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Do you have any direct experience with the medical industry? If not, do you know anyone who has? It really seems like you are arm-chair quarterbacking your com

by csa 4y ago

Do you have any direct experience with the medical industry? If not, do you know anyone who has? It really seems like you are arm-chair quarterbacking your comments based on some quick online searches. I strongly encourage you to talk to folks who have worked in hospital billing pre- and post-ACA and (if possible) actuaries who work in the health insurance industry who will speak to you frankly (rather than toeing the industry line). The misaligned incentives are a complete shit show. > Why is gross margin relevant? If you can increase gross margin number while maintaining operation costs at about the same proportional level, then you end up with more absolute profit. So 100 premium, 20 gm and 5 profit can become 150 premium, 30 gm, and 7.5 profit. > How are sub 5% profit margins feeding at the trough? The percentage is not the issue. The absolute amount is. Some examples: - My premiums pre-ACA to now have almost quintupled. There are some good reasons to explain a small part of that increase (e.g., I’m older), but 4-5x is absurd. Way higher than inflation, and way higher than the quality of care has improved (for me specially, but also in general). - This link (https://khn.org/news/article/surprise-bill-iv-push-hospital-unbundling/ https://khn.org/news/article/surprise-bill-iv-push-hospital-...) is an example of hospitals feeding at the trough. Imagine this happening hundreds or thousands of times a day at every hospital. It’s absurd. I realize that this is basically a marketing piece by Kaiser, but the article is directionally correct based on folks I know who work in medicine, health insurance, and hospital billing. Their stories are all very consistent. - There are many other countries with functional healthcare systems that do not charge anywhere near this much (for most people). Japan comes to mind. I have lived there. Premiums are based on a percentage of your salary, and the cost is much less than the US for 95%+ of the population. If you have no salary, it’s about $100 a year. When the US system reforms, I hope that the reformers take lessons from Japan since the transition from our current system to something like theirs will be relatively easier than many/most other options. > If you are claiming collusion, I would need proof. This isn’t CSI, and collusion doesn’t have to be explicit, especially with oligopolies. Once the major players in any market in the US realize that they can take a win-win game theory approach to their pricing, they pretty much do so. They don’t have to have surreptitious back room meetings in order to realize that increasing prices more or less in step is mutually beneficial, especially in health insurance, which has a wide moat.

lotsofpulp 4y ago
> The percentage is not the issue. The absolute amount is. Do you expect profit margins to approach 0% over time? > If you can increase gross margin number while maintaining operation costs at about the same proportional level, then you end up with more absolute profit. So 100 premium, 20 gm and 5 profit can become 150 premium, 30 gm, and 7.5 profit. Sure, but because of competition, this is not happening. The premium payer will shop around and choose a different insurer offering 130 premium. If this is happening, there would be clear evidence, since all of these publicly listed companies have public financials. > is an example of hospitals feeding at the trough. This discussion is about insurance companies, not hospitals. In any case, I will simply rest my case that a business with low single digit profit margins is, by definition, not “feeding at the trough”. Lots of competition, low profit margins, all lead to a pretty cutthroat business environment. I suggest people direct their ire at drug manufacturers, healthcare providers, software providers, and others in the healthcare business with 20%+ profit margins. And increasing the supply of healthcare in general. Or people can keep wasting energy on blaming the 3% middleman, which is beneficial for the 20%+ profit margin businesses. Edit: final note: > - My premiums pre-ACA to now have almost quintupled. There are some good reasons to explain a small part of that increase (e.g., I’m older), but 4-5x is absurd. Way higher than inflation, and way higher than the quality of care has improved (for me specially, but also in general). Premiums pre ACA and post ACA cannot be compared due to drastic changes in laws about the terms is the insurance. Namely, the limitation of pricing insurance on only age/location/smoking status, and the implementation of out of pocket maximums. In addition, as of 2022, the no surprises act bill means out of network emergency costs are included in the out of pocket maximums. Effectively, even though you feel you are getting less quality of care (and you very well might be), the insurance product is much different than before with much higher (nominal) coverage, much more expensive treatment options, and more subsidies for others in the insurance pool. Based on aging demographics and declining labor force participation rates, I would not expect the situation to get any better. Healthcare, especially labor intensive, will cost more and more.

by csa 4y ago

lotsofpulp 4y ago

> The percentage is not the issue. The absolute amount is. Do you expect profit margins to approach 0% over time? > If you can increase gross margin number while maintaining operation costs at about the same proportional level, then you end up with more absolute profit. So 100 premium, 20 gm and 5 profit can become 150 premium, 30 gm, and 7.5 profit. Sure, but because of competition, this is not happening. The premium payer will shop around and choose a different insurer offering 130 premium. If this is happening, there would be clear evidence, since all of these publicly listed companies have public financials. > is an example of hospitals feeding at the trough. This discussion is about insurance companies, not hospitals. In any case, I will simply rest my case that a business with low single digit profit margins is, by definition, not “feeding at the trough”. Lots of competition, low profit margins, all lead to a pretty cutthroat business environment. I suggest people direct their ire at drug manufacturers, healthcare providers, software providers, and others in the healthcare business with 20%+ profit margins. And increasing the supply of healthcare in general. Or people can keep wasting energy on blaming the 3% middleman, which is beneficial for the 20%+ profit margin businesses. Edit: final note: > - My premiums pre-ACA to now have almost quintupled. There are some good reasons to explain a small part of that increase (e.g., I’m older), but 4-5x is absurd. Way higher than inflation, and way higher than the quality of care has improved (for me specially, but also in general). Premiums pre ACA and post ACA cannot be compared due to drastic changes in laws about the terms is the insurance. Namely, the limitation of pricing insurance on only age/location/smoking status, and the implementation of out of pocket maximums. In addition, as of 2022, the no surprises act bill means out of network emergency costs are included in the out of pocket maximums. Effectively, even though you feel you are getting less quality of care (and you very well might be), the insurance product is much different than before with much higher (nominal) coverage, much more expensive treatment options, and more subsidies for others in the insurance pool. Based on aging demographics and declining labor force participation rates, I would not expect the situation to get any better. Healthcare, especially labor intensive, will cost more and more.