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It's called the Medical Loss Ratio rule of the Affordable Care Act. From my understanding the law states that health insurers MUST spend 80% of revenue from pre

It's called the Medical Loss Ratio rule of the Affordable Care Act. From my understanding the law states that health insurers MUST spend 80% of revenue from premiums on health care and if they don't, they must provide rebates to the policy holders. This is one of the reasons why health care costs have gone through the roof; health insurers must be spending all this money on health care costs, so they buy pharmacies and gouge the costs of cheap medicine to make up for the lost profits. Instead of paying $5 for insulin, they make you pay $60, which helps them hit the 80% rule.

tzs 2y ago
> This is one of the reasons why health care costs have gone through the roof. I doubt that it has much affect, for two reasons. 1. Looking at graphs of US health care costs over time I don't really see much change in the growth of health care costs during pre-ACA times and post-ACA times. 2. Looking at health care costs of other first world countries, their health care costs over the 50 years have been growing fairly similarly to the way US health care costs having been growing. This suggests that the reasons for most health care cost increases in the US are neither things we do differently than most other first world countries (e.g. more heavily relying on private for-profit insurance companies) nor any relatively recent changes to how we regulate things.
ars 2y ago
> so they buy pharmacies and gouge the costs of cheap medicine to make up for the lost profits. Instead of paying $5 for insulin, they make you pay $60, which helps them hit the 80% rule. Yah, that's not really true. Sure if they can increase healthcare costs, then they can increase premiums, but that also makes them less competitive. But the bigger reason it's not true is that insurance companies don't set the reimbursement rate for drugs in the first places. Instead that's set by PBM's, which are separate companies. Insurance companies hate PBM's because the PBM's prevent the insurance companies from doing exactly like you describe. (This hate translates into a lot of badmouthing which I'm sure you'll find if you lookup PBM's. They get called "middlemen" who take money and don't provide a service - this is just propaganda by insurance companies.) The whole hero worship of Luigi is based on a complete misunderstanding of who actually causes healthcare costs to be high. It's not insurance companies or PBM's! It's actually Dr's and hospitals. It's not trendy to hate those though.

tzs 2y ago

> This is one of the reasons why health care costs have gone through the roof. I doubt that it has much affect, for two reasons. 1. Looking at graphs of US health care costs over time I don't really see much change in the growth of health care costs during pre-ACA times and post-ACA times. 2. Looking at health care costs of other first world countries, their health care costs over the 50 years have been growing fairly similarly to the way US health care costs having been growing. This suggests that the reasons for most health care cost increases in the US are neither things we do differently than most other first world countries (e.g. more heavily relying on private for-profit insurance companies) nor any relatively recent changes to how we regulate things.

ars 2y ago

> so they buy pharmacies and gouge the costs of cheap medicine to make up for the lost profits. Instead of paying $5 for insulin, they make you pay $60, which helps them hit the 80% rule. Yah, that's not really true. Sure if they can increase healthcare costs, then they can increase premiums, but that also makes them less competitive. But the bigger reason it's not true is that insurance companies don't set the reimbursement rate for drugs in the first places. Instead that's set by PBM's, which are separate companies. Insurance companies hate PBM's because the PBM's prevent the insurance companies from doing exactly like you describe. (This hate translates into a lot of badmouthing which I'm sure you'll find if you lookup PBM's. They get called "middlemen" who take money and don't provide a service - this is just propaganda by insurance companies.) The whole hero worship of Luigi is based on a complete misunderstanding of who actually causes healthcare costs to be high. It's not insurance companies or PBM's! It's actually Dr's and hospitals. It's not trendy to hate those though.