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> Insurers make even less money than Pharma companies do. In the whole or in relative terms? Source, even if personal or anecdotal? I am willing to consider y

> Insurers make even less money than Pharma companies do. In the whole or in relative terms? Source, even if personal or anecdotal? I am willing to consider your point because, to be fair, the article doesn't show any data that indicts the insurers. They just blame them at the end without any evidence. > all health care spending goes to companies that deliver health services directly. Well, that wouldn't explain why medication alone is more expensive in America, right? But accepting your argument: is it because of greed and oligopolies, incompetence or excess of regulation?

tptacek 1y ago
Hah, I wouldn't need "personal" or "anecdotal" evidence for this; it's right there in black and white in the NHE data; literally in the first row of the sheet. I posted about this across the thread.
mothballed 1y ago
No, he's right. Insurance profits are legally capped, and this keeps them from representing an outsized fraction of spending even in cases when they might partially be the driver behind it. They have to spend N% of their income on actual health care benefits. They're not absurdly high, you could look them up, but I don't think it's possible to exceed something like 10% profit. This means the only way for insurance companies to increase profits is to increase the price of healthcare, and they have zero incentive to try and lower the amount of money they pay out for healthcare which might otherwise have been split between profits and lower premiums.
- tptacek 1y ago
  My guess is that if you found NHE data from before the ACA cap insurance would remain a small component of overall health spending (the ACA was very important and I am in no way downplaying it). Mostly I'm saying: you don't have to axiomatically derive why this is. Medicare collects and synthesizes this data.
  - mothballed 1y ago
    How would you derive it from medicare? Isn't medicare supposed to be non-profit? They should occupy 0% of health care spending once you remove the pass-through transfer payments that go back into medical care, minus some administration overhead.
    - tptacek 1y ago
      The CMS collects these statistics in the same way that the BLS collects labor statistics. It has nothing specifically to do with the part of CMS that directly administers Medicare. The point is that we have very high quality data on this stuff.
      - mikeyouse 1y ago
        I’d like to see a deeper analysis here though. Insurers don’t make that much money on a percentage profit basis, but profit’s derived after expenses. Hypothetically, their sheer existence could be a huge burden to everyone involved, their costs to employ legions of make-work employees processing/rejecting/questioning claims could result in low profits even if the work isn’t necessary, they could take advantage of transfer pricing to hide profits in their wholly owned but separately reported PBMs…
        tptacek 1y ago
        I'm not even looking at profit; you don't have to, because insurance is such a small component of US health spending. This is the value of having the NHE data in front of you in discussions like this; we don't even have to debate how much of US health insurance is administered by nonprofit firms, or whether for-profit firms are gouging, because the whole thing is too small a component to matter.
        mothballed 1y ago
        Not sure you're understanding. The insurance companies can't gouge by jacking up profits because that's illegal. They can't ever become a big component of healthcare spending nominally, but they can be the actor that causes a big component of health care costs to baloon. The way insurance companies might gouge is by jacking up healthcare prices, since they act as a government-captured oligopoly block and thus don't have normal free market forces. That is how they could increase nominal profits without increasing % profits. They could jack up health care prices massively while only being measured as a small % of the total. Whether this is actually the case or not, I'm not sure, but the incentives demand that they do it if they can. It should be impossible to pull off such a cartel in any unregulated market, but due to the way healthcare works it seems more likely it could be true.

tptacek 1y ago

Hah, I wouldn't need "personal" or "anecdotal" evidence for this; it's right there in black and white in the NHE data; literally in the first row of the sheet. I posted about this across the thread.

mothballed 1y ago

No, he's right. Insurance profits are legally capped, and this keeps them from representing an outsized fraction of spending even in cases when they might partially be the driver behind it. They have to spend N% of their income on actual health care benefits. They're not absurdly high, you could look them up, but I don't think it's possible to exceed something like 10% profit. This means the only way for insurance companies to increase profits is to increase the price of healthcare, and they have zero incentive to try and lower the amount of money they pay out for healthcare which might otherwise have been split between profits and lower premiums.

tptacek 1y ago
My guess is that if you found NHE data from before the ACA cap insurance would remain a small component of overall health spending (the ACA was very important and I am in no way downplaying it). Mostly I'm saying: you don't have to axiomatically derive why this is. Medicare collects and synthesizes this data.
- mothballed 1y ago
  How would you derive it from medicare? Isn't medicare supposed to be non-profit? They should occupy 0% of health care spending once you remove the pass-through transfer payments that go back into medical care, minus some administration overhead.
  - tptacek 1y ago
    The CMS collects these statistics in the same way that the BLS collects labor statistics. It has nothing specifically to do with the part of CMS that directly administers Medicare. The point is that we have very high quality data on this stuff.
    - mikeyouse 1y ago
      I’d like to see a deeper analysis here though. Insurers don’t make that much money on a percentage profit basis, but profit’s derived after expenses. Hypothetically, their sheer existence could be a huge burden to everyone involved, their costs to employ legions of make-work employees processing/rejecting/questioning claims could result in low profits even if the work isn’t necessary, they could take advantage of transfer pricing to hide profits in their wholly owned but separately reported PBMs…
      - tptacek 1y ago
        I'm not even looking at profit; you don't have to, because insurance is such a small component of US health spending. This is the value of having the NHE data in front of you in discussions like this; we don't even have to debate how much of US health insurance is administered by nonprofit firms, or whether for-profit firms are gouging, because the whole thing is too small a component to matter.
        mothballed 1y ago
        Not sure you're understanding. The insurance companies can't gouge by jacking up profits because that's illegal. They can't ever become a big component of healthcare spending nominally, but they can be the actor that causes a big component of health care costs to baloon. The way insurance companies might gouge is by jacking up healthcare prices, since they act as a government-captured oligopoly block and thus don't have normal free market forces. That is how they could increase nominal profits without increasing % profits. They could jack up health care prices massively while only being measured as a small % of the total. Whether this is actually the case or not, I'm not sure, but the incentives demand that they do it if they can. It should be impossible to pull off such a cartel in any unregulated market, but due to the way healthcare works it seems more likely it could be true.