6 ms·

I've always wondered what's stopping someone from creating a non-profit and just having people join it in order to give the non-profit ability to negotiate lowe

by tabeth 9y ago

I've always wondered what's stopping someone from creating a non-profit and just having people join it in order to give the non-profit ability to negotiate lower prices. I imagine there's a cost to set this up, but is that cost less than the marginal cost of each employee and the savings they would (presumably) receive if enough people joined?

rgoddard 9y ago
The cost of insurance is largely driven by the underlying cost of what you are insuring. Unless they are able to lower the cost of care significantly, the price difference between a non-profit and for-profit is marginal.
didgeoridoo 9y ago
Blue Cross Blue Shield is a 501(c)(4) nonprofit. Doesn’t seem to help.
- clarkevans 9y ago
  Some regional BCBS are nonprofit; Anthem BCBS isn't. Even so, your main point is taken. There's a broad directorship problem with many non-profits, higher eduction, and mutuals. General users of these public services either have no say -or- have no reasonable way to exercise their limited authority. For example, State Farm Mutual permits its subscribers to show up in person on a particular day once per year in order to vote from a set of directors that was selected by... the previous directors. I'm curious what sort of legal/social/technology solutions could be put to use in addressing this administrative capture.
  - deleted 9y ago
    [deleted]
- djsumdog 9y ago
  Many BlueCrosses (they're not one company, they're all independent) are _non-for-profits_ which is totally different from a _non-profit_ or 501(c)(3). They can still lobby as a non-for-profit and the whole model is pretty much weird legal bullshit anyway. Also another reason you couldn't start a big non-profit is because insurance companies are limited in reach by state/region. Sadly, that's one of the few things keeping them in check. If that regulation was removed, you'd see all the Blues and other companies start to merge into only two to three mega companies, similar to cell phone providers.
adventured 9y ago
The US healthcare system worked for the majority of people until roughly the last 15 years, and then it began failing gradually up the income ladder. So if you look more recently, the last ten years in particular, that would be the window where something like this would especially begin to matter. It wasn't done before, because it didn't make sense for large entities to bother; things have gotten bad enough that now it makes sense. The average annual premium for families for health insurance was $5,791 in 1999. The median was even lower. Today it's closer to $18,000. The system worked at $5,791, the average family could afford that without much problem. At $18,000 the system breaks apart and fails for the typical family. Wages for the US were even further beyond comparable nations back in ~1999. With very modest real wage growth since 1999, especially at the median, that $18,000 cost essentially represents money in the economy that should have in part gone into wage growth. These large companies now have a powerful incentive - for several different reasons - to begin hammering down the cost of healthcare. Their action on this front is a positive fortunately, these companies are extraordinarily powerful, both politically and economically. If they're dead set on bringing down the cost of healthcare, that's exactly what will happen, and they'll gather other very willing partners and the momentum will likely roll.
- criddell 9y ago
  > Today it's closer to $18,000. Do you happen to know the sources of inflation? Are we consuming a lot more services? Are healthcare providers being paid more? Are healthcare companies getting rich?
  - brittohalloran 9y ago
    As a 10 year engineer in the medical device industry I've slowly come to believe the root cause is not greed for more profit, but actually runaway altruism. All across healthcare, providers, scientists, administrators are faced with millions of tiny choices every day: should we spend more money to improve outcomes. Should we add that extra feature to this device - costs more but improves care a little. Should we use this more expensive material - costs more but is probably safer. Should we do additional testing - costs more but we'll be more sure it's safe. The calculus of incremental value vs. cost is subconsciously seen as inhumane across the industry -- it's seen as starting down that slippery slope that ends with a "dollars per life" number which feels wrong to everyone. Nobody wants to be the person who traded someone's health for a buck. I'm not necessarily condemning it, I want the best possible care for my children, but I do think that (like a lot of big socioeconomic problems) this comes back to incentives.
samsolomon 9y ago
I've thought about this before as well. It seems like there would be room for something like Mozilla—a non-profit arm for healthcare insurance, perhaps with car, home and other types of insurance as for-profit. Then again, I know little about how these companies operate. That and I'm sure it requires a large amount of capital to start such a company.
- deleted 9y ago
  [deleted]
kasey_junk 9y ago
Kaiser Foundation Health Plans & the Kaiser hospitals are non-profits.
- jrowley 9y ago
  Kaiser is an integrated / commercial HMO too, which means they generally offer higher quality of care. See more on payer breakdowns vs quality at http://costatlas.iha.org http://costatlas.iha.org A full rewrite of this app with more data and better mobile design launches in February.
- tssva 9y ago
  In my area on the individual exchange they were one of two providers available with the other being a for profit insurance company. At every level of plan the for profit had cheaper premiums, co-pays and lower deductibles. At least in my area Kaiser also likes to centralize certain specialties at a single one of their health clinics. For instance mental health providers are only available in one location. I live in a large metro area with severe traffic issues. The clinic mental health services are provided out of may be the worse location for the majority of the service area to reach. For me an appointment would have involved a 45 minute to hour drive each way. A couple of years ago Kaiser decided not to renew their contract with the non-profit hospital system which dominates this area and instead signed a contract with a for profit hospital system. This means there is a single hospital within a reasonable drive of me which I would be able to utilize. Even then there are 3 hospitals in the non-profit system which are closer or equal distance. It gets worse if for some reason I would have had to use the next closest hospital Kaiser will cover. There are 5 hospitals in the non-profit system that would be closer. Also the non-profit system is nationally recognized as the top or a top 5 care provider for several specialties. The for profit is not. I have no love for Aetna, Cigna, United Health, Anthem or any of the other large health insurance companies, but Kaiser also doesn't seem to be the model to follow.
SkyPuncher 9y ago
> I've always wondered what's stopping someone from creating a non-profit and just having people join it in order to give the non-profit ability to negotiate lower prices. Likely the fact that many of these prices are basically standardized because of CMS. Providers basically look to what the Medicare/Medicaid standard is as a benchmark for pricing. As a provider why accept a lower price from insurance when the gov't is providing a backlog of people at predetermined prices? ----- Unless these companies are also looking to enter the provider space, they will likely only competing on marginally better insurance rates.
- chimeracoder 9y ago
  > As a provider why accept a lower price from insurance when the gov't is providing a backlog of people at predetermined prices? This isn't even an option on the table. Private insurers are generally required by law to pay more than Medicare does. And besides, Medicare reimburses rates that are below COGS, so providers charge private insurers more in order to make up the difference. Otherwise, they wouldn't be able to accept Medicare patients at all; they'd literally lose money on a per patient basis.
  - shanusmagnus 9y ago
    This is so important and so little understood: Medicare can demand the prices that it does because other payers will be making up for it. Their low prices create externalities in the rest of the insured market.
- qaq 9y ago
  Have you seen rates Medicare/Medicaid pays? It's generally way lower vs what private insurance providers can negotiate
- dannyw 9y ago
  Amazon is basically about vertical integration. I'd be surprised if they do not enter the provider space. Don't forget the rumors that Amazon is planning to offer its own branded generics.
sixdimensional 9y ago
Actually, I'll go one step further. Why don't we set up a non-profit/cooperative to aggregate people to get all the group benefits that full time employees receive (e.g. Retirement, Health and other insurance, and other discounted perks)? Heck, we could even create a HN-cooperative that any of us could join, sign up and pay a nominal membership fee. Then we could off and all be independent contractors etc. without fear of losing benefits.

by tabeth 9y ago

rgoddard 9y ago

The cost of insurance is largely driven by the underlying cost of what you are insuring. Unless they are able to lower the cost of care significantly, the price difference between a non-profit and for-profit is marginal.

didgeoridoo 9y ago

Blue Cross Blue Shield is a 501(c)(4) nonprofit. Doesn’t seem to help.

clarkevans 9y ago
Some regional BCBS are nonprofit; Anthem BCBS isn't. Even so, your main point is taken. There's a broad directorship problem with many non-profits, higher eduction, and mutuals. General users of these public services either have no say -or- have no reasonable way to exercise their limited authority. For example, State Farm Mutual permits its subscribers to show up in person on a particular day once per year in order to vote from a set of directors that was selected by... the previous directors. I'm curious what sort of legal/social/technology solutions could be put to use in addressing this administrative capture.
- deleted 9y ago
  [deleted]
djsumdog 9y ago
Many BlueCrosses (they're not one company, they're all independent) are _non-for-profits_ which is totally different from a _non-profit_ or 501(c)(3). They can still lobby as a non-for-profit and the whole model is pretty much weird legal bullshit anyway. Also another reason you couldn't start a big non-profit is because insurance companies are limited in reach by state/region. Sadly, that's one of the few things keeping them in check. If that regulation was removed, you'd see all the Blues and other companies start to merge into only two to three mega companies, similar to cell phone providers.

adventured 9y ago

The US healthcare system worked for the majority of people until roughly the last 15 years, and then it began failing gradually up the income ladder. So if you look more recently, the last ten years in particular, that would be the window where something like this would especially begin to matter. It wasn't done before, because it didn't make sense for large entities to bother; things have gotten bad enough that now it makes sense. The average annual premium for families for health insurance was $5,791 in 1999. The median was even lower. Today it's closer to $18,000. The system worked at $5,791, the average family could afford that without much problem. At $18,000 the system breaks apart and fails for the typical family. Wages for the US were even further beyond comparable nations back in ~1999. With very modest real wage growth since 1999, especially at the median, that $18,000 cost essentially represents money in the economy that should have in part gone into wage growth. These large companies now have a powerful incentive - for several different reasons - to begin hammering down the cost of healthcare. Their action on this front is a positive fortunately, these companies are extraordinarily powerful, both politically and economically. If they're dead set on bringing down the cost of healthcare, that's exactly what will happen, and they'll gather other very willing partners and the momentum will likely roll.

criddell 9y ago
> Today it's closer to $18,000. Do you happen to know the sources of inflation? Are we consuming a lot more services? Are healthcare providers being paid more? Are healthcare companies getting rich?
- brittohalloran 9y ago
  As a 10 year engineer in the medical device industry I've slowly come to believe the root cause is not greed for more profit, but actually runaway altruism. All across healthcare, providers, scientists, administrators are faced with millions of tiny choices every day: should we spend more money to improve outcomes. Should we add that extra feature to this device - costs more but improves care a little. Should we use this more expensive material - costs more but is probably safer. Should we do additional testing - costs more but we'll be more sure it's safe. The calculus of incremental value vs. cost is subconsciously seen as inhumane across the industry -- it's seen as starting down that slippery slope that ends with a "dollars per life" number which feels wrong to everyone. Nobody wants to be the person who traded someone's health for a buck. I'm not necessarily condemning it, I want the best possible care for my children, but I do think that (like a lot of big socioeconomic problems) this comes back to incentives.

samsolomon 9y ago

I've thought about this before as well. It seems like there would be room for something like Mozilla—a non-profit arm for healthcare insurance, perhaps with car, home and other types of insurance as for-profit. Then again, I know little about how these companies operate. That and I'm sure it requires a large amount of capital to start such a company.

deleted 9y ago
[deleted]

kasey_junk 9y ago

Kaiser Foundation Health Plans & the Kaiser hospitals are non-profits.

jrowley 9y ago
Kaiser is an integrated / commercial HMO too, which means they generally offer higher quality of care. See more on payer breakdowns vs quality at http://costatlas.iha.org http://costatlas.iha.org A full rewrite of this app with more data and better mobile design launches in February.
tssva 9y ago
In my area on the individual exchange they were one of two providers available with the other being a for profit insurance company. At every level of plan the for profit had cheaper premiums, co-pays and lower deductibles. At least in my area Kaiser also likes to centralize certain specialties at a single one of their health clinics. For instance mental health providers are only available in one location. I live in a large metro area with severe traffic issues. The clinic mental health services are provided out of may be the worse location for the majority of the service area to reach. For me an appointment would have involved a 45 minute to hour drive each way. A couple of years ago Kaiser decided not to renew their contract with the non-profit hospital system which dominates this area and instead signed a contract with a for profit hospital system. This means there is a single hospital within a reasonable drive of me which I would be able to utilize. Even then there are 3 hospitals in the non-profit system which are closer or equal distance. It gets worse if for some reason I would have had to use the next closest hospital Kaiser will cover. There are 5 hospitals in the non-profit system that would be closer. Also the non-profit system is nationally recognized as the top or a top 5 care provider for several specialties. The for profit is not. I have no love for Aetna, Cigna, United Health, Anthem or any of the other large health insurance companies, but Kaiser also doesn't seem to be the model to follow.

SkyPuncher 9y ago

> I've always wondered what's stopping someone from creating a non-profit and just having people join it in order to give the non-profit ability to negotiate lower prices. Likely the fact that many of these prices are basically standardized because of CMS. Providers basically look to what the Medicare/Medicaid standard is as a benchmark for pricing. As a provider why accept a lower price from insurance when the gov't is providing a backlog of people at predetermined prices? ----- Unless these companies are also looking to enter the provider space, they will likely only competing on marginally better insurance rates.

chimeracoder 9y ago
> As a provider why accept a lower price from insurance when the gov't is providing a backlog of people at predetermined prices? This isn't even an option on the table. Private insurers are generally required by law to pay more than Medicare does. And besides, Medicare reimburses rates that are below COGS, so providers charge private insurers more in order to make up the difference. Otherwise, they wouldn't be able to accept Medicare patients at all; they'd literally lose money on a per patient basis.
- shanusmagnus 9y ago
  This is so important and so little understood: Medicare can demand the prices that it does because other payers will be making up for it. Their low prices create externalities in the rest of the insured market.
qaq 9y ago
Have you seen rates Medicare/Medicaid pays? It's generally way lower vs what private insurance providers can negotiate
dannyw 9y ago
Amazon is basically about vertical integration. I'd be surprised if they do not enter the provider space. Don't forget the rumors that Amazon is planning to offer its own branded generics.

sixdimensional 9y ago

Actually, I'll go one step further. Why don't we set up a non-profit/cooperative to aggregate people to get all the group benefits that full time employees receive (e.g. Retirement, Health and other insurance, and other discounted perks)? Heck, we could even create a HN-cooperative that any of us could join, sign up and pay a nominal membership fee. Then we could off and all be independent contractors etc. without fear of losing benefits.