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>Costs are out of control. Until we find a way to control costs we will still pay way too much. But aren't the provider side actors (hospitals, insurance netwo

by xoa 8y ago

>Costs are out of control. Until we find a way to control costs we will still pay way too much. But aren't the provider side actors (hospitals, insurance networks, etc) the best placed to figure out how to control costs? It seems like a significant reason therefore for high costs may be because they simply do not feel any significant pressure to reduce them, in part precisely because of abusive behavior like this. If the spigots of inflowing coerced money are tightened, wouldn't that itself be motivation to try to find savings? It is in other industries at least. Same thing with more information and transparency, if providers are required by law to have all the costs laid out upfront and that is all they are ever allowed to collect that itself seems like a reasonable first step towards at the least motivating them to get their own internal systems in order.

vladgur 8y ago
Well, part of ACA, I believe was to limit what private insurers can make to 15-20% over their cost. While this had good intentions, this was not fully thought through because this incentivized insurers to cover more treatment and more expensive treatments because that’s how they could grow their profits which were fixed percentage wise.
- gnopgnip 8y ago
  Is there any evidence of that happening? Is it a bad thing that an insurance company is incentivized to cover an expensive procedure instead of denying it?
- dsfyu404ed 8y ago
  >this was not fully thought through That's a charitable way of putting it. It turned the insurers into money movers skimming their profit of the top. It somewhat incentivized them to let costs skyrocket. The more money that changes hands through them the better. A fixed % of a big number is more than a fixed % of a small number. The only thing that stops insurers for covering anything at any price and then just passing the cost and letting premiums really go crazy is that there's still some traces of competition left in the market so people (corporate persons or otherwise) will jump ship to other insurers if premiums get too high. You can look at the profit limits as incentivizing them to cover more expensive care (which it does do) but it comes at the expense of removing any reason for insurers to seriously care about cost so long as they're somewhat competitive with whoever their competition is. That's a very big tradeoff.

by xoa 8y ago

vladgur 8y ago

Well, part of ACA, I believe was to limit what private insurers can make to 15-20% over their cost. While this had good intentions, this was not fully thought through because this incentivized insurers to cover more treatment and more expensive treatments because that’s how they could grow their profits which were fixed percentage wise.

gnopgnip 8y ago
Is there any evidence of that happening? Is it a bad thing that an insurance company is incentivized to cover an expensive procedure instead of denying it?
dsfyu404ed 8y ago
>this was not fully thought through That's a charitable way of putting it. It turned the insurers into money movers skimming their profit of the top. It somewhat incentivized them to let costs skyrocket. The more money that changes hands through them the better. A fixed % of a big number is more than a fixed % of a small number. The only thing that stops insurers for covering anything at any price and then just passing the cost and letting premiums really go crazy is that there's still some traces of competition left in the market so people (corporate persons or otherwise) will jump ship to other insurers if premiums get too high. You can look at the profit limits as incentivizing them to cover more expensive care (which it does do) but it comes at the expense of removing any reason for insurers to seriously care about cost so long as they're somewhat competitive with whoever their competition is. That's a very big tradeoff.