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Your point about insurance industry profits is well-made, but I feel it slides rather smoothly past the gargantuan overhead the industry's mere existence demand
by forgetfreeman 2y ago
Your point about insurance industry profits is well-made, but I feel it slides rather smoothly past the gargantuan overhead the industry's mere existence demands. Given the industry does not provide healthcare services it seems straightforward to me that every penny spent either on insurance premiums or maintaining headcount to manage claims is money wasted.
- nradov 2y agoManaging claims is a waste in the sense that it contributes nothing to patient care. But every modern healthcare system needs some mechanism for allocating resources and preventing waste / fraud / abuse by providers. There's a lot of room to improve efficiency around claims but even fully socialized healthcare systems incur a lot of administrative cost on those functions. One alternative approach is to shift away from the current fee-for-service payment model towards a value-based care model. Financial risk is shifted from employers and consumers to provider organizations who receive a fixed capitated payment per member per month from the insurance company. Then the provider org has to do whatever is necessary to care for those patients. The participating providers no longer need to submit claims for payment, just report on what they did for each covered patient that month. It's not clear yet whether this model will work at scale but pilot programs have been encouraging.