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> It's worth noting that traditionally, actual insurance runs at a loss or break-even, most of the profits tend to come from investment. I hadn’t considered th
by throwaway66920 7y ago
> It's worth noting that traditionally, actual insurance runs at a loss or break-even, most of the profits tend to come from investment.
I hadn’t considered that. It sounds like another reason why insurance is broken. If you have two options, $100 premiums and $100 cost; versus $1000 premiums and $1000 cost; the net gain on premiums vs cost is the same, but the investment income over the interim will be higher when the total amount of money in the system is higher.
I would be interested to see the average premium price compared to total investment funds across different geographies and times
- czinck 7y agoThat's been one of the supposed consequences of the 80/20 rule that Obamacare introduced, although I can't find any numbers, just speculation that insurers are doing it. The 80/20 rule says that the insurance companies must spend at least 80% of their revenue on actual health care, or else they have to return money to the insured. So if you're a healthcare company and your stockholders want to see increases in profit, the only way is to spend more money whether it's necessary or not. You can't make more by increasing efficiency. Searching for this gives articles about how the insurance companies actually have returned a fair bit of money, and none with hard numbers about this actually driving healthcare costs up, But there could be a lot of reasons other than "it hasn't driven costs up" for why it's not showing up in a quick search.