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> The Affordable Care Act (Obamacare) set a minimum 85% medical loss ratio. The insurers have to cover their operating costs and profit margins out of the remai
by FireBeyond 3y ago
> The Affordable Care Act (Obamacare) set a minimum 85% medical loss ratio. The insurers have to cover their operating costs and profit margins out of the remaining 15%.
That's also a perverse incentive though. With capped "profit" windows, how is a company to make more money? Well if healthcare costs increase, then premiums need to. 15% of 1.3X is bigger than 15% of X, after all. And healthcare providers are unlikely to object to higher prices.
And what if your insurer gets involved in vertical integration - perhaps Kaiser style, perhaps less formal? Now you get to reduce the actual cost to you (the insurer) by removing the middleman, and you get increased profit by keeping the price the same. It might show up on a different ledger on your books, but nonetheless...
- lotsofpulp 3y ago> And what if your insurer gets involved in vertical integration - perhaps Kaiser style, perhaps less formal? Now you get to reduce the actual cost to you (the insurer) by removing the middleman, and you get increased profit by keeping the price the same. It might show up on a different ledger on your books, but nonetheless... Regulators are not this dumb or corrupt. This is not a big money making business, as evidenced by Buffett/Bezos/Dimon’s foray failing: https://www.latimes.com/business/story/2021-01-04/buffett-bezos-dimon-healthcare https://www.latimes.com/business/story/2021-01-04/buffett-be...
- peteradio 3y agoUNH stock has doubled since 2020. Someones making big money.
- lotsofpulp 3y agoBecause the risk of removing ACA legislation is gone. It’s a company with very reliable revenue that will keep up with inflation with relatively low liability.