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As I understand it, the ACA caps profits by requiring that insurance companies spend 80% of their revenue on "medical care and quality improvement". Therefore,
by MrLeap 2y ago
As I understand it, the ACA caps profits by requiring that insurance companies spend 80% of their revenue on "medical care and quality improvement". Therefore, the only ways for insurance companies to make more money is if they get a lot more customers OR if the price of medical care skyrockets.
I suspect the reason why UHC has decided to deny so many claims is that this will allow them to marginally lower he price of their premiums relative to their competitors. This'll get them more money via method 1. The whole industry is working around the clock on method #2.
Anyone more informed, feel free to correct me.
- ethbr1 2y agoThat's broadly correct. One of the most under-appreciated wins of the ACA was capping non-care premium costs (read: admin, et al). From working on automation inside the system at insurers at the time, I can definitively say this spurred health insurers to streamline and lower operational cost overheads. With regards to the denials, I think you're right too. People like to point at insurers and blame them, but it's easy to forget they're just the middleman. There's "cost of care" on the other side of them. At the end of the day, premiums need to balance with costs... (somewhat, in aggregate) There are probably some edge cases where there are opportunities to profit, mostly to do with privately-administered but publicly-funded areas of health insurance (read: FEP and Medicare Advantage), but generally it's trying to get premiums lower for competitive reasons.
- stogot 2y agoOh I wasn’t aware of this, thanks for describing the mechanics