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Nb. health insurance profit margins are now capped, in the US.

• lotsofpulp 4y ago
  At 15% to 20%. So smaller profit margins indicate downward pressure on pricing from competitors.
  • yamtaddle 4y ago
    Well, in point of fact, the limit is actually a mandate on how much they must spend on medical care. Their own operating expenses, salaries, advertising, et c., have to come out after that. So they could theoretically make 15% under that limit—except in practice that's actually impossible. Which means margins aren't necessarily 5% because of competition. [EDIT] That is, I'm skeptical that if one removed that limit, competition would keep margins where they are. Forcing all profit to come out of 15% of revenue probably does play a major role in keeping the actual margin as low as it is.
    • johngladtj 4y ago
      It also encourages healthcare price increases, since the best way for them to increase profits becomes increasing revenues, rather than reducing costs
      • lotsofpulp 4y ago
        The fact that they settle for sub 5% profit margins means they individually do not have the pricing power to do that. Clearly, a competing insurance company will steal business via lower premiums. I suppose one could assert they are all in cahoots and have a secret deal to accept low single digit profit margins to keep out of the news cycle, while simultaneously agreeing to pay healthcare providers more and more each year, but I would want proof.