32 ms·

There is - Obamacare capped the profit margins of insurance companies. So if you're United Health, you can't really improve your profit margins. And if you cut

There is - Obamacare capped the profit margins of insurance companies. So if you're United Health, you can't really improve your profit margins. And if you cut costs, you can't pass the extra value to shareholders. If you want to give more money to your shareholders, you need more revenue and then more costs and you need to maintain your margin - the extra costs defray the extra money you return to your shareholders. If you spend an extra $65 million on 'rehab' - you get to give more money to your shareholders. Here's what's really bad about it, there's no real expectation that the health care improves. The insurance company doesn't care whether the expensive care is better, it cares that expensive care = more money for shareholders. That's such a perverse incentive it's incredible. Healthcare has become a noose around the neck of America - it's 16% of our GDP and it accounts for about half of all the inflation since 1990. Here's a blog post explaining the mechanism in the ACA: http://thehealthcareblog.com/blog/2012/02/04/does-obamacare-limit-profits-for-health-insurance-companies-in-your-state/ http://thehealthcareblog.com/blog/2012/02/04/does-obamacare-... Here's Martin Shkreli saying that insurance companies make more money off expensive epipens than cheap epipens: http://www.businessinsider.com/martin-shkreli-on-epipen-and-mylan-pricing-2016-8 http://www.businessinsider.com/martin-shkreli-on-epipen-and-...

chii 9y ago
Insurance companies shouldn't be making money on the percentage of healthcare cost! They ought to be making money off their actuarial tables that correctly predict risk and make a small margin off that spread.
- k_sh 9y ago
  They ought to, but the regulatory climate incentivizes a different outcome. Change the game, not the players.
  - Mtinie 9y ago
    Agreed. In this case it would "change the game to change the player" as the worst offenders would be motivated to shift to better margin industries. An (almost) insurmountable problem with the regulatory climate today is if you look at who (generally) set it up, its the same interests that would would lose the most of the playing field were changed. Counter-lobby groups aren't as well funded so they just can't compete using the same tactics. Can monetary incentives be removed while still motivating people and businesses to work towards the public good (e.g., availability of broad mental health treatments, treating addiction as the disease it is)? In my heart of hearts I hope so, but I'm doubtful that I'll see it in my lifetime. But I remain hopeful and will do what I can within my capacity as a citizen to forward the idea.
  - kurthr 9y ago
    Who's lobbyists do you think brought about the current regulatory climate? Why would the outcome change until the players that get to change the rules change themselves? I think this is more of a political and ethical corruption problem than a healthcare problem. There is no desire within the industry for competition or a market. See the cable industry for another example.
Dove 9y ago
Cost plus percentage of cost (CPPC) contracts are so toxic that my IANAL understanding is that they are illegal for government contractors. I am darkly amused that they have been made mandatory for a public buying healthcare.
- alexanderstears 9y ago
  Cost-plus contracts are common in the defense industry: https://csis-prod.s3.amazonaws.com/s3fs-public/legacy_files/files/media/csis/pubs/081016_diig_cost_plus.pdf https://csis-prod.s3.amazonaws.com/s3fs-public/legacy_files/... you'll be darkly amused to note that the F-22 wasn't very cost-plus intensive and the F-35 is completely cost-plus. Also note that the F-22 seems to be a more effective weapons platform and at the end of the program, many people thought that we could just kill the F-35 program, fill up our airforce with F-22s and save money.
  - Dove 9y ago
    Yeah, cost plus a fixed fee or an award fee are common. But cost plus percentage is illegal, I believe. While cost plus fixed doesn't encourage the contractor to look for ways to be more efficient, it doesn't reward him for being wasteful, either. But cost plus percentage actually rewards a contractor for wasting money! That's why it's illegal.
deleted 9y ago
[deleted]

chii 9y ago

Insurance companies shouldn't be making money on the percentage of healthcare cost! They ought to be making money off their actuarial tables that correctly predict risk and make a small margin off that spread.

k_sh 9y ago
They ought to, but the regulatory climate incentivizes a different outcome. Change the game, not the players.
- Mtinie 9y ago
  Agreed. In this case it would "change the game to change the player" as the worst offenders would be motivated to shift to better margin industries. An (almost) insurmountable problem with the regulatory climate today is if you look at who (generally) set it up, its the same interests that would would lose the most of the playing field were changed. Counter-lobby groups aren't as well funded so they just can't compete using the same tactics. Can monetary incentives be removed while still motivating people and businesses to work towards the public good (e.g., availability of broad mental health treatments, treating addiction as the disease it is)? In my heart of hearts I hope so, but I'm doubtful that I'll see it in my lifetime. But I remain hopeful and will do what I can within my capacity as a citizen to forward the idea.
- kurthr 9y ago
  Who's lobbyists do you think brought about the current regulatory climate? Why would the outcome change until the players that get to change the rules change themselves? I think this is more of a political and ethical corruption problem than a healthcare problem. There is no desire within the industry for competition or a market. See the cable industry for another example.

Dove 9y ago

Cost plus percentage of cost (CPPC) contracts are so toxic that my IANAL understanding is that they are illegal for government contractors. I am darkly amused that they have been made mandatory for a public buying healthcare.

alexanderstears 9y ago
Cost-plus contracts are common in the defense industry: https://csis-prod.s3.amazonaws.com/s3fs-public/legacy_files/files/media/csis/pubs/081016_diig_cost_plus.pdf https://csis-prod.s3.amazonaws.com/s3fs-public/legacy_files/... you'll be darkly amused to note that the F-22 wasn't very cost-plus intensive and the F-35 is completely cost-plus. Also note that the F-22 seems to be a more effective weapons platform and at the end of the program, many people thought that we could just kill the F-35 program, fill up our airforce with F-22s and save money.
- Dove 9y ago
  Yeah, cost plus a fixed fee or an award fee are common. But cost plus percentage is illegal, I believe. While cost plus fixed doesn't encourage the contractor to look for ways to be more efficient, it doesn't reward him for being wasteful, either. But cost plus percentage actually rewards a contractor for wasting money! That's why it's illegal.

deleted 9y ago

[deleted]