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> health insurance is already a low margin business I’d like to know much, much more about this statement.

by proggy 6y ago

supertrope 6y ago
By the ACA law health insurance companies have to pay out at least 80% of premiums on claims. The cost of running the company and any profit has to come out of the other 20%. 5% of billions of dollars is huge in absolute figures but as a percentage falls in line with other industries.
- supertrope 6y ago
  To fix medical service affordability we need to bring down the cost of the services instead of expecting significantly more efficient insurance plans. We can’t insure away high costs. They just pass through the costs via premium and deductible increases. Even if health insurers were nonprofits that would only directly save us 5%. High deductibles encouraging shopping around but price discovery is very limited as even doctors don’t know how much a service costs. Focusing on price alone is an issue as people don’t know medicine and are unable to evaluate quality so they end up giving five stars for having a private room or suck up staff. What ends up happening is the not well off or frugal avoid care until there’s an undeniable problem. Others consider consuming medical services a dignity not a price and will never give up their low co-pay plans.
  - stjohnswarts 6y ago
    I agree. I believe that the government should definitely control health care and college costs, otherwise they're just attacking the symptoms.
    - lotsofpulp 6y ago
      The only way to control costs is to increase supply or decrease demand. If they want to lower health care costs, then increase the number of residency spots so there are more doctors...or reduce the requirements to becoming a doctor. Or make it so you don't need to see who went to school until 30 years old to get a simple antibiotic for routine conjunctivitis.
  - delfinom 6y ago
    Step 1. Ban private equity and investment firms from owning healthcare providers.
    - lotsofpulp 6y ago
      From my experience, the doctors that own the providers and private equity have the same motivations and resulting actions.
- ByteJockey 6y ago
  It also means that the easiest way to earn more profit is for healthcare costs (the 80%) to be higher. Kind of a perverse incentive in the long run.
  - asperous 6y ago
    Only if the insurance companies form a cartel (in the economic sense). People will switch carriers to ones with lower premiums so the market forces direct costs down to parity. Most costs are outside of insurer's control anyway, regulations prevent insurance companies from telling providers how to offer care as long as the care is medically necessary and the standard of care.
    - Dahoon 6y ago
      If both the insurance and the hospital earns money by raising the price we will get what we have today where insurance covered procedures are more expensive than none covered procedures.
      - lotsofpulp 6y ago
        Not if the supply of healthcare was increased (more doctors). Then they would be willing to sell their services for a lower price, and the insurance companies would be able to offer lower premiums, winning business from other insurance companies offering higher premiums.
    - ByteJockey 6y ago
      While it's true that a cartel would be the fastest way to raise prices, I don't think that not having one removes all incentive to try. I think you're also ignoring healthcare networks. This is important for two reasons. 1. The kind of supply and demand works very well for modeling commodities, but the difference in networks means it's very hard to have two completely equivalent insurance products. 2. Insurance companies can incentivize hospitals to behave in certain ways by regularly pruning those who do not behave that way. Also, most people get their healthcare from their employer. There's not as much ability to actually switch, unless you're so fed up that you're willing to switch jobs.
- xur17 6y ago
  This sounds like an incentive to increase costs (20% of 2X > 20% of X).
  - lotsofpulp 6y ago
    Assuming no competitor exist, which they do for many health insurance situations. There would be plenty of competitors to choose from if everyone was required to choose from healthcare.gov.
    - baq 6y ago
      incompatible with 'already low margin' - this suggests that there isn't much more any competitor could do to offer lower prices. besides, i think the issue is the cost of the underlying procedures - doctors charge maximum what the insurance company will pay instead of what the patient would pay. there are plenty of stories where a patient is billed $100 but if they say they don't want it out of insurance the price drops to $40 or whatever. another elephant in the room is that you can't pick your healthcare provider if you're unconscious. this part of the US system is little more than a scam.
      - lotsofpulp 6y ago
        The issue is the low supply of healthcare. The way to lower prices is to increase supply or decrease demand.
deleted 6y ago
[deleted]
lotsofpulp 6y ago
It’s public information, check any of the big health insurers’ 10-K and it’s probably less than 5%. https://naic.org/documents/topic_insurance_industry_snapshots_2018_health_ins_ind_report.pdf https://naic.org/documents/topic_insurance_industry_snapshot...

> health insurance is already a low margin business I’d like to know much, much more about this statement.

by proggy 6y ago

> health insurance is already a low margin business I’d like to know much, much more about this statement.

By the ACA law health insurance companies have to pay out at least 80% of premiums on claims. The cost of running the company and any profit has to come out of the other 20%. 5% of billions of dollars is huge in absolute figures but as a percentage falls in line with other industries.

supertrope 6y ago
To fix medical service affordability we need to bring down the cost of the services instead of expecting significantly more efficient insurance plans. We can’t insure away high costs. They just pass through the costs via premium and deductible increases. Even if health insurers were nonprofits that would only directly save us 5%. High deductibles encouraging shopping around but price discovery is very limited as even doctors don’t know how much a service costs. Focusing on price alone is an issue as people don’t know medicine and are unable to evaluate quality so they end up giving five stars for having a private room or suck up staff. What ends up happening is the not well off or frugal avoid care until there’s an undeniable problem. Others consider consuming medical services a dignity not a price and will never give up their low co-pay plans.
- stjohnswarts 6y ago
  I agree. I believe that the government should definitely control health care and college costs, otherwise they're just attacking the symptoms.
  - lotsofpulp 6y ago
    The only way to control costs is to increase supply or decrease demand. If they want to lower health care costs, then increase the number of residency spots so there are more doctors...or reduce the requirements to becoming a doctor. Or make it so you don't need to see who went to school until 30 years old to get a simple antibiotic for routine conjunctivitis.
- delfinom 6y ago
  Step 1. Ban private equity and investment firms from owning healthcare providers.
  - lotsofpulp 6y ago
    From my experience, the doctors that own the providers and private equity have the same motivations and resulting actions.
ByteJockey 6y ago
It also means that the easiest way to earn more profit is for healthcare costs (the 80%) to be higher. Kind of a perverse incentive in the long run.
- asperous 6y ago
  Only if the insurance companies form a cartel (in the economic sense). People will switch carriers to ones with lower premiums so the market forces direct costs down to parity. Most costs are outside of insurer's control anyway, regulations prevent insurance companies from telling providers how to offer care as long as the care is medically necessary and the standard of care.
  - Dahoon 6y ago
    If both the insurance and the hospital earns money by raising the price we will get what we have today where insurance covered procedures are more expensive than none covered procedures.
    - lotsofpulp 6y ago
      Not if the supply of healthcare was increased (more doctors). Then they would be willing to sell their services for a lower price, and the insurance companies would be able to offer lower premiums, winning business from other insurance companies offering higher premiums.
  - ByteJockey 6y ago
    While it's true that a cartel would be the fastest way to raise prices, I don't think that not having one removes all incentive to try. I think you're also ignoring healthcare networks. This is important for two reasons. 1. The kind of supply and demand works very well for modeling commodities, but the difference in networks means it's very hard to have two completely equivalent insurance products. 2. Insurance companies can incentivize hospitals to behave in certain ways by regularly pruning those who do not behave that way. Also, most people get their healthcare from their employer. There's not as much ability to actually switch, unless you're so fed up that you're willing to switch jobs.
xur17 6y ago
This sounds like an incentive to increase costs (20% of 2X > 20% of X).
- lotsofpulp 6y ago
  Assuming no competitor exist, which they do for many health insurance situations. There would be plenty of competitors to choose from if everyone was required to choose from healthcare.gov.
  - baq 6y ago
    incompatible with 'already low margin' - this suggests that there isn't much more any competitor could do to offer lower prices. besides, i think the issue is the cost of the underlying procedures - doctors charge maximum what the insurance company will pay instead of what the patient would pay. there are plenty of stories where a patient is billed $100 but if they say they don't want it out of insurance the price drops to $40 or whatever. another elephant in the room is that you can't pick your healthcare provider if you're unconscious. this part of the US system is little more than a scam.
    - lotsofpulp 6y ago
      The issue is the low supply of healthcare. The way to lower prices is to increase supply or decrease demand.

deleted 6y ago

[deleted]

lotsofpulp 6y ago

It’s public information, check any of the big health insurers’ 10-K and it’s probably less than 5%. https://naic.org/documents/topic_insurance_industry_snapshots_2018_health_ins_ind_report.pdf https://naic.org/documents/topic_insurance_industry_snapshot...