4 ms·

Health care is valuable. Health insurance is mostly a scam in the US, a way for insurance companies to take a cut without adding any value. Talk to someone who

Health care is valuable. Health insurance is mostly a scam in the US, a way for insurance companies to take a cut without adding any value. Talk to someone who has lived in countries with socialized medicine (as I have): other countries systems' aren't perfect, but they deliver better results, with less money, and without insurance companies taking massive profits for doing nothing but denying claims. Full disclosure: health insurance company once repeatedly refused to pay $5000 bill to lab. When I finally said "I'd like to file a grievance" they magically discovered a "coding error" and the bill was paid.

aaavl2821 9y ago
health insurance companies are not perfect, but id argue they are more a product of the imperfections of the us healthcare system than a cause of the imperfections private health insurance is needed as we do not have public insurance for everyone. even in countries like the UK, which tend to have better outcomes and lower cost, private health insurance exists. it gives people more options if they are willing to pay and can afford it health insurance companies are easy to scapegoat, but in reality they are not usually price gouging, but usually only responding to cost increases by hospitals and health systems. health insurance companies under the ACA must pay out 80% of premium revenues as medical claims. when you add administrative costs, health insurance companies have a structural profit ceiling of like 5%. however increasingly consolidated providers are getting more pricing power and charging more, so the insurance companies have to increase premiums or lower costs (claim denials) to protect their structurally thin margins insurance companies certainly do terrible things like not paying things and literally inventing coding errors to deny payment. however, in many cases this is mitigated by the healthcare provider taking assignment of insurance and dealing with all this on your behalf. although insurance companies can and do make life harder for docs and influence behavior. but even in countries with "socialised medicine" doctors are influenced (perhaps more strongly) by payers. tldr, dont hate the player hate the game
- prklmn 9y ago
  Ask yourself this question - how do insurance companies in general add value? Forget payout for a moment. Their value is added in deciding what rates to charge people, and determining if a claim is valid, that's it. Anything else they do is value subtraction. Their profit drivers come from raising premiums and denying more claims, both things kill value. You make a good point about providers consolidating, and the same point should be made about health insurance companies consolidating.
  - nugget 9y ago
    Health insurance companies recruit providers (hospitals and physicians), negotiate prices for services, manage patient records and billing, detect, prevent, and prosecute provider fraud, determine market prices based on their predicted population of insured live, and other random tasks. It's a stretch to call this no value add, in my opinion. We can, and should, compare the efficiency of medicare administration to private insurance administration, and study the best practices of each system. Even in countries with state-sponsored universal healthcare, like the UK, there are robust private health insurance systems, which indicates to me that they offer value to consumers and fill some market need.
  - aaavl2821 9y ago
    Insurance companies negotiate much lower payment amounts with providers than individuals could achieve otherwise. They do this through scale, which, as you mention, can be bad when scale gets too big, but also through risk pooling. Risk pooling allows you to eliminate idiosyncratic risk and thus lower the cost of healthcare on average. If you are a sick person with no insurance and average income, you won't be able to afford health care. But if you join a group of healthy people and pool some to pay for emergencies, you can. That's health insurance

aaavl2821 9y ago

health insurance companies are not perfect, but id argue they are more a product of the imperfections of the us healthcare system than a cause of the imperfections private health insurance is needed as we do not have public insurance for everyone. even in countries like the UK, which tend to have better outcomes and lower cost, private health insurance exists. it gives people more options if they are willing to pay and can afford it health insurance companies are easy to scapegoat, but in reality they are not usually price gouging, but usually only responding to cost increases by hospitals and health systems. health insurance companies under the ACA must pay out 80% of premium revenues as medical claims. when you add administrative costs, health insurance companies have a structural profit ceiling of like 5%. however increasingly consolidated providers are getting more pricing power and charging more, so the insurance companies have to increase premiums or lower costs (claim denials) to protect their structurally thin margins insurance companies certainly do terrible things like not paying things and literally inventing coding errors to deny payment. however, in many cases this is mitigated by the healthcare provider taking assignment of insurance and dealing with all this on your behalf. although insurance companies can and do make life harder for docs and influence behavior. but even in countries with "socialised medicine" doctors are influenced (perhaps more strongly) by payers. tldr, dont hate the player hate the game

prklmn 9y ago
Ask yourself this question - how do insurance companies in general add value? Forget payout for a moment. Their value is added in deciding what rates to charge people, and determining if a claim is valid, that's it. Anything else they do is value subtraction. Their profit drivers come from raising premiums and denying more claims, both things kill value. You make a good point about providers consolidating, and the same point should be made about health insurance companies consolidating.
- nugget 9y ago
  Health insurance companies recruit providers (hospitals and physicians), negotiate prices for services, manage patient records and billing, detect, prevent, and prosecute provider fraud, determine market prices based on their predicted population of insured live, and other random tasks. It's a stretch to call this no value add, in my opinion. We can, and should, compare the efficiency of medicare administration to private insurance administration, and study the best practices of each system. Even in countries with state-sponsored universal healthcare, like the UK, there are robust private health insurance systems, which indicates to me that they offer value to consumers and fill some market need.
- aaavl2821 9y ago
  Insurance companies negotiate much lower payment amounts with providers than individuals could achieve otherwise. They do this through scale, which, as you mention, can be bad when scale gets too big, but also through risk pooling. Risk pooling allows you to eliminate idiosyncratic risk and thus lower the cost of healthcare on average. If you are a sick person with no insurance and average income, you won't be able to afford health care. But if you join a group of healthy people and pool some to pay for emergencies, you can. That's health insurance