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> The three companies said they plan to set up a new independent company "that is free from profit-making incentives and constraints." I wonder if they will be

• robbiemitchell 9y ago
  One of the benefits a profit motive brings to insurance companies is pushing back on improper billing by providers (doctors/hospitals) and negotiating lowest possible care and drug rates. Tech-focused insurers like Oscar also invest heavily to help guide members toward better care paths, which if done well lead to better care at less expense (for both the member and insurer). Unrelated: one of the worst parts of insurance is the customer service quality. How does an internal, non-profit insurer staff itself to do this well? If they commit to this even at the risk of it being unprofitable, that would be most awesome —- but I’m skeptical.
  • jawns 9y ago
    You're correct that a profit motive leads for-profit health insurance companies to push back on improper billing and negotiate prices, because whatever profit they are able to eek out goes to its shareholders. But the same motive applies to co-ops. The member-owners of a co-op don't want their costs to be inflated by improper billing or inflated prices, because if they are able to reduce their expenses, then the member-owners benefit in the form of lower premiums. In both cases, the shareholders want to get their money's worth, it's just that in the case of a for-profit company, those shareholders are often external investors, but in the case of a cooperative, all shareholders are also members.
    • deleted 9y ago
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    • adventured 9y ago
      For companies like Amazon, JP Morgan, Berkshire, it's blatantly clear they have a massive financial incentive to beat down the run-away cost of healthcare. They've got a million employees all up and down the economic tiers. It's a very big boon to their business, to have a smaller share of cost going into healthcare, where they can instead redirect that money into eg competing for labor with higher wages (especially relevant with the U3 at 4.1%). Healthcare costs are so bad they're now a large, direct competitor to the Amazons and Berkshires and JP Morgans in a business well-being sense, as resources are finite. I like having these giants stepping up to the plate and targeting the healthcare system on cost. They tend to get their way; if a political rock (eg insurance companies) gets in the way, it'll get moved out of the way. It reminds me of the 450 hospitals getting together to set up a not-for-profit generic drug company recently - https://www.cnbc.com/2018/01/18/hospitals-plan-to-create-their-own-generic-drug-company.html https://www.cnbc.com/2018/01/18/hospitals-plan-to-create-the...
  • bwilliams18 9y ago
    A non-profit ensurer staffs itself to have high quality customer service by pushing back on improper billing by providers and instead of returning that savings to its members investing it into higher quality employees, more training, and better systems to ensure that hospitality is a paramount concern.
  • ceejayoz 9y ago
    > One of the benefits a profit motive brings to insurance companies is pushing back on improper billing by providers (doctors/hospitals) and negotiating lowest possible care and drug rates. The ACA requires insurers to spend 80% of the premiums they take in on direct healthcare costs for their members. Inflated billing and high drug costs are actually helpful if they want to make a nice big profit. To a point, at least - they've gotta find the right balance between profit and people being unable to pay their premiums.
    • robbiemitchell 9y ago
      That only applies to the individual market, not employer insurance (small and large group. Higher medical expenses don’t help. It only creates higher premiums, which members then blame on greed. There are plenty of legitimate problems with providers, drug laws, and insurers. But insurers definitely don’t benefit from higher expenses.
      • Retric 9y ago
        Actually systemic higher costs do help. An older industry analysis found insurance to be competitive so they only way to grow profits for the industry was to grow costs. The trick is for insurance companies to find ways to get other insurance companies to pay more even if they have to also carry those costs. AKA, 10% of 2 trillion is more than 10% of 1 trillion.
  • cptskippy 9y ago
    > One of the benefits a profit motive brings to insurance companies is pushing back on improper billing by providers And one of the reasons for the most complicated billing system in the world is for-profit Insurance companies.
    • chimeracoder 9y ago
      > And one of the reasons for the most complicated billing system in the world is for-profit Insurance companies. Not really. In fact, Medicare is responsible for most of the current billing system, not private insurers.
      • cptskippy 9y ago
        Medicare is relatively simple compared to most insurance companies and their rules. Insurance providers write custom lines of business for employers per state and allow those employers to customize the coverage however they like. This happens annually with revisions done to exclude or include coverage as the employer dictates. Insurance companies, and employers, come up with byzantine rules for what's covered, when it's covered, where it's covered, who is allowed to provide care, prerequisites before approving coverage, what brand of products are permitted in treatment, and on and on. The net effect is that the rules are multi-variant to the point that they cannot realistically be validated or tested by humans. There are entire industries dedicated to maintaining rules management engines specifically for validating policies, coverage, and claims.
        • chimeracoder 9y ago
          > Medicare is relatively simple compared to most insurance companies and their rules. As someone who's actually had to deal with this complexity and implement software to facilitate it, I can assure you that Medicare is not at all simple, by any stretch of the imagination. It's not even standard or consistent within Medicare within a geographical region, even if you limit the scope to Part A and Part B, excluding coverage provided under Part C and Part D. > Insurance companies, and employers, come up with byzantine rules for what's covered, when it's covered, where it's covered, who is allowed to provide care, prerequisites before approving coverage, what brand of products are permitted in treatment, and on and on. This is exactly what Medicare itself does. The private insurers generally structure their terms in ways that are similar to what Medicare does. They're not identical, but it's not like Medicare is some haven of simplicity by itself that the private insurers complicate. Medicare itself is unbelievably complicated and abstruse by itself. > There are entire industries dedicated to maintaining rules management engines specifically for validating policies, coverage, and claims. Yes, that's true. And that would be true even if you only looked at Medicare patients.
  • johnrob 9y ago
    Not always - the other way to mitigate billing inflation is to increase premiums (which would explain the last 20 years).
    • robbiemitchell 9y ago
      It's both. But there are also laws that limit an insurer's ability to push back. For example, ALL out-of-network emergency services must be covered, including all follow-up work that occurs as part of being admitted due to an emergency. Out of network means the insurer and provider have not previously negotiated a rate. And emergency services are among the most expensive bills out there.
  • noobermin 9y ago
    This is diametrically opposed to the facts. People need to stop making arguments like this about profit driven insurance when our system has the US spend the most per capita amongst modern nations with mediocre results.
    • conanbatt 9y ago
      Medicare is also more expensive per capita than most modern nations and its publicly funded.
    • robbiemitchell 9y ago
      That’s in large part because the costs of healthcare are crazy high, not the cost of insurance. They are interrelated, yes. But fundamentally we are at a place where providers, especially hospitals, are billing insanely high rates for services compared to other countries.
      • shanusmagnus 9y ago
        It's nutty to me that yours is the first comment that I'm reading in this thread that has mentioned that. The provider part of this shit sandwich (to steal a phrase used elsewhere in this thread) is by far the more problematic piece.
        • gbacon 9y ago
          When you use a service without paying for it (e.g., television, radio, Yoogle, Facepage, and so on), you are not the customer but the vector to get to the real customer who is paying. No, buying a TV or paying your ISP is not paying for the services you are accessing. What Americans think of as “health” “insurance” fits this model. Providers are in the business of soaking their customers the various tax-favored third-party payers for all they can. Of course prices rise continually. People are stirred into a frenzy about rising costs and demand that politicians just do something! The insurers get more tax-favored money that providers happily mop up.
• jedgardyson 9y ago
  This feels like a setup for a broader push into healthcare by these companies. The sector is still growing, Amazon is already working out the pharmacy space. "[F]ree from profit-making incentives and constraints" sounds like the strategy they've used so far to dominate sections of online retail.
  • bpicolo 9y ago
    They can tackle profit from other angles - sell medical supplies, etc.
    • samfriedman 9y ago
      I think it would be irresponsible at best for Amazon to tackle the medical supply/device market before they can get their counterfeiting problem under control.
      • bpicolo 9y ago
        Presumably they wouldn't allow literally-anybody comingled inventory for that. It's trivial for them to regulate requiring first party or trusted party sales for that. They already sell it: https://www.amazon.com/Professional-Medical-Supplies/b?ie=UTF8&node=8297370011 https://www.amazon.com/Professional-Medical-Supplies/b?ie=UT...
      • IncRnd 9y ago
        It would be irresponsible at best for Amazon to tackle the medical supply/device market before they can learn to ship 20 items from the same fulfillment center on the same day in the same box instead of in 20 oversized but mostly empty boxes.
        • ceejayoz 9y ago
          Fulfillment centers are large enough that shipping them in individual boxes may actually be the cost-effective method at times. I've also heard they play a bit of a game of tetris to fill truck trailers in a way that completely stuffs them full enough that packages don't move around.
• bpicolo 9y ago
  This is something I've been thinking about for a while - what would insurance companies (and even other companies in every vertical) look like with some incentive other than profit? Paying good salaries is one thing, but doing it for the sake of external shareholders is a different case. Newman's Own is one interesting (and successful) example I can think of that's an otherwise for-profit company acting effectively as a charity. Are there papers/books about how effective this would be in practice?
  • Cthulhu_ 9y ago
    I'm at a cooperative nonprofit insurance company - https://en.wikipedia.org/wiki/Univ%C3%A9 https://en.wikipedia.org/wiki/Univ%C3%A9 - basically, it's cheaper and nicer.
  • pmart123 9y ago
    Perhaps Vanguard is an example of a mass mutual company that owes part of its success through its formation due to its ability to pass cost savings back to its customers in the form of lower fund fees?
    • ihsw2 9y ago
      Vanguard took decades to gain any traction and it was managed well enough to ensure it didn't prematurely burn out, and not only that but Jack Bogle spent his entire life evangelizing low-cost in an environment where "cost is no object" was a common mantra. Not only that but the healthcare industry has extraordinarily high financial and legal barriers to entry.
      • 013a 9y ago
        > Managed well enough Unlike Amazon and Berkshire, two of the best managed companies humanity has ever created? > Extraordinarily high financial and legal barriers to entry Unlike financial companies?
        • ihsw2 9y ago
• Spooky23 9y ago
  My guess is that they’ll build a super HMO. The way to change the game in healthcare is to eject the legacy bullshit. Own the experience as a vertical, don’t accept Medicare/Medicaid and the price controls that come with it and you slice out a lot of the overheads.
• ataturk 9y ago
  Most of the Blues are already "non-profits." That really isn't the issue. The biggest issue is regulation--I've worked in healthcare IT and it sucks due to the regulatory burden and fears that are associated with it. You can't innovate, management won't let you. The second biggest issue is that they are using archaic technology such as AS/400 systems and trying to ship data around using "file drop." File drop--in 2018! They doubled down on stupid technology choices years ago and continue to fail because of it. The third biggest issue is revenue. You can't even run a non-profit without revenue. Employees don't work for free! A related problem is that the company I worked for failed to promote people like me who could solve some of their problems for them. I lost the political battle as a tech lead. Had I been someone with more clout, things might have gone differently. Companies promote all the wrong people, though. BTW, cooperatives are bullshit--even grocery coops have to have revenue, it's not magic. Coops fail because there's "no one in charge" and without decisive action there is failure. Credit unions work because they extend credit based on typical fractional reserve models. Members of credit unions own shares based on their deposits. You can't do use a credit union model with insurance because of how insurance underwriting works. Just look at the healthcare costs of any small company--if one person gets sick, everyone's rates go up. There's no magic as to how this all operates. There's no pool of people size n where n is large enough to fix the problem--which is why universal or single-payer systems are merely an illusion of prosperity while taxes rise to 80% and up! It becomes punitive taxation! Which means no freedom for any of the people living under such a system, and eventually the resultant economic collapse--yes, even in Europe.
• visarga 9y ago
  > distributism Thank you for giving a name to something I have been pondering a lot. I have come to this conclusion by thinking about automation and technological unemployment. If people own land, or productive tools, they can be self reliant and exist without jobs from corporations, or help from the state. Naturally people would organise as a cooperative or a market of services, exchanging services for services, because they have little money and no corporate jobs. Yet they can work, so they can create a kindergarten for children of the neighbourhood, or a medical clinic, or a mechanic repair-shop, or a construction company, and so on. By combining these skills a neighbourhood, or a city could be self reliant. In the future, with the advent of solar energy, agro-bots, 3d-printing and other empowering technologies it will be even easier to be self reliant. I see this as a better solution to UBI which depends on the state, which is corruptible and the corporations, which are greedy. People would retain their agency, unlike in the UBI scenario, where they would be wards of the state. There is no purpose to automation that does not exist in the service of humanity at large, but only for a few. Automation must be owned by the people directly. We need to have the means of production in our hands in order to survive. There is one single job the advancement of automation can't take from us - the job of taking care of ourselves! And that's hard work.
  • sagichmal 9y ago
    Why is this form of self-reliance a virtue? To me, it looks pathological; certainly not something we should collectively be working towards.
    • bgibson 9y ago
      Reducing interdependence in human society mitigates systemic risk. It absolutely is a virtue to be collectively working towards.
      • sagichmal 9y ago
        Systemic risk reduction is one effect of reducing interdependence. What are the others? On balance, are they net-negative or net-positive?
• Thriptic 9y ago
  It's quite possible they are simply setting up a captive third party administrator company. All of the companies will fund health insurance which will then have benefits designed for employees and care overseen by this third entity which would be a not for profit. This entity would then have to go out and negotiate contracts with providers, drug companies, lab testing facilities etc. Given the size of these entities, they would have significant negotiating power with providers and hospital systems which could keep costs down for members.
• noobermin 9y ago
  A large problem with this system I can see is it doesn't help those who either 1) don't work there or 2) want to switch jobs. This merely pushes back on health insurance companies which is great but it doesn't fix the general issues that occur when access to healthcare is tied to employment.
• EwanG 9y ago
  Would having an Amazon Prime "Membership" likely count enough to expect to see Amazon offer this to consumers (possibly at enough of a discount to make it competitive with employer insurance)? I would think that having access to medical records to determine that someone needs a few more OTC allergy med suggestions might make this a long term goal of the project. In that same vein, fully expect to see an Amazon Credit Union someday as well and possibly part of a complete "Amazon Member Benefits" bundle.