5 ms·

So insurance is bounded by cost plus pricing now. They have no problem if actual health care costs go up, their bottom line profits go up too! The insurance com

• phil21 10y ago
  I never understood why this is not glaringly obvious before anyone implements such a plan. Or maybe it was and this was intended? Seems just as likely at this point. I mean, this is a constant joke in professional circles. If you are hourly billing and you can use your shitty talent to create something in 8 hours that your good talent would create in 1 - it's usually economically beneficial to have the worse employees do the work as it's more profitable overall. Up until the point where you lose the customer - but in this case that's not a concern.
  • will_pseudonym 10y ago
    It's right up there with excess taxes on gambling and tobacco. Governments become dependent on those excesses and are disincentivized to decrease the activities they're ostensibly trying to lower.
    • daveguy 10y ago
      > excess taxes on gambling and tobacco You may be mishearing the term "excise tax". An excise tax is a tax on any specific good, such as tobacco or gasoline. Those taxes are included in the cost of the good (it just costs more at the pump or on the shelf). Yes, they are typically used to reduce consumption, or to pay for costs associated with consumption (eg roads).
      • will_pseudonym 10y ago
        I'm aware of what excise taxes are, but I see why it might seem like that's what I meant, because I wasn't really explaining what I meant by that phrase. By "excess tax", I mean taxes in excess of the cost of the behavior they're trying to regulate. Both of these examples are both excise taxes, the rates of which are in excess of the costs borne to society of those activities.
    • sesqu 10y ago
      Disincentivizing taxes are usually very profitable, because they're targeting goods that are considered overly desired. Their effectiveness is not too clear, but it is commonly accepted that they do reduce consumption. For example, a recent study on soft drink taxes concluded that retailers absorbed half of the extra cost to keep consumption high. An alternative income source might be luxury taxes. There are a number of luxuries where consumption correlates positively with price - but it would be politically difficult to implement a tax on extravagance.
  • gleb 10y ago
    Its safe to assume that it was obvious to everybody involved. And therefore was quid-pro-quo for passing ACA.
  • mooreds 10y ago
    > but in this case that's not a concern Why? It seems that if premiums are rising relentlessly for one company that the insured will seek out other companies, and hence that one company will "lose the customer". Or am I missing something?
• jrs235 10y ago
  To add to this, before, insurance companies tried pushing care costs down and tried to keep premiums lower in order to compete with other insurers. Now with a mandate for coverage the competitive pressure to keep premiums lower in order to steal customers away from others and induce new uncovered buyers went away. A silent industry wide "gentlemen's" agreement now exists. Don't compete on lower premiums, let health care costs go up so they all benefit. It's easier to allow costs to go up and profit more by passing costs onto customers than it is to compete on having lower premiums by reducing costs and being more efficient. You can only cut expenses so much, but the sky is the limit to profits if cost plus pricing is in play and costs go up for the entire industry.
• abalashov 10y ago
  So insurance is bounded by cost plus pricing now. They're defence contractors now! :joy:
  • jrs235 10y ago
    Why repair a tire when it makes "financial sense" to blow up the truck and order a new one?!