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Amazing, every single dollar goes to care! Not a single dollar to overhead! Where are these insurance companies' profit margins coming from? How do they even pa

Amazing, every single dollar goes to care! Not a single dollar to overhead! Where are these insurance companies' profit margins coming from? How do they even pay their executives' salaries? Boy have I been mistaken about how inefficient the American system is

asmodeuslucifer 11mo ago
Beat me to it. This chart is only 1/2 complete. It doesn't show where the money goes after hospital care, for instance.
- harvey9 11mo ago
  Do you mean the breakdown of staff wages, equipment and so on?
  - asmodeuslucifer 11mo ago
    I'm more interested in what the equity owners get. edit: and the insurance companies
deleted 11mo ago
[deleted]
gwbas1c 11mo ago
> How do they even pay their executives' salaries? I suspect less goes to executives than you think. Most of it is going to pay employees in the insurance industry. The irony is that they are being paid to say "no." Perhaps if they instead went to work as service providers, we could get more services for what we spend.
- dangus 11mo ago
  Healthcare executive pay is pretty darn high, more money than any family needs to live comfortably. Keep in mind this is just for Blue Shield California. There are executives of other health insurance systems in other states and regions who are making similar compensation. However, I'll go ahead and say right now that I support the idea of these executives being paid these salaries, but on one condition: that we first achieve the goal of 100% of Americans having affordable access to healthcare. Once that goal is achieved, then we can start paying executives big bonuses and incentives. Deal? (Yeah, right...) https://www.blueshieldca.com/content/dam/bsca/en/member/docs/2025/2024-Executive-Compensation-Summary-FINAL.pdf https://www.blueshieldca.com/content/dam/bsca/en/member/docs... Below is a summary of the compensation paid in 2024 to Blue Shield of California’s President and Chief Executive Officer (CEO), Chief Financial Officer (CFO), and top three highest paid executives (other than the CEO and CFO) who were employed by Blue Shield of California at year-end. Paul Markovich President and Chief Executive Officer $11,191,674 Sandra Clarke EVP, Chief Operating Officer $5,765,368 Peter Long EVP, Strategy and Health Solutions $4,360,245 Lisa Davis EVP, Chief Information Officer $2,873,613 Michael Stuart EVP, Chief Financial Officer $2,406,837 Some other CEOs: Cerner (EMR provider to the VA), $35 million pay package: https://kffhealthnews.org/morning-breakout/cerner-to-pay-new-ceo-35-million-pfizers-trillium-purchase-explained/ https://kffhealthnews.org/morning-breakout/cerner-to-pay-new... Pfizer, $24.6M pay package: https://www.fiercepharma.com/pharma/rebound-year-pfizer-ceo-bourla-gets-14-pay-hike-246m https://www.fiercepharma.com/pharma/rebound-year-pfizer-ceo-... Epic Systems is a private company, so there's no executive pay information, but the founder Judy Falkner's estimated net worth is $7.8 billion. Perhaps Epic could reduce the price of its very expensive software for providers to help ease healthcare costs and maybe Judy could give up some of those billions and not notice any difference in her quality of life?
  - SpicyLemonZest 11mo ago
    Blue Shield of California has 4.5 million plan members, so all of these executive salaries combined add up to 49 cents per member per month. It's not a significant factor in premium costs.
    - dangus 11mo ago
      I think that's highly significant. Keep in mind that that's only one provider in the system. You've also got to pay the executive salaries of your hospital system, your pharmacy chain, your drug company, medical equipment company, etc. If we figure that every company involved in your $15k/year healthcare cost is paying 0.1-0.5% of their revenue to executive compensation (Cleveland Clinic as a random example pays 0.4% of revenue to the executives, $30 million) then we are talking about a small streaming video subscription worth of cost just which is allocated not on paying a productive group of administrators to keep the lights on, but instead paying excess incentives to an extremely small group of people. In reality, if CEO compensation was capped to something reasonable like $500,000/year or 10x the pay of the lowest paid employee, there would still be CEOs and the quality of CEOs would not decline because it would still be the highest paid job on the market. Everyone involved in our economy would be just that much richer if the wealth wasn't getting unnecessarily concentrated.
      - SpicyLemonZest 11mo ago
        $500,000 is a lot of money, I don't want to minimize that, but it would not be the highest paid job on the market. There's a number of roles in medicine, law, finance, and nowadays software that pay more for fewer managerial duties. There really isn't much room to argue for cutting executive pay without arguing that it's unimportant to get the best people in executive roles. And that's an argument you can certainly have, but it seems strange to make it a precondition to fixing the healthcare system, when cutting executive pay would resolve only a small fraction of the problem.
        AngryData 11mo ago
- HDThoreaun 11mo ago
  Absolutely not. Over use of service is already one of the bigger problems in US healthcare. We need more death panels, not less.
  - ch4s3 11mo ago
    I'm loathe to agree here, but you are highlighting a point that people miss about other OECD countries. Many very expensive treatments available in the US are covered by insurance (to a point) but are simply unavailable in the UK, Japan, or France. In the US a tremendous amount of money is spent to extend lives by a few scant months at a very low quality of life.
    - HDThoreaun 11mo ago
      End of life is the biggest problem with over use but it's not limited to that. In the US literally everyone who shows up at the emergency room talking about chest pain gets an expensive ct scan even if theres effectively no chance of it catching anything. Procedures that have been shown in studies to not work are still prescribed, because why not/lobbying groups of the doctors that perform them whine loudly enough. At no point is anyone in the system trying to save money, so costs just grow and grow and grow. I think about the fact that everyone in the hospital gets a private room a lot. Having a private room does not increase health outcomes at all, but it costs an absolute ton of money. It does increase satisfaction so it should be available, but hospital users should be able to choose shared rooms and get a portion of the savings they create but this just isnt possible in the US because of the incentives we've created.
- klustregrif 11mo ago
  > I suspect less goes to executives than you think. How can it be less than nothing? The graph is literally showing that all the entities that are not care facilities operate without any costs and without any profits. Apparently both CEO’s and workers at these organizations are volunteers.
threethirtytwo 11mo ago
[flagged]
- SpicyLemonZest 11mo ago
  Overhead which is associated with hospital spending, but not paid to the hospital, should not flow to the hospital in a Sankey diagram.
- cycrutchfield 11mo ago
  Physician salaries are only 8% of total healthcare spending. Care to revise your screed?
- ceejayoz 11mo ago
  https://www.commonwealthfund.org/publications/issue-briefs/2023/oct/high-us-health-care-spending-where-is-it-all-going https://www.commonwealthfund.org/publications/issue-briefs/2... > More than half of excess U.S. health spending was associated with factors likely reflected in higher prices, including more spending on: administrative costs of insurance (~15% of the excess), administrative costs borne by providers (~15%), prescription drugs (~10%), wages for physicians (~10%) and registered nurses (~5%), and medical machinery and equipment (less than 5%). Reductions in administrative burdens and drug costs could substantially reduce the difference between U.S. and peer nation health spending.
redmattred 11mo ago
> Where are these insurance companies' profit margins coming from? Vertical integration. UnitedHealthcare's (Larger insurance company in the US) profits are effectively limited by the Medical Loss Ratio rules from the Affordable Care Act. But they are owned by UnitedHealth Group, which also owns OptumHealth (the largest network of physicians in the US), OptumRx (pharmacies), and OptumInsight (technology consulting, which goes into the COGS for UnitedHealthcare). This is where they make their profits. UHG controls which physicians + pharmacies are in their network and what their negotiated rates for many services are (the exception being medicare + medicaid). Here's a write up on their strategy: https://www.unionhealthcareinsight.com/post/unitedhealth-group-approach-to-vertical-consolidation https://www.unionhealthcareinsight.com/post/unitedhealth-gro... And an infographic that breaks it down: https://static.wixstatic.com/media/be1b8b_b0d4ebb04ce04b44a3a19b991a15facb~mv2.jpg/v1/fill/w_1480,h_832,al_c,q_85,usm_0.66_1.00_0.01,enc_avif,quality_auto/be1b8b_b0d4ebb04ce04b44a3a19b991a15facb~mv2.jpg https://static.wixstatic.com/media/be1b8b_b0d4ebb04ce04b44a3...
- NickC25 11mo ago
  United Health needs to be broken up. They are a racket.
- Nicook 11mo ago
  Are they limited by medical loss ratios, or does that just inflate costs to get more profit?
riku_iki 11mo ago
> Amazing, every single dollar goes to care! Not a single dollar to overhead! Where are these insurance companies' profit margins coming from? they kinda have it on chart but without overhead numbers: insurance collects 1T of payments, than for business segments, they pay around 60% of that as medical expenses, and for individual plans it is more like 40% of medical expenses, meaning for individual plans insurance corps have 60% profit margin.

asmodeuslucifer 11mo ago

Beat me to it. This chart is only 1/2 complete. It doesn't show where the money goes after hospital care, for instance.

harvey9 11mo ago
Do you mean the breakdown of staff wages, equipment and so on?
- asmodeuslucifer 11mo ago
  I'm more interested in what the equity owners get. edit: and the insurance companies

deleted 11mo ago

[deleted]

gwbas1c 11mo ago

> How do they even pay their executives' salaries? I suspect less goes to executives than you think. Most of it is going to pay employees in the insurance industry. The irony is that they are being paid to say "no." Perhaps if they instead went to work as service providers, we could get more services for what we spend.

dangus 11mo ago
Healthcare executive pay is pretty darn high, more money than any family needs to live comfortably. Keep in mind this is just for Blue Shield California. There are executives of other health insurance systems in other states and regions who are making similar compensation. However, I'll go ahead and say right now that I support the idea of these executives being paid these salaries, but on one condition: that we first achieve the goal of 100% of Americans having affordable access to healthcare. Once that goal is achieved, then we can start paying executives big bonuses and incentives. Deal? (Yeah, right...) https://www.blueshieldca.com/content/dam/bsca/en/member/docs/2025/2024-Executive-Compensation-Summary-FINAL.pdf https://www.blueshieldca.com/content/dam/bsca/en/member/docs... Below is a summary of the compensation paid in 2024 to Blue Shield of California’s President and Chief Executive Officer (CEO), Chief Financial Officer (CFO), and top three highest paid executives (other than the CEO and CFO) who were employed by Blue Shield of California at year-end. Paul Markovich President and Chief Executive Officer $11,191,674 Sandra Clarke EVP, Chief Operating Officer $5,765,368 Peter Long EVP, Strategy and Health Solutions $4,360,245 Lisa Davis EVP, Chief Information Officer $2,873,613 Michael Stuart EVP, Chief Financial Officer $2,406,837 Some other CEOs: Cerner (EMR provider to the VA), $35 million pay package: https://kffhealthnews.org/morning-breakout/cerner-to-pay-new-ceo-35-million-pfizers-trillium-purchase-explained/ https://kffhealthnews.org/morning-breakout/cerner-to-pay-new... Pfizer, $24.6M pay package: https://www.fiercepharma.com/pharma/rebound-year-pfizer-ceo-bourla-gets-14-pay-hike-246m https://www.fiercepharma.com/pharma/rebound-year-pfizer-ceo-... Epic Systems is a private company, so there's no executive pay information, but the founder Judy Falkner's estimated net worth is $7.8 billion. Perhaps Epic could reduce the price of its very expensive software for providers to help ease healthcare costs and maybe Judy could give up some of those billions and not notice any difference in her quality of life?
- SpicyLemonZest 11mo ago
  Blue Shield of California has 4.5 million plan members, so all of these executive salaries combined add up to 49 cents per member per month. It's not a significant factor in premium costs.
  - dangus 11mo ago
    I think that's highly significant. Keep in mind that that's only one provider in the system. You've also got to pay the executive salaries of your hospital system, your pharmacy chain, your drug company, medical equipment company, etc. If we figure that every company involved in your $15k/year healthcare cost is paying 0.1-0.5% of their revenue to executive compensation (Cleveland Clinic as a random example pays 0.4% of revenue to the executives, $30 million) then we are talking about a small streaming video subscription worth of cost just which is allocated not on paying a productive group of administrators to keep the lights on, but instead paying excess incentives to an extremely small group of people. In reality, if CEO compensation was capped to something reasonable like $500,000/year or 10x the pay of the lowest paid employee, there would still be CEOs and the quality of CEOs would not decline because it would still be the highest paid job on the market. Everyone involved in our economy would be just that much richer if the wealth wasn't getting unnecessarily concentrated.
    - SpicyLemonZest 11mo ago
      $500,000 is a lot of money, I don't want to minimize that, but it would not be the highest paid job on the market. There's a number of roles in medicine, law, finance, and nowadays software that pay more for fewer managerial duties. There really isn't much room to argue for cutting executive pay without arguing that it's unimportant to get the best people in executive roles. And that's an argument you can certainly have, but it seems strange to make it a precondition to fixing the healthcare system, when cutting executive pay would resolve only a small fraction of the problem.
      - AngryData 11mo ago
HDThoreaun 11mo ago
Absolutely not. Over use of service is already one of the bigger problems in US healthcare. We need more death panels, not less.
- ch4s3 11mo ago
  I'm loathe to agree here, but you are highlighting a point that people miss about other OECD countries. Many very expensive treatments available in the US are covered by insurance (to a point) but are simply unavailable in the UK, Japan, or France. In the US a tremendous amount of money is spent to extend lives by a few scant months at a very low quality of life.
  - HDThoreaun 11mo ago
    End of life is the biggest problem with over use but it's not limited to that. In the US literally everyone who shows up at the emergency room talking about chest pain gets an expensive ct scan even if theres effectively no chance of it catching anything. Procedures that have been shown in studies to not work are still prescribed, because why not/lobbying groups of the doctors that perform them whine loudly enough. At no point is anyone in the system trying to save money, so costs just grow and grow and grow. I think about the fact that everyone in the hospital gets a private room a lot. Having a private room does not increase health outcomes at all, but it costs an absolute ton of money. It does increase satisfaction so it should be available, but hospital users should be able to choose shared rooms and get a portion of the savings they create but this just isnt possible in the US because of the incentives we've created.
klustregrif 11mo ago
> I suspect less goes to executives than you think. How can it be less than nothing? The graph is literally showing that all the entities that are not care facilities operate without any costs and without any profits. Apparently both CEO’s and workers at these organizations are volunteers.

threethirtytwo 11mo ago

[flagged]

SpicyLemonZest 11mo ago
Overhead which is associated with hospital spending, but not paid to the hospital, should not flow to the hospital in a Sankey diagram.
cycrutchfield 11mo ago
Physician salaries are only 8% of total healthcare spending. Care to revise your screed?
ceejayoz 11mo ago
https://www.commonwealthfund.org/publications/issue-briefs/2023/oct/high-us-health-care-spending-where-is-it-all-going https://www.commonwealthfund.org/publications/issue-briefs/2... > More than half of excess U.S. health spending was associated with factors likely reflected in higher prices, including more spending on: administrative costs of insurance (~15% of the excess), administrative costs borne by providers (~15%), prescription drugs (~10%), wages for physicians (~10%) and registered nurses (~5%), and medical machinery and equipment (less than 5%). Reductions in administrative burdens and drug costs could substantially reduce the difference between U.S. and peer nation health spending.

redmattred 11mo ago

> Where are these insurance companies' profit margins coming from? Vertical integration. UnitedHealthcare's (Larger insurance company in the US) profits are effectively limited by the Medical Loss Ratio rules from the Affordable Care Act. But they are owned by UnitedHealth Group, which also owns OptumHealth (the largest network of physicians in the US), OptumRx (pharmacies), and OptumInsight (technology consulting, which goes into the COGS for UnitedHealthcare). This is where they make their profits. UHG controls which physicians + pharmacies are in their network and what their negotiated rates for many services are (the exception being medicare + medicaid). Here's a write up on their strategy: https://www.unionhealthcareinsight.com/post/unitedhealth-group-approach-to-vertical-consolidation https://www.unionhealthcareinsight.com/post/unitedhealth-gro... And an infographic that breaks it down: https://static.wixstatic.com/media/be1b8b_b0d4ebb04ce04b44a3a19b991a15facb~mv2.jpg/v1/fill/w_1480,h_832,al_c,q_85,usm_0.66_1.00_0.01,enc_avif,quality_auto/be1b8b_b0d4ebb04ce04b44a3a19b991a15facb~mv2.jpg https://static.wixstatic.com/media/be1b8b_b0d4ebb04ce04b44a3...

NickC25 11mo ago
United Health needs to be broken up. They are a racket.
Nicook 11mo ago
Are they limited by medical loss ratios, or does that just inflate costs to get more profit?

riku_iki 11mo ago

> Amazing, every single dollar goes to care! Not a single dollar to overhead! Where are these insurance companies' profit margins coming from? they kinda have it on chart but without overhead numbers: insurance collects 1T of payments, than for business segments, they pay around 60% of that as medical expenses, and for individual plans it is more like 40% of medical expenses, meaning for individual plans insurance corps have 60% profit margin.