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Insurance profit is limited to a percentage of what they pay out. So the more they pay, the more money they make.
by SoftTalker 1y ago
Insurance profit is limited to a percentage of what they pay out. So the more they pay, the more money they make.
- frollogaston 1y agoOh, that's important info. Also such a rule suggests that health insurance isn't a competitive market.
- littlestymaar 1y agoThere's no such thing as a “competitive market” in the real world.
- samdoesnothing 1y agoYes there is.
- littlestymaar 1y agoName a single one then. It's funny to see that this was my most downvoted comment ever on HN. Looks like blasphemy against the “free market” religion isn't tolerated here.
- frollogaston 1y agoAll the other kinds of insurance
- littlestymaar 1y agoAh yes, like the health insurance market, so competitive it took a CEO murder to fix abusive practices from the dominant actor. How compelling of an example, really.
- frollogaston 1y agoTo clarify, "other kinds of insurance" means not health insurance
- ninalanyon 1y agoYou first have to agree on a definition of free in this context. When Adam Smith was writing the Wealth of Nations most of the transactions in the market were between entities with more or less comparable power. Local people bought stuff from local suppliers. This is very much not the case any more when it comes to transactions involving private individuals on one side and corporations on the other.
- frollogaston 1y agoThis is true but beside the point. I don't care either way what you count as a "free" market or whether such a thing exists, you can just say that health insurance is less free than almost any other market.
- itsmek 1y agoGlobal commodities are not competitive?
- littlestymaar 1y agoWhat commodity isn't ruled by intergovernmental agreements, a cartel, a monopsony or something else? Please name just one.
- itsmek 1y agoGold
- littlestymaar 1y agoGold isn't really a commodity. It's mostly used and traded as an asset.
- estearum 1y agoAlso the largest insurers increasingly own the doctors you’re seeing too. Also the pharmacy you get your drugs from. Also the entity that negotiates prices between pharma companies and your insurer. More healthcare consumption = better, across the board
- doctorpangloss 1y agoUh, no… they want to deny claims. The best situation for insurers is that you are healthy for a while, then abruptly die of something that cannot be treated.
- frollogaston 1y agoThey are accepting claims that are way more expensive than in any other country, so I don't think this is their game
- estearum 1y agoUh no, they don't. Not if they're also the ones who provide healthcare. Simply denying claims isn't even remotely close to the financially (and obviously not the politically) optimal strategy. The optimal strategy if you own both the insurer and the provider is a combination of premiums, copays, deductibles, and maybe even some totally unnecessary care to drive up volume. Lower margin on dramatically higher volume is still dramatically more money. Lower margin actually provides political cover for your $400 billion revenue years.
- hibikir 1y agoEven when it's not the insurer, it's at least a hospital. Many a doctor around me that used to have a private practice sold to one of the hospital chains, as they promised more money than by owning, solely due to superior collective action advantages. A large insurer can bully a private practice into cutting costs, but a hospital network that handles 40% of ERs in the metro area? The insurance company can lose. So everyone makes more money but the people paying insurance.
- 1y ago
- VirusNewbie 1y agowow, why would they cap it that way? that makes no sense.
- darkerside 1y agoIt makes a ton of sense in theory. In a fair market, you would want to prevent the insurer from charging super high premiums that let them make a large profit relative to the cost of care provided. The problem is that it doesn't stop there. There is a second order effect.