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> Sure wish there was a system that just did that, without trying to also generate insane profits off it. Health insurance companies in the US must pay 80% of

> Sure wish there was a system that just did that, without trying to also generate insane profits off it. Health insurance companies in the US must pay 80% of premiums to providers. All their overhead (e.g. their accountants and actuaries and so on) comes out of the remaining 20%. What's left is their profit. People have this fantasy that all the money we spend on healthcare is secretly going to greedy insurance companies while doctors struggle to get by. But insurance company profits are a drop in the bucket. The real villains are the doctors who recommend expensive MRIs and act like it's a complete surprise that the bill they give you is so high. And then go lobby the government to limit their competition. I would love to have a doctor in france look over my radiology and tell me if I have cancer. But that's illegal, I need to hire an American. Coincidentally, the average radiologist in San Francisco makes $660,000/year (about $400/hour).

jodrellblank 1y ago
Their overhead (e.g. their accountants and actuaries and so on) spend a lot of time inserting paperwork and delays in between hospitals and patients, fighting hospital invoices and fighting patient claims, doing marketing, and any profit the insurance company makes is money customers "spent on healthcare" which didn't end up being spent on anyone's healthcare. > "Health insurance companies in the US must pay 80% of premiums to providers." How was that figure decided upon, and why isn't it higher? Why isn't it "pay overheads and salaries, and return the rest to the customers"?
- ChadNauseam 1y ago
  The benefits of allowing people to make money by starting businesses are a separate discussion. I only meant to say that insurance companies are already legally prohibited from making "insane profits". But to answer your question, there are many people looking to invest their time and money into profitable enterprises. Because insurance is a good that is very beneficial for society, we want people to invest in making it a thing. Therefore, we set up a system where the people who invested in its creation get a tiny fraction of the benefit it generates. There are many areas of life where this works great, like providing food and shelter, and I guess it wasn't obvious that insurance would be an exception for some reason.
- nradov 1y ago
  The actual minimum medical loss ratio is 85% for most large health plans. In practice most of the large payers are at a higher ratio due to competitive pressures. As to how that figure was decided upon, when Congress passed the Affordable Care Act (Obamacare) they just picked a number that seemed reasonable — it wasn't based on a quantitative economic analysis or anything like that. https://www.cms.gov/marketplace/private-health-insurance/medical-loss-ratio https://www.cms.gov/marketplace/private-health-insurance/med...
FireBeyond 1y ago
It's almost as if, then, providers know they can push their rates up, and reimbursement rates go up, since all that means is that premiums go up. And by a stunning coincidence, how much that 20% is goes up. And then they buy/create PBMs which aren't covered by those limitations, and then force their customers into using them. "Oh, you want a convenient 90 day refill? Sure. If you go through our wholly-owned mail order pharmacy. From your pharmacy? No. You can keep going there every 30 days for your meds."

jodrellblank 1y ago

Their overhead (e.g. their accountants and actuaries and so on) spend a lot of time inserting paperwork and delays in between hospitals and patients, fighting hospital invoices and fighting patient claims, doing marketing, and any profit the insurance company makes is money customers "spent on healthcare" which didn't end up being spent on anyone's healthcare. > "Health insurance companies in the US must pay 80% of premiums to providers." How was that figure decided upon, and why isn't it higher? Why isn't it "pay overheads and salaries, and return the rest to the customers"?

ChadNauseam 1y ago
The benefits of allowing people to make money by starting businesses are a separate discussion. I only meant to say that insurance companies are already legally prohibited from making "insane profits". But to answer your question, there are many people looking to invest their time and money into profitable enterprises. Because insurance is a good that is very beneficial for society, we want people to invest in making it a thing. Therefore, we set up a system where the people who invested in its creation get a tiny fraction of the benefit it generates. There are many areas of life where this works great, like providing food and shelter, and I guess it wasn't obvious that insurance would be an exception for some reason.
nradov 1y ago
The actual minimum medical loss ratio is 85% for most large health plans. In practice most of the large payers are at a higher ratio due to competitive pressures. As to how that figure was decided upon, when Congress passed the Affordable Care Act (Obamacare) they just picked a number that seemed reasonable — it wasn't based on a quantitative economic analysis or anything like that. https://www.cms.gov/marketplace/private-health-insurance/medical-loss-ratio https://www.cms.gov/marketplace/private-health-insurance/med...

FireBeyond 1y ago

It's almost as if, then, providers know they can push their rates up, and reimbursement rates go up, since all that means is that premiums go up. And by a stunning coincidence, how much that 20% is goes up. And then they buy/create PBMs which aren't covered by those limitations, and then force their customers into using them. "Oh, you want a convenient 90 day refill? Sure. If you go through our wholly-owned mail order pharmacy. From your pharmacy? No. You can keep going there every 30 days for your meds."