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Ironically, I think that the increased attention to the denial of claims plays straight into insurer's hands. Healthcare isn't expensive because insurers don't

• londons_explore 2y ago
  > incentivized to overpay for care to maximize the size of their 20% slice. This. You see it anytime you mandate some profit cap or limit as a percentage of revenue. Companies will just manipulate the other variable to get more profits. Or they'll buy other related companies so they can do sneaky internal pricing shenanigans.
  • lotsofpulp 2y ago
    Only if no competitors exist, or all the competitors are colluding.
    • londons_explore 2y ago
      I feel like nearly every industry is colluding, at least a little, with a "we wont screw you over if you don't screw us over" approach. Competition focuses on trying to expand the market, rather than screwing a competitor and stealing all their clients.
      • lotsofpulp 2y ago
        That is a unnecessarily narrow definition of competition, and businesses don’t steal clients (absent illegal methods), they provide better products or services at a preferable utility to price ratio such that customers choose them over another business. Just like a person performing better in a job interview isn’t stealing from other applicants who performed worse.
• Spivak 2y ago
  I mean I guess but it would still be a huge improvement in real people's lives if the burden was flipped and insurance companies had to prove fraud to deny a claim. I think we want the opposite when it comes to negotiations and want instance companies to all have to pay out the cash price. The first step to making it possible to not need insurance for most care is making everyone pay the same.
  • derektank 2y ago
    It would be an improvement until premiums increased and/or there was a shortage of services, likely in the form of longer wait times. That would be a net benefit for some patients and a net loss for others.
    • Spivak 2y ago
      Given that claim denials most often happen after the services are rendered the shortage issue is probably not that significant. But nonetheless health insurance being affordable only because insurance companies can simply choose to not provide service to their customers and if people stopped forgoing necessary medical care there would be shortages aren't I think the points you think your making.
  • s1artibartfast 2y ago
    Claim denial isnt about (mostly) fraud prevention. It is about cost control. Doctors and patients have no incentive to control cost and select cheaper and inferior treatments.
    • NickC25 2y ago
      Cost control? Think about an insurance company for a moment. They could pay their CEO less. They could not engage in needless advertising. They could refrain from paying dividends to shareholders. The list goes on...
      • s1artibartfast 2y ago
• teknikl 2y ago
  [dead]
• clcaev 2y ago
  > The ACA mandates that at least 80% of premiums must go towards medical expenses. This is not precisely accurate. The medical loss ratio (80% for individual plans) can also be spent on quality improvement. There is a blurry line between administrative costs and QI initiatives. For example, a plan-provided coordinator could be QI rather than administrative.
  • FireBeyond 2y ago
    Now all that money will go into AI QI bots and training...
  • blactuary 2y ago
    This is correct, but I can tell you from experience that that stuff is a tiny amount of what goes into the claims in the numerator
• derektank 2y ago
  You can negotiate all you want but ultimately the productivity improvements have to come from providers (hospitals, pharmaceutical companies) if you want to lower costs. There are ways to make insurers better agents (one simple step would be to make their customers the actual patients, rather than the employers of patients) but I'm not sure how much power they actually have to keep costs low
  • asdf6969 2y ago
    Every dollar of profit an insurance company makes is an unnecessary cost. It should be returned to the customers because it means they were over charged. That’s the biggest opportunity for cost savings
    • Der_Einzige 2y ago
      [flagged]
      • NickC25 2y ago
        Luigi went back to the drawing board, and seems to have found a way to get health "insurance" executives quite freaked out to the point where some of their proposed changes for 2025 were quietly walked back.
    • derektank 2y ago
      [flagged]
      • EliRivers 2y ago
        They get round this by what's called "intercompany eliminations". UHC and chums simply buy the medical providers, and can then use them to launder people's premiums. UHC et al can only keep a maximum of 20% (? - I forget the exact figure) of the premiums; but if UHC simply own the hospitals, then money laundered through those hospitals via very high profit procedures etc become permitted profits for UHC.
    • 2y ago
• throw10920 2y ago
  This is one of the drivers of cost disease[1] in healthcare, which is a huge problem that won't completely go away even if insurance is radically reworked. [1] https://slatestarcodex.com/2017/02/09/considerations-on-cost-disease/ https://slatestarcodex.com/2017/02/09/considerations-on-cost...?
  • ceejayoz 2y ago
    > This is one of the drivers of cost disease... The ACA (with this new 80/20 provision) passed in 2010. Costs have been on a steady upward march (yes, adjusted for inflation) since the 1970s. https://www.healthsystemtracker.org/chart-collection/u-s-spending-healthcare-changed-time/ https://www.healthsystemtracker.org/chart-collection/u-s-spe... The "Average annual growth rate of GDP per capita and total national health spending per capita, 1970-2023" chart even shows the 2020s as the first decade with lower increases in healthcare spending than corresponding GDP growth. This theory seems... unlikely as a result. (Cost disease itself is certainly an issue; I merely very much doubt its attribution to this particular provision. Obama didn't have a time machine.)
    • jimmymcgee73 2y ago
      [dead]
    • Aunche 2y ago
      To be clear, I'm not blaming the ACA for increased healthcare costs. Most people get insurance that is self-funded by their employer where the mandated loss ratio doesn't apply. The incentive for insurers to overpay for care has always existed, but the loss ratio mandate makes it easier to illustrate.
    • throw10920 2y ago
      That's a good point - I didn't know that the ACA was that recent. Haven't health insurers still had been regulated to cap how much they can make off payouts for longer than that, though?
  • JusticeJuice 2y ago
• cool_dude85 2y ago
  Nobody, not this article or any other reasonable person, thinks that claim denial is the reason healthcare is expensive. Rather, they think it is fundamentally fraudulent that someone can pay their premiums, etc. and then when they need treatment, be arbitrarily denied by an in-house doctor employed by their insurer to deny treatment. This is a story of the fraud in the health insurance industry, not the racket part of the industry.
  • FireBeyond 2y ago
    > be arbitrarily denied by an in-house doctor employed by their insurer to deny treatment. Oftentimes by a doctor who cannot or doesn't practice in "the real world" (some physicians employed by insurers go straight to working from them after becoming licensed). Or a nurse (technically with "oversight" by a doctor who might "supervise" the decisions of dozens of nurses or more). And now these companies if not using AI directly, will present these providers "notes" along with the claim for review with an AI summary, replete with hallucinations, as bullet points "guiding" them towards the "correct" decision.
  • ClumsyPilot 2y ago
    > is fundamentally fraudulent that someone can pay their premiums, etc. and then when they need treatment, be arbitrarily denied This -somehow the insurance industry does whatever it wants. If I get paid but refuse to provide service, multiple times, I will be a wanted man.
  • s1artibartfast 2y ago
    Cost controls are a necessary part of the US system, and European single payer systems as well. The primary difference is that the US system puts the patient in-between the doctor and payer. Alternative systems usually sort this out by simply denying or allowing the treatment without the patient in the loop
  • Aunche 2y ago
    Again, zeroing in on these denials is missing the forest for the trees. It's the entire claims process that is incentivized to dysfunctional. Insurers are paying for unnecessary chiropractic adjustments, name-brand prescriptions as a first resort, and the more expensive private rooms that hospitals like to build these days over shared ones. Occasionally, they'll fail to provide life saving care, but they can spin that into a win because that will give them an excuse to increase premiums even higher. Psychiatric issues, which this Propublica article is about, are already being over-treated even though it may be under-treated in other aspects. Focusing only on these cases of denial may cause under-treatment to go down, but at a cost of much higher over-treatment, which comes out of everyones premiums. I don't think anything wrong with SSRIs or stimulants being used as medication, but clearly something wrong with the way we're prescribing them when despite being the largest consumers of them, Americans suffer more poor mental health outcomes.
• Aloisius 2y ago
  > This means that insurers are actually incentivized to overpay for care to maximize the size of their 20% slice. I'm confused. If that's the case, then why would they deny coverage? Wouldn't that be an easy way to overpay? Heck, they could simply allow everything through and use rising costs as a justification to increase premiums. This nefarious scheme of course requires insurers to have no competition. After all, if your competitors don't overpay, then they can lower rates and steal your customers. The truth of the matter is that hospitals and doctors try to maximize their profits through excessive billing and care little about cost efficiency. They don't try this at the same rate with medicare/medicaid both because the government does not generally negotiate - reimbursement schedules are largely fixed and because defrauding the government is a criminal rather than civil offense. There are some easy fixes here and there. We could, for instance, ban price discrimination by healthcare providers. Every payer would then pay the lowest accepted rate - which is usually medicaid or medicare's. This won't prevent billing for medically unnecessary or inefficient services, but it would eliminate the negotiation problem. The problem is political. If you save a trillion dollars a year in healthcare costs, the GDP gets lowered by roughly the same amount. Healthcare providers would, of course, fight to prevent any reduction in reimbursements from happening - which they've been extremely effective at historically.