5 ms·

The accusation here isn't that they are skimming a disproportionate amount, it's that they aren't doing their job, which is to put downwards pressure on provide

The accusation here isn't that they are skimming a disproportionate amount, it's that they aren't doing their job, which is to put downwards pressure on provider prices.

lotsofpulp 4y ago
The fact that there are at least 5 large insurers competing nationwide and all have 5% or less profit margins means there is lots of competition, and if they are not providing the best prices, their customers will go elsewhere. See pharmacy forums as an example for all the pharmacists complaining about how independent pharmacies are so tough to operate due to ever smaller payments from insurance companies for the past 10 years.
- jjoonathan 4y ago
  > if they are not providing the best prices, their customers will go elsewhere Nope. Not if they can inject enough noise into the comparison process to hide the differences. There's a reason they threw so much money at getting bronze/silver/gold standards killed. They knew it was critical to avoid being squeezed. > pharmacists complaining Pharmacists are a tiny part of the bloat picture and it's always easier to put the screws to smaller players. Come back when drugs and hospital stays stop costing twice as much as the rest of the developed world, or stop growing 10% y/y (on top of regular inflation) and then I'll believe that insurance companies are doing their negotiating job.
  - lotsofpulp 4y ago
    > There's a reason they threw so much money at getting bronze/silver/gold standards killed. I am not aware of these standards being killed. I select a Gold HSA plan every year. https://www.healthcare.gov/choose-a-plan/plans-categories/ https://www.healthcare.gov/choose-a-plan/plans-categories/ > Come back when drugs and hospital stays stop costing twice as much as the rest of the developed world, and then I'll believe that insurance companies are doing their negotiating job. > Come back when drugs and hospital stays stop costing twice as much as the rest of the developed world, and then I'll believe that insurance companies are doing their negotiating job. How are they supposed to negotiate if there is only 1 hospital in an area or a drug company owns the patent to a drug so they are the only seller? The insurance company is mandated to cover emergency care at the hospital and pay whatever price for the medicine if it has sufficient efficacy data, per the laws. When there are generic drugs available, insurance does pay less for those drugs.
    - jjoonathan 4y ago
      I could be wrong or I could be remembering that they were effectively killed by inserting a key loophole. I'll have to dig up my notes and probably do some research to figure that out. My point about performance -- 2x, 10%y/y -- stands.
      - lotsofpulp 4y ago
        There is no point to comparing US expenses to other countries where drug manufacturers and hospitals and doctors are not allowed to negotiate, and have to accept what the government gives them. What would you do if you were the insurer and there was one hospital in an area or 1 patented medicine and the government forced you to cover it?
        jjoonathan 4y ago
        No point? The point is that we should be doing what they are doing. When you're in a hole, stop digging. > WWYD I would get rid of private insurers and have the NHS negotiate prices.
        lotsofpulp 4y ago
        This discussion is about insurers negotiating pricing, not about politicians enacting taxpayer funded healthcare.
        jjoonathan 4y ago
        Nice try. It's a discussion about private insurers systematically sucking at their notional purpose. Which they absolutely do. They need to be replaced. "They're doing as well as could be expected" might be an exoneration of a company, but it's an indictment of the system.
- vkou 4y ago
  No, it means that Obamacare is working as written[1]. Insurer profit margins are set to the legally permitted ((medical bills) * 15%) - operating costs. If insurers want to make more money, they can either make medical bills more expensive, or reduce their own operating costs. Reducing the cost of medical bills does not increase the amount of money they make, unless it means they are capturing market share from a competitor. The problem is that it's nearly-impossible to capture market share. Which insurer do I have? The one that work provides. Did I have any choice in it? No. Did I choose my workplace based on the insurer bundled with it? No. Will my workplace ever switch their insurer provider of choice? Almost certainly 'no'. How do you capture market share, when all of your customers, and all of your competitors' customers are captives? [1] Whether or not it was written well is another question.
  - lotsofpulp 4y ago
    It does if it results in them being able to sell policies at lower premiums than their competitors and hence earn more customers. > Will my workplace ever switch their insurer provider of choice? Almost certainly 'no'. Why not? I am an employer and we evaluate the cost of health insurance every year. It is a huge expense, so why would we not shop around?
    - vkou 4y ago
      > It is a huge expense, so why would we not shop around? Because switching to a different provider can be a huge pain in the ass to your employees, whose multi-year treatments/doctors/etc may suddenly become out of network? And it's probably not worth doing unless the cost delta is truly staggering?
      - lotsofpulp 4y ago
        That goes for switching any almost vendor. But it does give insurers an incentive to not runaway with pricing.
  - mypalmike 4y ago
    I agree with many of your points. But in terms of employers switching plans, I've experienced such changes several times as an employee of different companies. It's not particularly inconvenient to a business to switch insurers, though it certainly can be to the employees.
- uoaei 4y ago
  I would like to understand better your definition of "competing" because accidental cartels happen all the time in highly regulated and captured markets such as healthcare.
  - lotsofpulp 4y ago
    Nobody chooses to earns a 5% profit margin if they can earn 6%. Low single digits is objectively a low profit margin, for any business, and so must indicate that competitors exist Who prevent charging higher prices to increase the profit margins.

The accusation here isn't that they are skimming a disproportionate amount, it's that they aren't doing their job, which is to put downwards pressure on provider prices.

lotsofpulp 4y ago

The fact that there are at least 5 large insurers competing nationwide and all have 5% or less profit margins means there is lots of competition, and if they are not providing the best prices, their customers will go elsewhere. See pharmacy forums as an example for all the pharmacists complaining about how independent pharmacies are so tough to operate due to ever smaller payments from insurance companies for the past 10 years.

jjoonathan 4y ago
> if they are not providing the best prices, their customers will go elsewhere Nope. Not if they can inject enough noise into the comparison process to hide the differences. There's a reason they threw so much money at getting bronze/silver/gold standards killed. They knew it was critical to avoid being squeezed. > pharmacists complaining Pharmacists are a tiny part of the bloat picture and it's always easier to put the screws to smaller players. Come back when drugs and hospital stays stop costing twice as much as the rest of the developed world, or stop growing 10% y/y (on top of regular inflation) and then I'll believe that insurance companies are doing their negotiating job.
- lotsofpulp 4y ago
  > There's a reason they threw so much money at getting bronze/silver/gold standards killed. I am not aware of these standards being killed. I select a Gold HSA plan every year. https://www.healthcare.gov/choose-a-plan/plans-categories/ https://www.healthcare.gov/choose-a-plan/plans-categories/ > Come back when drugs and hospital stays stop costing twice as much as the rest of the developed world, and then I'll believe that insurance companies are doing their negotiating job. > Come back when drugs and hospital stays stop costing twice as much as the rest of the developed world, and then I'll believe that insurance companies are doing their negotiating job. How are they supposed to negotiate if there is only 1 hospital in an area or a drug company owns the patent to a drug so they are the only seller? The insurance company is mandated to cover emergency care at the hospital and pay whatever price for the medicine if it has sufficient efficacy data, per the laws. When there are generic drugs available, insurance does pay less for those drugs.
  - jjoonathan 4y ago
    I could be wrong or I could be remembering that they were effectively killed by inserting a key loophole. I'll have to dig up my notes and probably do some research to figure that out. My point about performance -- 2x, 10%y/y -- stands.
    - lotsofpulp 4y ago
      There is no point to comparing US expenses to other countries where drug manufacturers and hospitals and doctors are not allowed to negotiate, and have to accept what the government gives them. What would you do if you were the insurer and there was one hospital in an area or 1 patented medicine and the government forced you to cover it?
      - jjoonathan 4y ago
        No point? The point is that we should be doing what they are doing. When you're in a hole, stop digging. > WWYD I would get rid of private insurers and have the NHS negotiate prices.
        lotsofpulp 4y ago
        This discussion is about insurers negotiating pricing, not about politicians enacting taxpayer funded healthcare.
        jjoonathan 4y ago
        Nice try. It's a discussion about private insurers systematically sucking at their notional purpose. Which they absolutely do. They need to be replaced. "They're doing as well as could be expected" might be an exoneration of a company, but it's an indictment of the system.
vkou 4y ago
No, it means that Obamacare is working as written[1]. Insurer profit margins are set to the legally permitted ((medical bills) * 15%) - operating costs. If insurers want to make more money, they can either make medical bills more expensive, or reduce their own operating costs. Reducing the cost of medical bills does not increase the amount of money they make, unless it means they are capturing market share from a competitor. The problem is that it's nearly-impossible to capture market share. Which insurer do I have? The one that work provides. Did I have any choice in it? No. Did I choose my workplace based on the insurer bundled with it? No. Will my workplace ever switch their insurer provider of choice? Almost certainly 'no'. How do you capture market share, when all of your customers, and all of your competitors' customers are captives? [1] Whether or not it was written well is another question.
- lotsofpulp 4y ago
  It does if it results in them being able to sell policies at lower premiums than their competitors and hence earn more customers. > Will my workplace ever switch their insurer provider of choice? Almost certainly 'no'. Why not? I am an employer and we evaluate the cost of health insurance every year. It is a huge expense, so why would we not shop around?
  - vkou 4y ago
    > It is a huge expense, so why would we not shop around? Because switching to a different provider can be a huge pain in the ass to your employees, whose multi-year treatments/doctors/etc may suddenly become out of network? And it's probably not worth doing unless the cost delta is truly staggering?
    - lotsofpulp 4y ago
      That goes for switching any almost vendor. But it does give insurers an incentive to not runaway with pricing.
- mypalmike 4y ago
  I agree with many of your points. But in terms of employers switching plans, I've experienced such changes several times as an employee of different companies. It's not particularly inconvenient to a business to switch insurers, though it certainly can be to the employees.
uoaei 4y ago
I would like to understand better your definition of "competing" because accidental cartels happen all the time in highly regulated and captured markets such as healthcare.
- lotsofpulp 4y ago
  Nobody chooses to earns a 5% profit margin if they can earn 6%. Low single digits is objectively a low profit margin, for any business, and so must indicate that competitors exist Who prevent charging higher prices to increase the profit margins.