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> 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 p

> 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.

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.