6 ms·

Why can't they just put this money towards rejecting fewer claims?

by fiftyfifty 2y ago

dmm 2y ago
[flagged]
- throwway120385 2y ago
  Isn't profit what the board keeps after they pay for everything including the people in the board's employ? So in that sense the profit margin doesn't mean terribly much because you can always pay more to your senior managers and less to your patients.
  - dmm 2y ago
    The 80/20 rule[0] requires insurance companies to pay out at least 80% of premiums. That's revenue, not profit, and is independent of their costs. So if they were a charity which magically had 0 costs the most payouts could increase is 20%. Healthcare demand is infinite and providers have every incentive to inflate costs and recommend as many services as possible. I don't like our healthcare system but as it is, insurance companies play a necessary role of rationing care and there is no magical fix to claim denials. [0] https://www.healthcare.gov/health-care-law-protections/rate-review/ https://www.healthcare.gov/health-care-law-protections/rate-...
    - ceejayoz 2y ago
      Plenty of that 80% goes to profit, through their extensive network of subsidiaries to capture both ends of the equation. https://news.ycombinator.com/item?id=43016192 https://news.ycombinator.com/item?id=43016192
      - lotsofpulp 2y ago
        You keep claiming managed care organizations are earning outsized profit margins, but the audited financials on their 10-Ks indicate otherwise, as do their subpar annual stock returns. You can either accept that these business do not have a lot of pricing power, and they compete on razor thin profit margins (except UNH, but that is because they sell software and healthcare, not just insurance). Even then, their profit margin is only 5% or so, which is objectively a low profit margins. Or you think there is a massive fraud and a nationwide conspiracy amongst 7 publicly listed businesses (UNH/Elevance/Cigna/CVS/Humana/Centene/Molina), and numerous non profits like Kaiser Permanente and various BCBS affiliated plans (because their premiums are basically the same as the for profit insurers). The easiest thing to do though, is ask yourself why shareholders would accept lower annual returns if their business they own earns so much money? Put their stock tickers in here: https://dqydj.com/stock-return-calculator/ https://dqydj.com/stock-return-calculator/ https://dqydj.com/sp-500-return-calculator/ https://dqydj.com/sp-500-return-calculator/ You would think they could do better than SP500 if they were raking it in. Although, UNH did do better, but that is because they sell more high margin stuff like software and healthcare.
        ceejayoz 2y ago
        > You can either accept that these business do not have a lot of pricing power... I definitely do not accept that assertion. Especially for the big vertically integrated ones like UHC. > Or you think there is a massive fraud and a nationwide conspiracy amongst 7 publicly listed businesses (UNH/Elevance/Cigna/CVS/Humana/Centene/Molina), and numerous non profits like Kaiser Permanente and various BCBS affiliated plans (because their premiums are basically the same as the for profit insurers). Yes? It's a cartel. "Massive fraud" isn't really even in dispute! https://www.nytimes.com/2022/10/08/upshot/medicare-advantage-fraud-allegations.html https://www.nytimes.com/2022/10/08/upshot/medicare-advantage... > Even then, their profit margin is only 5% or so, which is objectively a low profit margins. Walmart's is lower than that. > The easiest thing to do though, is ask yourself why shareholders would accept lower annual returns if their business they own earns so much money? That's why they do stock buybacks. > You would think they could do better than SP500 if they were raking it in. If everyone else wasn't also enshittifying at the same time, sure.
        lotsofpulp 2y ago
        > "Massive fraud" isn't really even in dispute! Good article, and they definitely do skate on the line, but there aren’t any indictments and it doesn’t seem there is any evidence they are colluding. Just lack of enforcement by the feds means it pays off for everyone to break the rules, but even then, the business is not profiting much. >Walmart's is lower than that So? That doesn’t mean 5% is a low profit margin. And the other MCOs are at 3% or less. > That's why they do stock buybacks. The effects of stock buybacks are incorporated into the total return calculation, so not sure what the relevance of this is either. I just don’t see the logical consistency of claiming a business is doing super shady things to earn ridiculous amounts of profit, and then the business not doing better than SP500. Or why insurance premiums at all the non profits would similar to premiums at all the for profits. The more likely and simple answer is that it’s a cutthroat business, where almost all revenue goes out as expenses, and that is why all the premiums are similar, because no one can really cut more costs than they already are.
  - jncfhnb 2y ago
    Profit goes to shareholders, not the board. The board is generally supposed to want more money to shareholders, not internal management. The incentives here are not great though, as being a board member is generally a cushy role for which one does not want to rock the boat. However senior management generally wants to pump the stock price to get comp, not juice their salary. And to pump the stock price, they want money going to shareholders (or growth).
    - philipov 2y ago
      > And to pump the stock price, they want money going to shareholders (or growth). Paying out dividends hasn't been a major factor in stock picking logic for at least 20 years, and rather than real growth, they'd rather pad their numbers by firing people. Shareholders get their money by buying low and selling high, not through something as quaint as long-term investment. https://www.youtube.com/watch?v=-653Z1val8s https://www.youtube.com/watch?v=-653Z1val8s
- StormChaser_5 2y ago
  Depends what their costs are but if all claims would take 85.5 of their premiums with the rest their overhead costs then I think most of their customers would be happy
- franktankbank 2y ago
  They bloat the overall health care system to increase the absolute value of that 80% premium. Efforts to human health are overburdened by exercises of human bureaucracy and frankly obviously intentional bad service.
- NewJazz 2y ago
  We should up that threshold until these companies start posting consistent losses, then ease up. I tried researching this, but couldn't come up with an answer: if an insurance company pays doctors to review and dent claims, does that doctor salary count as "quality improvement activities", or administrative?
- ceejayoz 2y ago
  > Their profit margin is 5.5%. Sure, except they own the pharmacy (https://en.wikipedia.org/wiki/Optum https://en.wikipedia.org/wiki/Optum), the payments solution (https://en.wikipedia.org/wiki/Change_Healthcare https://en.wikipedia.org/wiki/Change_Healthcare), the outpatient surgery centers (https://en.wikipedia.org/wiki/SCA_Health https://en.wikipedia.org/wiki/SCA_Health), the in-home care providers (https://en.wikipedia.org/wiki/Amedisys https://en.wikipedia.org/wiki/Amedisys), and a whopping 10% of the country's doctors - the nation's single largest employer of them (https://www.statnews.com/2024/07/25/united-health-group-medicare-advantage-strategy-doctor-clinic-acquisitions/ https://www.statnews.com/2024/07/25/united-health-group-medi...). (Oh, and they pay their doctors higher rates. 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...) Those are "expenses" for that margin calculation.
  - JumpCrisscross 2y ago
    > Those are "expenses" for that margin calculation Source? They would be expenses for the insurance sub but profits for the consolidated public company. The latter are 22% (gross) and 4% (net). I don’t have a horse in this race. But it seems like the problem is at the level of PBMs and providers more than insurers.
    - ceejayoz 2y ago
      > They would be expenses for the insurance sub... Yes, and that's the subsidiary that has the 80/20 expenses rule. UHC ensures as much of the 80% paid for "patient care" winds up in their other subsidiaries that don't have a profit cap. > But it seems like the problem is at the level of PBMs and providers more than insurers. UHC is both the insurer and the PBM, and they're buying up all the providers they can get their hands on.
      - JumpCrisscross 2y ago
        But we can see the group profits. They’re right at 20 gross and much lower net. You’re arguing they’re double booking profits; that should show more profits. There aren’t more profits. Also, other comments praise Kaiser for being more consolidated. Is your argument care at Kaiser is much worse?
- darth_avocado 2y ago
  If they deny less claims, they’ll need fewer adjusters, admin and customer care staff. They will still have 5.5% profit margins but the CEO will get paid less because the net profit won’t perpetually grow and Wall Street doesn’t like that.
  - dmm 2y ago
    I do not like our healthcare system and would enthusiastically support reform. But your arguments really don't make sense. The UHC CEO made 10M, even if we 10x that to 100M then if the CEO decided to give it all back, UHC could payout << 1% more claims.
  - nradov 2y ago
    If they deny fewer claims then medical expenses will rise for their self funded employer customers, and then those customers will switch their health plans to a competitor like Cigna or Aetna. Most coverage rules are driven by large employers. UHC would be happy to offer a health plan which paid every single claim if that's what employers wanted: it would actually mean higher profits for UHC.
- johnduhart 2y ago
  > Their profit margin is 5.5%. 5.5% of what, dmm? https://www.healthcaredive.com/news/unitedhealth-unh-2024-record-revenue/737477/ https://www.healthcaredive.com/news/unitedhealth-unh-2024-re... > the Minnesota healthcare behemoth reported adjusted profit of $25.7 billion — an all-time record.
  - skyyler 2y ago
    Is there any legal way to remove the leeches from the system? Obviously murdering healthcare CEOs and shareholders isn’t legal, and I wouldn’t endorse that method. Are there alternatives?
    - vkou 2y ago
      Yes, the legal way is to change the laws. Unfortunately that is rolling a boulder uphill, and even if you fire all of Congress (on this issue, you'd need to get rid of all the Republicans and at least a third of the Democrats) and replace it with people who give a crap, all it takes is one executive to stop enforcing the rules.
      - JumpCrisscross 2y ago
        > you'd need to get rid of all the Republicans and at least a third of the Democrats And then most voters: “71% of U.S. adults consider the quality of healthcare they receive to be excellent or good, and 65% say the same of their own coverage. There has been little deviation in these readings since 2001” [1]. [1] https://news.gallup.com/poll/654044/view-healthcare-quality-declines-year-low.aspx https://news.gallup.com/poll/654044/view-healthcare-quality-...
        skyyler 2y ago
        "19% -- say they are satisfied with its cost" From your link.
        ceejayoz 2y ago
        Quality of healthcare and quality of insurance experience are not the same statistic. I'm very satisfied with my healthcare. I am not satisfied with my insurer.
- wahnfrieden 2y ago
  [flagged]
- 7952 2y ago
  Surely the entire point of insurance is that the provider takes the financial risk. That is what they have been paid to do. If they cannot afford to do that through premiums then they should make a loss.
  - nradov 2y ago
    Most commercial health insurers no longer bear much financial risk. Instead they primarily administer health plans on behalf of large self-funded employers. Actual insurance is mostly limited to individual and small group plans, which are a much smaller line of business.
    - lotsofpulp 2y ago
      Some numbers here: https://www.kff.org/report-section/ehbs-2023-section-10-plan-funding/#:~:text=plan%20in%202023.-,SELF%2DFUNDED%20PLANS,61%25)%20%5BFigure%2010.2%5D. https://www.kff.org/report-section/ehbs-2023-section-10-plan... While everyone calls them "health insurers", the industry term is "managed care organizations" (MCOs), which sell a variety of services, which may or may not include healthcare, managed care, insurance, negotiated pricing, and even retail pharmacy services.
sega_sai 2y ago
The company's goal is to satisfy share-holders, not some pesky sick people.
wesselbindt 2y ago
I don't understand, why would they do that?
- hypothesis 2y ago
  For same reason any other insurance company doing it? Those guys are statistically the worst, with no one else being close. Like if your argument being fiduciary duty to rob everyone blind health outcomes be damned, then why say Kaiser is not being sued in to the ground?
  - bobthepanda 2y ago
    This i think depends on where you are with Kaiser; i know folks in Washington have bad times with them.
  - SpicyLemonZest 2y ago
    Kaiser doctors, because they're employees of the same organization that provides the insurance, are much less likely to prescribe treatments that will be denied. Which I like, don't get me wrong, but it's a double-edged sword. Many people with complex or hard-to-treat conditions feel that Kaiser isn't an option for them, because when they need some rare treatment another insurance company might fight you over, Kaiser simply won't prescribe it at all.
    - coloneltcb 2y ago
      My wife is on Kaiser, she was having extreme, persistent back pain. Before she could even talk a specialist, they told her she needed to attend a live webinar about back pain that was scheduled for 3 weeks later...

Why can't they just put this money towards rejecting fewer claims?

dmm 2y ago

[flagged]

throwway120385 2y ago
Isn't profit what the board keeps after they pay for everything including the people in the board's employ? So in that sense the profit margin doesn't mean terribly much because you can always pay more to your senior managers and less to your patients.
- dmm 2y ago
  The 80/20 rule[0] requires insurance companies to pay out at least 80% of premiums. That's revenue, not profit, and is independent of their costs. So if they were a charity which magically had 0 costs the most payouts could increase is 20%. Healthcare demand is infinite and providers have every incentive to inflate costs and recommend as many services as possible. I don't like our healthcare system but as it is, insurance companies play a necessary role of rationing care and there is no magical fix to claim denials. [0] https://www.healthcare.gov/health-care-law-protections/rate-review/ https://www.healthcare.gov/health-care-law-protections/rate-...
  - ceejayoz 2y ago
    Plenty of that 80% goes to profit, through their extensive network of subsidiaries to capture both ends of the equation. https://news.ycombinator.com/item?id=43016192 https://news.ycombinator.com/item?id=43016192
    - lotsofpulp 2y ago
      You keep claiming managed care organizations are earning outsized profit margins, but the audited financials on their 10-Ks indicate otherwise, as do their subpar annual stock returns. You can either accept that these business do not have a lot of pricing power, and they compete on razor thin profit margins (except UNH, but that is because they sell software and healthcare, not just insurance). Even then, their profit margin is only 5% or so, which is objectively a low profit margins. Or you think there is a massive fraud and a nationwide conspiracy amongst 7 publicly listed businesses (UNH/Elevance/Cigna/CVS/Humana/Centene/Molina), and numerous non profits like Kaiser Permanente and various BCBS affiliated plans (because their premiums are basically the same as the for profit insurers). The easiest thing to do though, is ask yourself why shareholders would accept lower annual returns if their business they own earns so much money? Put their stock tickers in here: https://dqydj.com/stock-return-calculator/ https://dqydj.com/stock-return-calculator/ https://dqydj.com/sp-500-return-calculator/ https://dqydj.com/sp-500-return-calculator/ You would think they could do better than SP500 if they were raking it in. Although, UNH did do better, but that is because they sell more high margin stuff like software and healthcare.
      - ceejayoz 2y ago
        > You can either accept that these business do not have a lot of pricing power... I definitely do not accept that assertion. Especially for the big vertically integrated ones like UHC. > Or you think there is a massive fraud and a nationwide conspiracy amongst 7 publicly listed businesses (UNH/Elevance/Cigna/CVS/Humana/Centene/Molina), and numerous non profits like Kaiser Permanente and various BCBS affiliated plans (because their premiums are basically the same as the for profit insurers). Yes? It's a cartel. "Massive fraud" isn't really even in dispute! https://www.nytimes.com/2022/10/08/upshot/medicare-advantage-fraud-allegations.html https://www.nytimes.com/2022/10/08/upshot/medicare-advantage... > Even then, their profit margin is only 5% or so, which is objectively a low profit margins. Walmart's is lower than that. > The easiest thing to do though, is ask yourself why shareholders would accept lower annual returns if their business they own earns so much money? That's why they do stock buybacks. > You would think they could do better than SP500 if they were raking it in. If everyone else wasn't also enshittifying at the same time, sure.
        lotsofpulp 2y ago
        > "Massive fraud" isn't really even in dispute! Good article, and they definitely do skate on the line, but there aren’t any indictments and it doesn’t seem there is any evidence they are colluding. Just lack of enforcement by the feds means it pays off for everyone to break the rules, but even then, the business is not profiting much. >Walmart's is lower than that So? That doesn’t mean 5% is a low profit margin. And the other MCOs are at 3% or less. > That's why they do stock buybacks. The effects of stock buybacks are incorporated into the total return calculation, so not sure what the relevance of this is either. I just don’t see the logical consistency of claiming a business is doing super shady things to earn ridiculous amounts of profit, and then the business not doing better than SP500. Or why insurance premiums at all the non profits would similar to premiums at all the for profits. The more likely and simple answer is that it’s a cutthroat business, where almost all revenue goes out as expenses, and that is why all the premiums are similar, because no one can really cut more costs than they already are.
- jncfhnb 2y ago
  Profit goes to shareholders, not the board. The board is generally supposed to want more money to shareholders, not internal management. The incentives here are not great though, as being a board member is generally a cushy role for which one does not want to rock the boat. However senior management generally wants to pump the stock price to get comp, not juice their salary. And to pump the stock price, they want money going to shareholders (or growth).
  - philipov 2y ago
    > And to pump the stock price, they want money going to shareholders (or growth). Paying out dividends hasn't been a major factor in stock picking logic for at least 20 years, and rather than real growth, they'd rather pad their numbers by firing people. Shareholders get their money by buying low and selling high, not through something as quaint as long-term investment. https://www.youtube.com/watch?v=-653Z1val8s https://www.youtube.com/watch?v=-653Z1val8s
StormChaser_5 2y ago
Depends what their costs are but if all claims would take 85.5 of their premiums with the rest their overhead costs then I think most of their customers would be happy
franktankbank 2y ago
They bloat the overall health care system to increase the absolute value of that 80% premium. Efforts to human health are overburdened by exercises of human bureaucracy and frankly obviously intentional bad service.
NewJazz 2y ago
We should up that threshold until these companies start posting consistent losses, then ease up. I tried researching this, but couldn't come up with an answer: if an insurance company pays doctors to review and dent claims, does that doctor salary count as "quality improvement activities", or administrative?
ceejayoz 2y ago
> Their profit margin is 5.5%. Sure, except they own the pharmacy (https://en.wikipedia.org/wiki/Optum https://en.wikipedia.org/wiki/Optum), the payments solution (https://en.wikipedia.org/wiki/Change_Healthcare https://en.wikipedia.org/wiki/Change_Healthcare), the outpatient surgery centers (https://en.wikipedia.org/wiki/SCA_Health https://en.wikipedia.org/wiki/SCA_Health), the in-home care providers (https://en.wikipedia.org/wiki/Amedisys https://en.wikipedia.org/wiki/Amedisys), and a whopping 10% of the country's doctors - the nation's single largest employer of them (https://www.statnews.com/2024/07/25/united-health-group-medicare-advantage-strategy-doctor-clinic-acquisitions/ https://www.statnews.com/2024/07/25/united-health-group-medi...). (Oh, and they pay their doctors higher rates. 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...) Those are "expenses" for that margin calculation.
- JumpCrisscross 2y ago
  > Those are "expenses" for that margin calculation Source? They would be expenses for the insurance sub but profits for the consolidated public company. The latter are 22% (gross) and 4% (net). I don’t have a horse in this race. But it seems like the problem is at the level of PBMs and providers more than insurers.
  - ceejayoz 2y ago
    > They would be expenses for the insurance sub... Yes, and that's the subsidiary that has the 80/20 expenses rule. UHC ensures as much of the 80% paid for "patient care" winds up in their other subsidiaries that don't have a profit cap. > But it seems like the problem is at the level of PBMs and providers more than insurers. UHC is both the insurer and the PBM, and they're buying up all the providers they can get their hands on.
    - JumpCrisscross 2y ago
      But we can see the group profits. They’re right at 20 gross and much lower net. You’re arguing they’re double booking profits; that should show more profits. There aren’t more profits. Also, other comments praise Kaiser for being more consolidated. Is your argument care at Kaiser is much worse?
darth_avocado 2y ago
If they deny less claims, they’ll need fewer adjusters, admin and customer care staff. They will still have 5.5% profit margins but the CEO will get paid less because the net profit won’t perpetually grow and Wall Street doesn’t like that.
- dmm 2y ago
  I do not like our healthcare system and would enthusiastically support reform. But your arguments really don't make sense. The UHC CEO made 10M, even if we 10x that to 100M then if the CEO decided to give it all back, UHC could payout << 1% more claims.
- nradov 2y ago
  If they deny fewer claims then medical expenses will rise for their self funded employer customers, and then those customers will switch their health plans to a competitor like Cigna or Aetna. Most coverage rules are driven by large employers. UHC would be happy to offer a health plan which paid every single claim if that's what employers wanted: it would actually mean higher profits for UHC.
johnduhart 2y ago
> Their profit margin is 5.5%. 5.5% of what, dmm? https://www.healthcaredive.com/news/unitedhealth-unh-2024-record-revenue/737477/ https://www.healthcaredive.com/news/unitedhealth-unh-2024-re... > the Minnesota healthcare behemoth reported adjusted profit of $25.7 billion — an all-time record.
- skyyler 2y ago
  Is there any legal way to remove the leeches from the system? Obviously murdering healthcare CEOs and shareholders isn’t legal, and I wouldn’t endorse that method. Are there alternatives?
  - vkou 2y ago
    Yes, the legal way is to change the laws. Unfortunately that is rolling a boulder uphill, and even if you fire all of Congress (on this issue, you'd need to get rid of all the Republicans and at least a third of the Democrats) and replace it with people who give a crap, all it takes is one executive to stop enforcing the rules.
    - JumpCrisscross 2y ago
      > you'd need to get rid of all the Republicans and at least a third of the Democrats And then most voters: “71% of U.S. adults consider the quality of healthcare they receive to be excellent or good, and 65% say the same of their own coverage. There has been little deviation in these readings since 2001” [1]. [1] https://news.gallup.com/poll/654044/view-healthcare-quality-declines-year-low.aspx https://news.gallup.com/poll/654044/view-healthcare-quality-...
      - skyyler 2y ago
        "19% -- say they are satisfied with its cost" From your link.
      - ceejayoz 2y ago
        Quality of healthcare and quality of insurance experience are not the same statistic. I'm very satisfied with my healthcare. I am not satisfied with my insurer.
wahnfrieden 2y ago
[flagged]
7952 2y ago
Surely the entire point of insurance is that the provider takes the financial risk. That is what they have been paid to do. If they cannot afford to do that through premiums then they should make a loss.
- nradov 2y ago
  Most commercial health insurers no longer bear much financial risk. Instead they primarily administer health plans on behalf of large self-funded employers. Actual insurance is mostly limited to individual and small group plans, which are a much smaller line of business.
  - lotsofpulp 2y ago
    Some numbers here: https://www.kff.org/report-section/ehbs-2023-section-10-plan-funding/#:~:text=plan%20in%202023.-,SELF%2DFUNDED%20PLANS,61%25)%20%5BFigure%2010.2%5D. https://www.kff.org/report-section/ehbs-2023-section-10-plan... While everyone calls them "health insurers", the industry term is "managed care organizations" (MCOs), which sell a variety of services, which may or may not include healthcare, managed care, insurance, negotiated pricing, and even retail pharmacy services.

sega_sai 2y ago

The company's goal is to satisfy share-holders, not some pesky sick people.

wesselbindt 2y ago

I don't understand, why would they do that?

hypothesis 2y ago
For same reason any other insurance company doing it? Those guys are statistically the worst, with no one else being close. Like if your argument being fiduciary duty to rob everyone blind health outcomes be damned, then why say Kaiser is not being sued in to the ground?
- bobthepanda 2y ago
  This i think depends on where you are with Kaiser; i know folks in Washington have bad times with them.
- SpicyLemonZest 2y ago
  Kaiser doctors, because they're employees of the same organization that provides the insurance, are much less likely to prescribe treatments that will be denied. Which I like, don't get me wrong, but it's a double-edged sword. Many people with complex or hard-to-treat conditions feel that Kaiser isn't an option for them, because when they need some rare treatment another insurance company might fight you over, Kaiser simply won't prescribe it at all.
  - coloneltcb 2y ago
    My wife is on Kaiser, she was having extreme, persistent back pain. Before she could even talk a specialist, they told her she needed to attend a live webinar about back pain that was scheduled for 3 weeks later...