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>When you point out that, for example, health insurance profits are low single digit percentage of overall healthcare costs Do you have any source for this? I

>When you point out that, for example, health insurance profits are low single digit percentage of overall healthcare costs Do you have any source for this? I’m assuming (because HN) that you had the USA in mind, and it doesn’t pass the sniff test for me given that US insurance fees are more than single digit percentages higher than other high quality care countries with privatised healthcare systems

nradov 2y ago
You can literally read the 10-K statement from any of several publicly traded medical insurance companies. Average industry profit margin is about 3%. There are also some non-profit insurers but their fees generally aren't any lower.
jwagenet 2y ago
The issue in the US is that there is no price regulation for different procedures (other than Medicare), plus the providers (hospital chains) are intertwined* with insurance. The end result is everyone charges as much as they can and the premiums need to be high, even if insurance technically negotiates the rates down from the “sticker” price. Insurance companies are willing to take a small percent of profit because there is so much money being taken from customers. * https://www.statnews.com/2024/11/25/unitedhealth-higher-payments-optum-providers-converts-expenses-to-profits/ https://www.statnews.com/2024/11/25/unitedhealth-higher-paym...
- pizza 2y ago
  Right, low profit margins are not a valid argument for why it’s invalid for consumers to suspect there is some inefficiency compared to other markets. Saying the system must be efficient because profits are low is like saying boiling water should be as cheap as 98->99 degrees C because it’s just +1 C - profit margins aren’t as good an indicator of whether there is an unusual amount of disorder in the system, compared to extremely context-sensitive resource costs for hypothetically identical systems.
  - EraYaN 2y ago
    I think the point is more that the insurers are not the real target for your wrath. You should not motivate your congress person to do something about the insurance necessarily. It's probably better to look at a level further up the chain for example.
lotsofpulp 2y ago
These are all the publicly listed health insurers in the US, with public financials, so the numbers come from the 10-Q and 10-K reports filed with the SEC. Note that the first one, United Health, has slightly higher profit margins than the rest because UNH has an enormous business selling healthcare itself, not just insurance (they own a lot of doctor groups and outpatient clinics and employ a lot of doctors and nurses). https://www.macrotrends.net/stocks/charts/UNH/unitedhealth-group/profit-margins https://www.macrotrends.net/stocks/charts/UNH/unitedhealth-g... https://www.macrotrends.net/stocks/charts/ELV/elevance-health/profit-margins https://www.macrotrends.net/stocks/charts/ELV/elevance-healt... https://www.macrotrends.net/stocks/charts/CI/cigna-group/profit-margins https://www.macrotrends.net/stocks/charts/CI/cigna-group/pro... https://www.macrotrends.net/stocks/charts/CVS/cvs-health/profit-margins https://www.macrotrends.net/stocks/charts/CVS/cvs-health/pro... https://www.macrotrends.net/stocks/charts/HUM/humana/profit-margins https://www.macrotrends.net/stocks/charts/HUM/humana/profit-... https://www.macrotrends.net/stocks/charts/CNC/centene/profit-margins https://www.macrotrends.net/stocks/charts/CNC/centene/profit... https://www.macrotrends.net/stocks/charts/MOH/molina-healthcare/profit-margins https://www.macrotrends.net/stocks/charts/MOH/molina-healthc... The other big insurers will be Kaiser Foundation Health Plan and various plans franchised with Blue Cross Blue Shield, but they are all non profit. https://projects.propublica.org/nonprofits/organizations/941340523 https://projects.propublica.org/nonprofits/organizations/941...
- nradov 2y ago
  Some Blue Cross Blue Shield Association members are for-profit corporations now. As for UnitedHealth Group, much of their profit comes from a large software business which is separate from their insurance, care delivery, and PBM businesses. If that software business was spun out it would be one of the 20 largest US tech companies.
  - lotsofpulp 2y ago
    > Some Blue Cross Blue Shield Association members are for-profit corporations now. In this list, I couldn’t find a single for profit BCBS licensee other than Elevance. They all seem to be mutuals/member owned/non profit. https://en.wikipedia.org/wiki/Blue_Cross_Blue_Shield_Association https://en.wikipedia.org/wiki/Blue_Cross_Blue_Shield_Associa... > As for UnitedHealth Group, much of their profit comes from a large software business which is separate from their insurance, care delivery, and PBM businesses. If that software business was spun out it would be one of the 20 largest US tech companies. Interesting, I didn’t know UNH sold software!
jfengel 2y ago
Part of the problem is that the existence of the middle man adds a lot of costs: insurance company salaries, their executives, doctor's office billing coding, advertising, etc. The shareholders take home only a fraction. But a lot of money gets spent that simply doesn't need to be. Other countries avoid the deadweight loss of the middle man.
- lotsofpulp 2y ago
  The genius of the US way is that the politicians avoid the heat when healthcare coverage is denied. Whereas UK and Canadian politicians have to answer to their constituents. Of course, now that getting murdered is on the table, the US health insurance executives might want to up their compensation.
  - gunian 2y ago
    no offence but that murder had nothing to do with what is right or caring for the people just a game same reason trains got graffiti on them. At most a beautiful lesson in the power that comes with controlling the narrative
  - gruez 2y ago
    > Whereas UK and Canadian politicians have to answer to their constituents. Yeah, and "politicians have to answer to their constituents" is how we got the failed insurance markets in California and Florida. This thread has now gone full circle.
    - lotsofpulp 2y ago
      That is the problem with conflating insurance and subsidy. To buy votes, politicians sell “insurance”, but in reality it is a subsidy to a specific group of taxpayers. When a government directly pays for healthcare, it can’t be called insurance, and so limits to the subsidy are easily attributed to the government leaders. Whereas, if a government has the population buy “insurance” from non governmental entities, then it can pretend (for the layperson) that it isn’t a government subsidy and so the laypeople can blame limits of the subsidy on someone else. Obviously, health insurance in the US is far from health insurance and premiums are closer to taxes being paid rather than premiums for one’s own health risks. That isn’t so true in property and casualty insurance, at least not until governments like California step in.
bruce511 2y ago
Insurance fees are not high because the insurance companies are making huge profits. They're high because providers are making huge profits. Now granted, they may ultimately be the same thing, but that's a different discussion [1] In the context of housing (fires, hurricanes etc) insurance is expensive because housing is expensive to build. [1] insurance companies have to invest their income somewhere. It makes sense to choose companies will high returns. Which includes some health care providers. Which can basically change whatever they like because of structural reasons that have been well discussed.
- Newlaptop 2y ago
  > Insurance fees are not high because the insurance companies are making huge profits. United Healthcare alone made $23,000,000,000 in profit in 2023. Health insurance companies have collectively made $371 billion in profits since the passage of the Affordable Care Act. Property & Liability insurance (home, car, etc) have relatively modest profit margins, but health insurance companies absolutely are making huge profits.
  - chii 2y ago
    > alone made $23,000,000,000 in profit in 2023 why is this number considered huge? What measure are you using? These absolute numbers are meaningless, because you have to put it into context. That's why profit margin is what analysts use, not the absolute number. If i changed those figures to: they made $77 per person, per year in the USA for providing healthcare services, does that still seem as big? Or is it now reasonable?
    - slaw 2y ago
      $23,000,000,000 profit/29 million insured makes $793 profit per insured person.
      - lordnacho 2y ago
        That's huge isn't it? $800 bucks in profit per customer? What does Apple make? Or Unilever?
School-Cotton 2y ago
That’s because healthcare is unusually expensive in the US, not because insurers’ profit margins are unusually high.

nradov 2y ago

You can literally read the 10-K statement from any of several publicly traded medical insurance companies. Average industry profit margin is about 3%. There are also some non-profit insurers but their fees generally aren't any lower.

jwagenet 2y ago

The issue in the US is that there is no price regulation for different procedures (other than Medicare), plus the providers (hospital chains) are intertwined* with insurance. The end result is everyone charges as much as they can and the premiums need to be high, even if insurance technically negotiates the rates down from the “sticker” price. Insurance companies are willing to take a small percent of profit because there is so much money being taken from customers. * https://www.statnews.com/2024/11/25/unitedhealth-higher-payments-optum-providers-converts-expenses-to-profits/ https://www.statnews.com/2024/11/25/unitedhealth-higher-paym...

pizza 2y ago
Right, low profit margins are not a valid argument for why it’s invalid for consumers to suspect there is some inefficiency compared to other markets. Saying the system must be efficient because profits are low is like saying boiling water should be as cheap as 98->99 degrees C because it’s just +1 C - profit margins aren’t as good an indicator of whether there is an unusual amount of disorder in the system, compared to extremely context-sensitive resource costs for hypothetically identical systems.
- EraYaN 2y ago
  I think the point is more that the insurers are not the real target for your wrath. You should not motivate your congress person to do something about the insurance necessarily. It's probably better to look at a level further up the chain for example.

lotsofpulp 2y ago

These are all the publicly listed health insurers in the US, with public financials, so the numbers come from the 10-Q and 10-K reports filed with the SEC. Note that the first one, United Health, has slightly higher profit margins than the rest because UNH has an enormous business selling healthcare itself, not just insurance (they own a lot of doctor groups and outpatient clinics and employ a lot of doctors and nurses). https://www.macrotrends.net/stocks/charts/UNH/unitedhealth-group/profit-margins https://www.macrotrends.net/stocks/charts/UNH/unitedhealth-g... https://www.macrotrends.net/stocks/charts/ELV/elevance-health/profit-margins https://www.macrotrends.net/stocks/charts/ELV/elevance-healt... https://www.macrotrends.net/stocks/charts/CI/cigna-group/profit-margins https://www.macrotrends.net/stocks/charts/CI/cigna-group/pro... https://www.macrotrends.net/stocks/charts/CVS/cvs-health/profit-margins https://www.macrotrends.net/stocks/charts/CVS/cvs-health/pro... https://www.macrotrends.net/stocks/charts/HUM/humana/profit-margins https://www.macrotrends.net/stocks/charts/HUM/humana/profit-... https://www.macrotrends.net/stocks/charts/CNC/centene/profit-margins https://www.macrotrends.net/stocks/charts/CNC/centene/profit... https://www.macrotrends.net/stocks/charts/MOH/molina-healthcare/profit-margins https://www.macrotrends.net/stocks/charts/MOH/molina-healthc... The other big insurers will be Kaiser Foundation Health Plan and various plans franchised with Blue Cross Blue Shield, but they are all non profit. https://projects.propublica.org/nonprofits/organizations/941340523 https://projects.propublica.org/nonprofits/organizations/941...

nradov 2y ago
Some Blue Cross Blue Shield Association members are for-profit corporations now. As for UnitedHealth Group, much of their profit comes from a large software business which is separate from their insurance, care delivery, and PBM businesses. If that software business was spun out it would be one of the 20 largest US tech companies.
- lotsofpulp 2y ago
  > Some Blue Cross Blue Shield Association members are for-profit corporations now. In this list, I couldn’t find a single for profit BCBS licensee other than Elevance. They all seem to be mutuals/member owned/non profit. https://en.wikipedia.org/wiki/Blue_Cross_Blue_Shield_Association https://en.wikipedia.org/wiki/Blue_Cross_Blue_Shield_Associa... > As for UnitedHealth Group, much of their profit comes from a large software business which is separate from their insurance, care delivery, and PBM businesses. If that software business was spun out it would be one of the 20 largest US tech companies. Interesting, I didn’t know UNH sold software!

jfengel 2y ago

Part of the problem is that the existence of the middle man adds a lot of costs: insurance company salaries, their executives, doctor's office billing coding, advertising, etc. The shareholders take home only a fraction. But a lot of money gets spent that simply doesn't need to be. Other countries avoid the deadweight loss of the middle man.

lotsofpulp 2y ago
The genius of the US way is that the politicians avoid the heat when healthcare coverage is denied. Whereas UK and Canadian politicians have to answer to their constituents. Of course, now that getting murdered is on the table, the US health insurance executives might want to up their compensation.
- gunian 2y ago
  no offence but that murder had nothing to do with what is right or caring for the people just a game same reason trains got graffiti on them. At most a beautiful lesson in the power that comes with controlling the narrative
- gruez 2y ago
  > Whereas UK and Canadian politicians have to answer to their constituents. Yeah, and "politicians have to answer to their constituents" is how we got the failed insurance markets in California and Florida. This thread has now gone full circle.
  - lotsofpulp 2y ago
    That is the problem with conflating insurance and subsidy. To buy votes, politicians sell “insurance”, but in reality it is a subsidy to a specific group of taxpayers. When a government directly pays for healthcare, it can’t be called insurance, and so limits to the subsidy are easily attributed to the government leaders. Whereas, if a government has the population buy “insurance” from non governmental entities, then it can pretend (for the layperson) that it isn’t a government subsidy and so the laypeople can blame limits of the subsidy on someone else. Obviously, health insurance in the US is far from health insurance and premiums are closer to taxes being paid rather than premiums for one’s own health risks. That isn’t so true in property and casualty insurance, at least not until governments like California step in.

bruce511 2y ago

Insurance fees are not high because the insurance companies are making huge profits. They're high because providers are making huge profits. Now granted, they may ultimately be the same thing, but that's a different discussion [1] In the context of housing (fires, hurricanes etc) insurance is expensive because housing is expensive to build. [1] insurance companies have to invest their income somewhere. It makes sense to choose companies will high returns. Which includes some health care providers. Which can basically change whatever they like because of structural reasons that have been well discussed.

Newlaptop 2y ago
> Insurance fees are not high because the insurance companies are making huge profits. United Healthcare alone made $23,000,000,000 in profit in 2023. Health insurance companies have collectively made $371 billion in profits since the passage of the Affordable Care Act. Property & Liability insurance (home, car, etc) have relatively modest profit margins, but health insurance companies absolutely are making huge profits.
- chii 2y ago
  > alone made $23,000,000,000 in profit in 2023 why is this number considered huge? What measure are you using? These absolute numbers are meaningless, because you have to put it into context. That's why profit margin is what analysts use, not the absolute number. If i changed those figures to: they made $77 per person, per year in the USA for providing healthcare services, does that still seem as big? Or is it now reasonable?
  - slaw 2y ago
    $23,000,000,000 profit/29 million insured makes $793 profit per insured person.
    - lordnacho 2y ago
      That's huge isn't it? $800 bucks in profit per customer? What does Apple make? Or Unilever?

School-Cotton 2y ago

That’s because healthcare is unusually expensive in the US, not because insurers’ profit margins are unusually high.