4 ms·

I've suddenly started seeing this take all over the place and I have no idea where it comes from because it doesn't make sense. That the insurance companies pro

by acomar 8y ago

I've suddenly started seeing this take all over the place and I have no idea where it comes from because it doesn't make sense. That the insurance companies profit margins are restricted means rather little because executive pay isn't capped: if they earn too much money, they can simply pay bonuses to raise their expenses. Or cut shareholders a check. Or. Or. Or. Tangentially, this is why "non-profit" doesn't mean what people think it means. And despite what caps exist (can you point me to resources on this topic?), the industry is enjoying record profits right now. That's not to say hospitals aren't as well, but I'm puzzled that so many people seem to want to point the fingers at doctors. Doctors and nurses actually provide the care. If there's anyone I'm less worried about making a little more, it's the people actually doing the work. The administrators and the corporations that set and negotiate prices with the insurance companies though... I'm with you there. Lastly, the incentives of insurance companies do not align with the patients unless you ignore most of how the industry works. Insurance companies make money when they're able to deny you coverage or require you to pay more out of pocket (in vs out of network). That doesn't align with patients at all. There should not be a profit incentive in health insurance.

jhayward 8y ago
> I've suddenly started seeing this take all over the place and I have no idea where it comes from because it doesn't make sense. That the insurance companies profit margins are restricted means rather little because executive pay isn't capped: if they earn too much money, they can simply pay bonuses to raise their expenses. Or cut shareholders a check. Or. Or. Or. Tangentially, this is why "non-profit" doesn't mean what people think it means. This is not correct, as I understand it. Under the ACA (Obamacare), health plan providers had to ensure that at least 80% of premiums were paid out for patient services. That leaves 20% for overheard, including profit and compensation. The "trick" here is that service providers (doctors, hospitals, MRI facilities, labs, etc.) are not limited in this way (except by "usual and customary" terms where applicable), and there are LOTS of layers of providers. So in the end you can get many multiples of actual costs by simply washing the underlying treatment or service through 5 or so layers of providers.
- jfk13 8y ago
  > This is not correct, as I understand it. Under the ACA (Obamacare), health plan providers had to ensure that at least 80% of premiums were paid out for patient services. That leaves 20% for overheard, including profit and compensation. Doesn't this imply that it's in the interest of health plan providers for patient services in general to be as expensive as possible? That means premiums will have to be correspondingly high, and the 20% available for profit and compensation will be larger.
  - acomar 8y ago
    Right, they have less incentive to negotiate for lower rates, because higher rates mean higher premiums, and higher premiums mean higher executive compensation.
  - mrguyorama 8y ago
    That's been one of the biggest complaints about Obamacare, yes. Other than the "I shouldn't have to pay for my neighbor's wellbeing" complaint
    - gowld 8y ago
      How is an 20% cap worse than no cap? Obviously if this scam works it would also work with less regulation.
  - Sohcahtoa82 8y ago
    Yup. The ACA failed to address the core problem that the hospitals are charging exorbitant prices. Trying to make health insurance affordable is a fool's errand as long as hospitals can charge whatever the hell they want.
lotsofpulp 8y ago
If they pay bonuses to themselves, then their premiums will be higher than other insurance companies so they would lose customers, the same that stops any other business from doing the same. And since taxpayer funded healthcare is off the table in the US, we have to work with what we can. The biggest problem with health insurance right now is everyone is not forced to use healthcare.gov so the risk pools don't have the correct distribution of healthy and unhealthy people.
- acomar 8y ago
  > If they pay bonuses to themselves, then their premiums will be higher than other insurance companies so they would lose customers, the same that stops any other business from doing the same. This might stand up in a highly competitive market, but even there you have network effects, and asymmetric power/information issues, that keep it from ever being completely true. In a market like health insurance where large fractions of people get their coverage from their employers who make choices for their employees, it's not really credible to say that high premiums will drive an insurance company out of the market. Moreover, the data bears out that premiums, profits, and executive compensation are all increasing while the overall cost of our healthcare as a nation spirals out of control. > And since taxpayer funded healthcare is off the table in the US, we have to work with what we can. If you expect elected officials to fix it by writing them letters and angry comments on the internet, well, yes. But campaigning and petitioning are not the only routes to accomplishing political goals. The teachers' union/wildcat strikes across states with unified Republican control of the government that successfully forced wage and funding increases, despite timid unions that wanted to push for less, should be an indication of what actually works. We don't have to accept the system as it is. > The biggest problem with health insurance right now is everyone is not forced to use healthcare.gov so the risk pools don't have the correct distribution of healthy and unhealthy people. That's a problem in that will cause premiums to spiral faster and eventually shutter those insurance pools. But that's a slow death. The largest problem in health insurance right now are the actual, living people being forced across the country to either suffer or die from solvable medical problems, people who are rationing medication because they cannot afford to buy more, people who are being forced into bankruptcy by a broken system. When lives are already being destroyed today, a patch that prevents the rate of lives from being destroyed from increasing quite so quickly is nice, but it quite clearly misses the forest for the trees.

by acomar 8y ago

jhayward 8y ago

> I've suddenly started seeing this take all over the place and I have no idea where it comes from because it doesn't make sense. That the insurance companies profit margins are restricted means rather little because executive pay isn't capped: if they earn too much money, they can simply pay bonuses to raise their expenses. Or cut shareholders a check. Or. Or. Or. Tangentially, this is why "non-profit" doesn't mean what people think it means. This is not correct, as I understand it. Under the ACA (Obamacare), health plan providers had to ensure that at least 80% of premiums were paid out for patient services. That leaves 20% for overheard, including profit and compensation. The "trick" here is that service providers (doctors, hospitals, MRI facilities, labs, etc.) are not limited in this way (except by "usual and customary" terms where applicable), and there are LOTS of layers of providers. So in the end you can get many multiples of actual costs by simply washing the underlying treatment or service through 5 or so layers of providers.

jfk13 8y ago
> This is not correct, as I understand it. Under the ACA (Obamacare), health plan providers had to ensure that at least 80% of premiums were paid out for patient services. That leaves 20% for overheard, including profit and compensation. Doesn't this imply that it's in the interest of health plan providers for patient services in general to be as expensive as possible? That means premiums will have to be correspondingly high, and the 20% available for profit and compensation will be larger.
- acomar 8y ago
  Right, they have less incentive to negotiate for lower rates, because higher rates mean higher premiums, and higher premiums mean higher executive compensation.
- mrguyorama 8y ago
  That's been one of the biggest complaints about Obamacare, yes. Other than the "I shouldn't have to pay for my neighbor's wellbeing" complaint
  - gowld 8y ago
    How is an 20% cap worse than no cap? Obviously if this scam works it would also work with less regulation.
- Sohcahtoa82 8y ago
  Yup. The ACA failed to address the core problem that the hospitals are charging exorbitant prices. Trying to make health insurance affordable is a fool's errand as long as hospitals can charge whatever the hell they want.

lotsofpulp 8y ago

If they pay bonuses to themselves, then their premiums will be higher than other insurance companies so they would lose customers, the same that stops any other business from doing the same. And since taxpayer funded healthcare is off the table in the US, we have to work with what we can. The biggest problem with health insurance right now is everyone is not forced to use healthcare.gov so the risk pools don't have the correct distribution of healthy and unhealthy people.

acomar 8y ago
> If they pay bonuses to themselves, then their premiums will be higher than other insurance companies so they would lose customers, the same that stops any other business from doing the same. This might stand up in a highly competitive market, but even there you have network effects, and asymmetric power/information issues, that keep it from ever being completely true. In a market like health insurance where large fractions of people get their coverage from their employers who make choices for their employees, it's not really credible to say that high premiums will drive an insurance company out of the market. Moreover, the data bears out that premiums, profits, and executive compensation are all increasing while the overall cost of our healthcare as a nation spirals out of control. > And since taxpayer funded healthcare is off the table in the US, we have to work with what we can. If you expect elected officials to fix it by writing them letters and angry comments on the internet, well, yes. But campaigning and petitioning are not the only routes to accomplishing political goals. The teachers' union/wildcat strikes across states with unified Republican control of the government that successfully forced wage and funding increases, despite timid unions that wanted to push for less, should be an indication of what actually works. We don't have to accept the system as it is. > The biggest problem with health insurance right now is everyone is not forced to use healthcare.gov so the risk pools don't have the correct distribution of healthy and unhealthy people. That's a problem in that will cause premiums to spiral faster and eventually shutter those insurance pools. But that's a slow death. The largest problem in health insurance right now are the actual, living people being forced across the country to either suffer or die from solvable medical problems, people who are rationing medication because they cannot afford to buy more, people who are being forced into bankruptcy by a broken system. When lives are already being destroyed today, a patch that prevents the rate of lives from being destroyed from increasing quite so quickly is nice, but it quite clearly misses the forest for the trees.