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The article points out that the ACA caps insurer profits at 15%. A 15% profit doesn’t begin to explain the double cost of American healthcare. The article post
by yojo 3y ago
The article points out that the ACA caps insurer profits at 15%.
A 15% profit doesn’t begin to explain the double cost of American healthcare. The article postulates it’s all the middlemen, which, incidentally, the insurers are acquiring in search of higher profits.
- supertrope 3y agoVertical integration helps reduce the double margin problem. Instead of each middleman needing their own profit margin, a vertically integrated company can earn e.g. 5% on the entire operation. Of course this assumes the new market power is not abused to increase prices more than they would have increased without the vertical integration, or results in damaged choice and quality. Something like Kaiser is closer to the solution if we don’t have a government led rationalization.
- hyperpape 3y agoI’m actually not clear that the ACA isn’t tougher than that. The ACA introduced a 85% medical loss ratio. I thought that required them to spend 85% of premiums on payouts. That limits profits to an obvious maximum of 15%, but there are other expenses (advertising and so on) that also cut into that 15%. In practice, maximum profit will be lower than 15%. That said, I haven’t gone into this in tremendous depth, so I’m kinda hoping someone can confirm or deny my understanding.