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At least in theory insurance companies should look out for price, because they want to be cheaper than other companies. But, free market just doesn't work for

• mirajshah 7y ago
  Yep, also I think the barriers to entry for the insurance market are extremely high. Not only is there a huge fixed cost of actually negotiating rates with every individual doctor/hospital, there's also the fixed cost of getting individual employers to consider you for their business. These and some other factors leave the insurance market with just a few insurance providers, who can let prices run away and simply charge higher premiums/deductibles without fear of competition from a "start-up" insurance provider.
• ishjoh 7y ago
  FYI, in the US insurance companies are regulated such that: "No more than 20 percent of premium revenue can be spent on total administrative costs, including profits and salaries."[1] So the difficult thing is they are incentivized to increase revenue to increase profits, and cutting costs won't result in more profit. [1] - https://www.verywellhealth.com/health-insurance-companies-unreasonable-profits-1738941 https://www.verywellhealth.com/health-insurance-companies-un...
  • secabeen 7y ago
    Yep. And a lot of big companies are self-insured, so the "insurance company" is actually just an administrator for the big company's insurance pool. Thus reducing the cost incentive even more. Competition could help, but there just aren't a lot of insurance administrators that can run plans for the biggest companies, so there is little competitive pressure on price.