guess some may be able to find a few price points where the profits can be very high ; I guess a lot of small business that provide mutuelles to their employees don't have the time to carefully check around. Also, if those people you know are courtier, indeed most of the business is in getting new customers, and once you have a fair amount of them, the commissions can roll in regularly.
Another important thing is that although everday care, and more importantly eye and dental care, is not completely reimbursed, the really big risks, for grave illnesses, are often completely covered ; thus the risk profile for a complementary mutuelle is quite different than for an health insurer in the US. One consequence is that private complementary insurers aren't as bloodthirsty in trying to "not cover" problems. Un roi sans divertissement est un homme plein de misères
Are profits hidden as salary or other business costs
Yes.
Let us compare two firms, A and B. Both firms report gross income (R) of $100. Both firms report operating expenses of $100. Both firms tender a commodity to the general public (for the sake of simplicity). Both firms declare tax status of the firm nonprofit.
Let gross income of A = Q x P = 10 x $10. Let gross income of B = Q x P = 4 x $20. Let C of Q for A, B = $2 (for the sake of simplicity). Total cost A = $20; Total cost B = $8.
Clearly, C≠P yet firms A, B legitimately disclaim profit. The difference of C and P is extinguished in the difference of R - OpEx. To what operating expense(s) of the firm then do we attribute Profit A ($80) and Profit B ($72)?
There are hundreds of legitimate business expenses not directly related to production or purchase of Q which diminish the nonprofit firms' incomes, for example, amortization and depreciation of plant and equipment, interest payments, currency exchange losses, professional fees. In this case we compare the cost of salaries and wages alone. Typically, compensation is engrossed by line item General Administration of periodic financial statements.
Let A compensate three at $10 and one at $40, leaving $10 for other expenses. Let B compensate ten at $5 and two at $10, leaving $2 for other expenses.
Were we to add compensation to cost of Q, 90% of A's income is attributable to C of Q, 98% of B's income is attributable to C of Q.
What "Management Amendement" provision of the various US bills seek by defining the loss ratio of a federally qualified health insurer as 85% of R is, is part, maximizing cost of Q, ex ante compensation and other unspecified business expenses. A charitable interpretation of such limitation supposes an insurer will then tender cost of Q = P. But we see that identity is fairly meaningless.
Diversity is the key to economic and political evolution.
