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> you realize... right? Gosh, I really dislike that turn of phrase. Anyway, they can't do that, since the ACA has mandated that insurers spend at least 80 or

> you realize... right? Gosh, I really dislike that turn of phrase. Anyway, they can't do that, since the ACA has mandated that insurers spend at least 80 or 85% of premiums on health care costs since 2012. The insurers ride that line as closely as possible, since their profit has to come out of the 15% allowed margin. This means an increase in total premiums without a commensurate increase in the cost of claims cannot happen. If an insurer's payouts don't exceed the mandated Medical Loss Ratio, they have to refund their insured customers for the difference by mailing out rebate checks. I've received two such checks myself.

koolba 11y ago
> Anyway, they can't do that, since the ACA has mandated that insurers spend at least 80 or 85% of premiums on health care costs since 2012. That part of the law is particularly terrible. It directly incentivizes keeping costs high as the profit of the insurer is a fixed (says max but that means exactly 15%) percentage of the gross. It's in their interests to have the price of everything go up!
- Grishnakh 11y ago
  The whole law is terrible and it should be repealed and replaced with a nationalized system. As long as you have the insurance companies acting as middlemen, it's in their best interest to deny care as much as possible, to increase their profit. What actual good do they do? None, they just come between the patient and the caregiver.
  - dangrossman 11y ago
    > it's in their best interest to deny care as much as possible, to increase their profit That's not the case, as the comment you replied to points out. Let's say an insurer collects $1B in premiums some year. The ACA mandates that at least 85% of that is spent on healthcare costs. At most, the company gets to keep $150M, or 15% of the premiums. For every claim denied bringing the payouts below $850M, the number they keep 15% of goes down, so their profits go down. Denying claims costs them money, rather than letting them keep more. If the insurer wants to make more than $150M the next year, there is only one way to do that: pay more than $850M in healthcare costs this time, and increase premiums by the same amount. That means encouraging and approving more claims, not fewer. Unfortunately, this aspect of the MLR promotes, rather than punishes, increased healthcare costs as a byproduct. Competition is supposed to be the check on that -- if an insurer doesn't control costs so that it can raise premiums and keep 15% of a bigger number, you'll switch to a plan with another insurer that isn't doing that and offers lower premiums. Unfortunately, that's not doing the job very well for a variety of reasons. > What actual good do they do? None, they just come between the patient and the caregiver. Insurance protects the insured from catastrophic losses by pooling risk. When the caregiver wants to bill me several hundred thousand dollars in unavoidable expenses, I very much appreciate having a middleman I only pay $200 per month to instead.
    - Grishnakh 11y ago
      For your point 1, that's just splitting hairs. It's in the insurer's interest to increase profits, rather than to provide care. So you just pointed out a way they found of increasing profits, which results in both ballooned healthcare costs and increased premiums all around. This isn't helping me get high-quality healthcare at affordable prices. For your point 2, you protect people from catastrophic losses by having a single payer: the government. Insurance is supposed to be a way of protecting people from catastrophic losses, which is why we have it for house fires, car accidents/thefts, etc. Healthcare is not about catastrophic losses in most cases, it's about ongoing care to maintain health. You getting your yearly checkup at the doctor is not a "catastrophic loss", nor is you getting an ultrasoound to check out something the doctor found to make sure it isn't something really bad. These are just ongoing care, and it isn't what insurance is designed to handle fundamentally. As for $200/month, I wish. More like $800/month.
cmdrfred 11y ago
Remember profit is a funny thing. If I own a company and I net after taxes 100 million a year and then pay myself 75 million in compensation I can claim that my company only makes 25 million a year.
jimbokun 11y ago
"Gosh, I really dislike that turn of phrase." Point taken. Maybe: "I appreciate your sentiment, but won't that result in insurance companies raising their rates by the amount of the subsidy?" I think that reads better. Makes the same point, less argumentative.

koolba 11y ago

> Anyway, they can't do that, since the ACA has mandated that insurers spend at least 80 or 85% of premiums on health care costs since 2012. That part of the law is particularly terrible. It directly incentivizes keeping costs high as the profit of the insurer is a fixed (says max but that means exactly 15%) percentage of the gross. It's in their interests to have the price of everything go up!

Grishnakh 11y ago
The whole law is terrible and it should be repealed and replaced with a nationalized system. As long as you have the insurance companies acting as middlemen, it's in their best interest to deny care as much as possible, to increase their profit. What actual good do they do? None, they just come between the patient and the caregiver.
- dangrossman 11y ago
  > it's in their best interest to deny care as much as possible, to increase their profit That's not the case, as the comment you replied to points out. Let's say an insurer collects $1B in premiums some year. The ACA mandates that at least 85% of that is spent on healthcare costs. At most, the company gets to keep $150M, or 15% of the premiums. For every claim denied bringing the payouts below $850M, the number they keep 15% of goes down, so their profits go down. Denying claims costs them money, rather than letting them keep more. If the insurer wants to make more than $150M the next year, there is only one way to do that: pay more than $850M in healthcare costs this time, and increase premiums by the same amount. That means encouraging and approving more claims, not fewer. Unfortunately, this aspect of the MLR promotes, rather than punishes, increased healthcare costs as a byproduct. Competition is supposed to be the check on that -- if an insurer doesn't control costs so that it can raise premiums and keep 15% of a bigger number, you'll switch to a plan with another insurer that isn't doing that and offers lower premiums. Unfortunately, that's not doing the job very well for a variety of reasons. > What actual good do they do? None, they just come between the patient and the caregiver. Insurance protects the insured from catastrophic losses by pooling risk. When the caregiver wants to bill me several hundred thousand dollars in unavoidable expenses, I very much appreciate having a middleman I only pay $200 per month to instead.
  - Grishnakh 11y ago
    For your point 1, that's just splitting hairs. It's in the insurer's interest to increase profits, rather than to provide care. So you just pointed out a way they found of increasing profits, which results in both ballooned healthcare costs and increased premiums all around. This isn't helping me get high-quality healthcare at affordable prices. For your point 2, you protect people from catastrophic losses by having a single payer: the government. Insurance is supposed to be a way of protecting people from catastrophic losses, which is why we have it for house fires, car accidents/thefts, etc. Healthcare is not about catastrophic losses in most cases, it's about ongoing care to maintain health. You getting your yearly checkup at the doctor is not a "catastrophic loss", nor is you getting an ultrasoound to check out something the doctor found to make sure it isn't something really bad. These are just ongoing care, and it isn't what insurance is designed to handle fundamentally. As for $200/month, I wish. More like $800/month.

cmdrfred 11y ago

Remember profit is a funny thing. If I own a company and I net after taxes 100 million a year and then pay myself 75 million in compensation I can claim that my company only makes 25 million a year.

jimbokun 11y ago

"Gosh, I really dislike that turn of phrase." Point taken. Maybe: "I appreciate your sentiment, but won't that result in insurance companies raising their rates by the amount of the subsidy?" I think that reads better. Makes the same point, less argumentative.