Comment by porcoda
3 days ago
Nothing is shocking about the insurance industry anymore since they’ve been pulling this kind of thing for years. To me the most shocking thing is the people who defend them. I understand the drive to make money and build huge businesses: what confuses me is that we treat human health the same as things that don’t directly impact the health of people. It seems to me that there are endless opportunities to get insanely rich: I’ve never understood why we don’t set aside certain areas and just agree that they are not the place to do that. (I know, leaving potential profit on the table is sacrilegious to those who worship at the altar of the almighty dollar…)
The problem with greed is it has no limits. These people are happily dancing on graves all the way to the bank, and we allow it.
What I believe has broken in the US, UK and is well on the way to breaking in Australia, is the confidence that principles will win over greed. If you believe there is a critical mass of good principled people who will stand against selfishness, then being principled is a smart choice. If you do not have that belief, being principled feels like a foolish extravagance. As many have said before, it's got to the point people have more faith in a zombie apocalypse than in citizens cooperating for their own common good.
"chart goes up and to the right!" seems to excuse just about anything in some peoples' political philosophy.
much shareholder value was increased, I'm sure.
Why would anyone expect it not to go to the right?
I wonder if places that read right to left also chart things so that 0 is on the right side and the positive numbers are on the left.
In many ways, the problem is that we do treat health care different. What other industry will actively reject attempts to ask about prices? What other industry just sends out bills with no contractual basis and exaggerated fraudulent amounts made up after the fact? What other industry do you need to buy "insurance" to even be able to financially communicate with service providers? What other industry does the government provision social services by telling businesses that they must serve some of the most expensive customers for free, and then ensures monopolies so those large losses can be made back from every other customer? What other industry is it impossible to obtain services until a professional declares that you "need" them, at which point it's supposed to be close to free?
These massive profits are because of the so-called "regulation" that has continued to keep market dynamics away, new entrants out, and the industry supremely entitled (from doctors to billing departments). The political debate continues to be sidetracked by doubling down on this mistaken idea of thinking constructive outcomes can simply be declared in law. What needs to happen is to focus on making healthcare a competitive market where patients have agency, while also providing direct financial subsidies when people need them.
The problem is that it is different. What other industry sells a product that you might need in order to survive or to not be disabled which requires the dedicated efforts of multiple professionals with a decade of post-secondary education? What other industry sells a product that you might suddenly need at a moment’s notice that is the only way you’ll survive the day, that requires sophisticated equipment, dedicated facilities, and a team of the aforementioned highly educated professionals?
Most industries are either optional things you want to have but can live without, or necessities you need on an ongoing basis that need more than a few minutes of individual attention.
There’s a lot more to medicine than emergencies and lifesaving treatments. But I think those are the original sin from which the rest flows.
The basic question is this: should people be left to die if they have a sudden life-threatening event (heart attack, hit by a bus, shot) and they can’t demonstrate an ability to pay for treatment? (Note, not the same as not being able to pay for treatment. This would potentially apply to a rich person who got mugged and left for dead, for example.)
Few will answer “yes.” And everything else flows from the “no.” The US’s universal health care system is built around it. We pretend we don’t have universal health care, but we do. It’s just tremendously shoddy and weird. The one place with universal care is the hospital emergency room. Those have been required to treat everyone regardless of ability to pay since 1986. Once you start doing that, the rest flows from there. People start saying, what if it’s not critical to survival but they’ll be crippled without it? What if it’s life critical but there’s time to verify payment?
Can we do better without removing that? No doubt. But we’ll have a hard time getting to a proper competitive market.
Other industries with these characteristics (police, firefighting, rescue, ambulance if you count that separately from medicine) are usually handled by the government or at least contracted by them.
> Few will answer “yes.” And everything else flows from the "no."
Everything else has flowed from the "no", but I do not think it needs to have. Imagine the government being a definitive payer of last resort, instead of this unfunded mandate where hospitals have to provide emergency service for free but then receive a bunch of regulatory capture to make up for it.
That still leaves an avenue for hospitals to defraud the government about how much providing that care cost, and emergency care has that dynamic intrinsically regardless of who is paying. But that's still leaps ahead of basing the entire industry on a foundation of billing fraud shakedowns. And it would be a lot harder for emergency departments to claim exaggerated fraudulent costs when the rest of the hospital is charging much less.
The vast majority of care is not life saving emergency treatment, and this is where the brokenness of the current system gets really galling. For example I just had a specialist declare that the proper course of treatment is to follow up in 12 months. I nudged them that 12 months seemed like an awful long time, but they held fast. I would happily pay for another check in 6 months if the system would let me. But instead, the concept of patient agency has been completely scrapped in favor of top down "necessary" and "not necessary".
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Does anybody defend them?
I’ve been on the selection side as an employer and several others will probably echo what I’m about to say.
Virtually every insurance provider is going up 15-20% / year to the point that it’s completely unsustainable. United was quoted to me as almost 20% lower than current rate for our provider (before they are about to go up 20%).
On premium alone they will save some people close to $500 / month for what is…”on paper” the same coverage.
I’ve read all of the same stuff about United that everybody else has but the finances put employers in a very difficult position.
I feel people defend them by opposing any other approach to solving this. Politicians in particular say things like "preserving customer choice", which I think just means having the ability to select among all the terrible insurance companies who will treat you poorly.
That excuse doesn't even hold up because in places like the UK which have universal healthcare, private health insurance still exists alongside it as a "premium" option. That's more choice!
And shouting about "death panels" in public healthcare systems, as if the private insurance companies don't have people whose whole job is denying as many claims as possible
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Most people don't even get the ability to select among all the terrible insurance companies - their employer chooses for them!
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> Politicians in particular say things like "preserving customer choice"
But that’s not shocking. Lobbyists and campaign donations make such behavior expected.
This is why we need to install National Health Care. Single payer systems get the best rate, and we can make a national decision over how much we can afford. The current system is insane and unsustainable.
Sure, I'll defend them, conceptually at least. I think most actors in this system are in some sense corrupt, and I don't think insurers are the most corrupt. Pull up the 2022 National Health Expenditure table, "National Health Expenditures by Type of Expenditure and Program: Calendar Year 2022" and look at combined hospital and physician expenses compared to insurer expenses; it's pretty black-and-white.
One should not profit from denying care. All health systems ration care. Doing so in a way that people profit from denying care is immoral.
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> look at combined hospital and physician expenses compared to insurer expenses; it's pretty black-and-white
I mean, yeah. They're doing all the work.
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> I don't think insurers are the most corrupt
Lol, nice defence
> $500 / month
What the actual f!?
That saving is double the total cost of my private health insurance in Australia!
This includes the “Medicare levy” tax I pay at the highest rate because I get an above average income.
Health insurance cost is something I just don’t think about.
My missus reminds me every few years to combine our plans because it might save us AUD 250 per… year. Maybe.
Yeah, it's bad here. My health insurance premium (family of four) went from $3,000 US/month to $3,600/month on Jan 1. That doesn't cover everything, either - there's a deductible, and then there's copays, which means up to $9k/year out of pocket on top of those premiums.
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I haven't seen any defenses of insurance companies lately. In fact, it seems like insurance companies are the only safe target for criticism of US healthcare problems right now.
> Virtually every insurance provider is going up 15-20% / year to the point that it’s completely unsustainable.
The elephant in the room is that healthcare costs are going up. Even if we waved a magic wand and eliminated health insurance overhead, profits, and executive pay, your rates would still be going up that same 15-20% per year.
This is the part that seems to confuse everyone. There's a common misconception that insurance companies are raking in huge profits and that prices would plummet if we could just eliminate those profits. You see it throughout this thread with phrases like "dancing on the graves all the way to the bank" and blaming "capitalism" or "corporate greed" with the implication that insurance companies are the purveyors of this greed.
Yet we have non-profit insurance companies. They're not appreciably cheaper. If you look at insurance company profits, they're actually relatively low for companies that large. If you map healthcare spending on a big pie chart, the slice that goes to insurance company administrative overhead and profits is not that big. Single digit percentage. Even companies with socialized medicine have some overhead in this same slice.
The problem is multifactorial. The challenge is that it's not politically safe to touch on some of the drivers of US healthcare costs. Everyone loves to point at insurance companies and drug pricing because it's easy, but things get much quieter when you point out that our doctors, surgeons, and providers are paid substantially more than their peers in other countries. Americans also love to consume more healthcare and many would be very upset if they were forced to accept the level of allowed care and delays in other countries. It's not just insurance companies who have decision trees about when and what care is allowed. Americans also consume medications at an extremely high rate. Again, they don't take kindly to suggestions that we limit prescribing or drug prescriptions (see outrage over the DEA limits on amphetamine production or complaints about hesitancy to prescribe opioids, even though we already consume far more opioids than most countries).
Many Americans also live unhealthy lifestyles which contribute greatly to healthcare costs, but it's taboo to mention that. Everyone has seen the life expectancy charts showing US lagging international peers, but fewer people have seen the per-state version that shows that life expectancy depends heavily on where you live (and therefore what you eat, how active you are, and the local culture). Instead, the only acceptable target of blame is our food. While we have some room for improvement, we're not going to solve the obesity epidemic and lifespan problems by banning red dyes. Lifestyles and diets need to change, but that's a difficult topic. Much easier to point the finger at insurance companies, "CEOs", and the food industry and pretend that those cover all that is wrong with healthcare.
This is why it's politically difficult to accomplish anything in the United States. If anyone tried to copy and paste the health care system of a European country, from doctor pay to allowed procedures to more limited prescribing practices, there would be riots. People want all the healthcare, they want it now, they want it how they decide, and they want someone else to pay for it.
I was shocked to hear from an anesthesiologist friend of mine in Germany that an American salary could be 10x higher.
The medical costs are skyrocketing because insurance companies inflate the price of medicine. The slice of the pie that goes to the insurance company is small compared to the pie, so they make the pie bigger to make their slice bigger. The other parts of the pie, many of whom are owned by the same insurance company, aren't complaining. They are horribly inefficient. The cost of hospitals processing payments to insurance companies alone (and note this is typically one company sending itself a bill) is nearly $400 Billion per year. That's about 8% of all US healthcare spending, and it generates no value.
What isn't happening is increasing cost because of either more or improved care. As time goes on it should be easier to make drugs, meaning that prices should go down. Instead the cost per gram of even very simple drugs like epinephrine and insulin are going through the roof. Doctors are paid well, but they've always been paid well, and in fact while physician pay over the past 70 years has kept pace with inflation, it has been far outstripped by the price of education needed to achieve that salary, meaning doctors today are generally worse off financially than they used to be. other medical professionals like nurses are seeing increasing workloads without commensurate increase in pay. American life expectancy is decreasing, as are numerous other measures of healthcare efficacy. While we are paying more, we are getting less than we used to.
Then there is the common argument - our high drug prices subsidize new drug development. Only issue is that new drug development has been steadily slowing down. Most drug development is in the form of minor changes to existing drugs that serve little purpose beyond resetting the clock so cheap generics don't come on the market. Where new drugs are developed, they tend to be focused on profits, for example new pills to help people maintain erections rather than treat rare diseases. When the stars align and a new drug is developed that genuinely helps people, it tends to be insanely expensive, such as the cancer drugs TFA is talking about. This is not to say that nothing at all gets done, but it's less than it used to be.
Is insurance the only problem in America? No, obviously not. But at the same time, healthcare prices dramatically higher than anywhere else in the world that are also rapidly increasing is not an inescapable fact of life. Our healthcare can be both substantially cheaper and higher quality than it currently is by eliminating purposefully inefficient systems that use anticompetitive practices to jack up prices. When the dust settles US healthcare might remain a bit pricy per capita - part of having a country with very high wealth per capita is that everything is expensive per capita - but our money will be going towards paying skilled people to do useful work for our benefit.
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>but the greater public ultimately felt he went too easy on them.
Not sure what exactly is meant by that, but most people did not think the killing was acceptable.
https://www.axios.com/2024/12/17/united-healthcare-ceo-killi...
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It's easy to just blame the insurance providers, but keep in mind:
Everybody expects a higher standard of care, because now we treat things that we didn't even know about in the past. For example, I have a CPAP and went through surgery for sleep apnea. 50 years ago, who knows what would have happened to me?
Medical providers are incentivized to "find" things to bill for. For example, I went to a podiatrist for foot pain, and she tried to figure out how to have me visit monthly.
Likewise, end-of-life issues can get very expensive, because it's hard to say "no" when loved ones' emotions are fragile.
I have a CPAP too, and the insurance paid for part of the cost, but most was still paid for by me. I investigated the price of buying it directly, for cash, and it was only a few hundred dollars more.
The point is that other countries are realizing the same or better (generally better) levels of care while confronting the same issues.
Privatization and ineffective/lobbyist-written regulation is and has been the problem from the beginning.
Adding "but before all those complex concerns, our number one priority is making a profit" is literal insanity.
Add to the mix that employers are only incentivized to provide care for accute conditions that jeopardize productivity (rather than things that improve longevity and quality of life), and I mean... what did anyone expect?
Healthcare is complex but understanding why we're living in a failure mode isn't. The fundamentals are completely incorrect.
How do you respond to people that say the profit motive is what drives innovation, and in the long term we’d rather have better, novel treatments sooner
Profit motives for medical / biotech research, yes. What innovations have insurance companies made in the last 100 years besides to squeeze out more profit?
A lot of that research is primarily done in university labs, mind you. On the taxpayer dime. Somehow the research escapes a lab and Pfizer manages to put some stupid name on it and reaps billions in profit.
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Even if that's true for the actual pharmas, how are insurance companies like UHC innovating? They're just middlemen.
They prevent unnecessary treatments! /s
I'm not sure about UHC specifically, but insurance companies do innovate. Some insurers have invested pretty heavily in biotech and wearables, and they're also a big driver behind telehealth/remote health monitoring tech. We can cynically say that they're just in it because they want to reduce costs – and that's probably true – but it'd be simplistic to say investing to reduce costs is purely selfish.
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We are talking about delivering care, not innovative medical technology. The biggest single target for innovation in care delivery is to get rid of private insurers.
I think the graph at the top of this article really says it all: https://www.economist.com/graphic-detail/2019/05/22/republic...
They're totally wrong. War is what funds innovations.
Imagine all the innovation we're missing on every day a country isn't being invaded!
By informing them that most of that is funded by taxes and students doing all the work, not corporations and not based on their revenue. If anything, they have an incentive not to make better treatments because better often means less profitable.
You don't, because they are trolls.
You can't possibly argue in good faith that being able to provide less than 0.1% of novel treatments is somehow more valuable than providing good, standard healthcare with already existing drugs and treatment protocols to the other 99.9% at a sane cost.
Competition is what drives innovation. There are many ways to chase profits without innovating.
Xerox parc is a good counter-example.
I'd say we have an unsustainable system, and innovation that makes it less sustainable is not particularly helpful.
Profit motive can also drive profiteering.
What "innovation" is UnitedHealth doing, pray tell me?
I'm going to go ahead and defend them because private insurance is actually far from the most broken thing about US healthcare, yet they seem to shoulder all the blame.
Average health insurance profit margin in US is ~3%. That's not a greedy profit margin. It's the health care that's expensive, not the insurance. Health care is much more expensive in the US than in similar countries. I'm not an expert on why, but there are all sorts of misaligned incentives on IP and drug pricing that need to be fixed. It's not the insurers.
The army of middlemen the doctors and hospitals need to hire to deal with the insurance companies adds a lot to healthcare costs in the US. Not to mention the armies of middlemen hired by the insurance companies themselves.
While every healthcare system has administrators, the US system with its thousands of different systems interacting with thousands of other individuals makes for a nightmarishly complex problem. Doctors in countries with socialized medicine complain about the government administrators too, but at least they only have one system to deal with.
That may be true. I can only assure you that the army of government bureaucrats who do that work in countries with universal healthcare tend to be less efficient.
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The profit margin is just the shareholders' cut though.
What about the CEO salary? What about his secretary? The rent they pay for the buildings they occupy? Going down that path, how much of the operational expenses of private insurance meaningfully improve patients' health?
Google says UHC made $370b gross revenue and $12b net revenue.
Not sure what the total exec team costs but if the ceo was paid $10 million that’s 0.03% of revenue and 0.1% of profit.
Not defending them but I do think that people hear $10 million but don’t quite realize how huge the pie is.
I don’t think healthcare should be for-profit, but since we do have that system, what do people expect the ceo of a company (any company) that grosses $370b to earn?
It’s a bit reductive to just say something like “he makes $10 million dollars a year denying patient life-saving treatment”, just like saying the ceo of ratheon makes money from the killing of innocent Palestinians.
In the end though, I increasingly feel like the only moral solution is to have a single payer fully socialized system.
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Not having to worry about any of those details is the whole point of having a competitive market in the first place. Any company that isn't serious about avoiding overpayment (even to their own CEO) becomes obsolete. And yes, it's a very competitive market with thousands of players and Obamacare setting a ceiling on rates and a floor on coverage.
If the market is competitive, you can trust that you're getting what you pay for. If it's not, well then that's the problem.
Even using more accurate financial indicators like Operating Cash Flow and Free Cash Flow still leave lots of room to obfuscate egregious behavior.
I don't know, people who talk about profit margins as if they mean anything in this context are either financially naive or are trying to muddy the water.
I'm not sure a low profit margin is indicative of a company providing a moral degree of service to their insured. Certainly naive profit margin percentages don't show the terptitude of overcharging cancer patients.
For someone who doesn't get this, if a company like UHC buys an entire hospital group they can use that expenditure to legally "hide" profits by reducing their "profit margin" short term while decreasing competition in the space.
If a company acquires enough debt in a given year they can "hide" nearly unlimited profit margins legally.
On a larger scale, a company (UHC) can dump money into "external" money losing ventures that just serve to hold wealth and take that money off their balance sheet, once that entity takes on enough debt the same company (UHC) can acquire it taking on that debt and reducing their profit margin yet again.
GE Capital and Amazon are poster children for having done this process in a legal fashion.
As a beginners guide, if you have access to a talented accounting firm you can ask about these approaches to get started:
1. Management & Consulting Fee Arrangements (Especially with Related Parties)
2. Transfer Pricing (in Multinational Contexts)
3. Debt Pushdown & Thin Capitalization
4. Special Purpose Entities (SPEs) or Variable Interest Entities (VIEs)
5. Intellectual Property (IP) Holding Companies
I would be inclined to agree with you, the issues is related to the healthcare vastly overcharging for basic acts such as giving simple drugs such as ibuprofen or paracetemol.
The only reason healthcare is so expensive is because a dysfunctional insurance industry exists.
There are actually many reasons and the commercial insurance industry, while in serious need of reform, is hardly the most significant reason for high costs.
https://www.sensible-med.com/p/the-entire-healthcare-system-...
https://www.bloomsbury.com/us/price-we-pay-9781635575910/
>"Average health insurance profit margin in US is ~3%. That's not a greedy profit margin."
Could it be that good chunk of the profits is eaten by overinflated salaries of major execs?
It shows that the US never had a world war on the continent. All the other countries treat health care as a matter of national security. The US’s primary concern is mark to market in pension funds.
> It shows that the US never had a world war on the continent. All the other countries treat health care as a matter of national security.
You seem to be making a weird connection here, but maybe I misunderstand you.
Are you truly suggesting that countries who have socialized health care do so because they've been affected by war on their territory at some point?
I seem to recall John Cleese or some other british person suggesting that the NHS was a given after so many had been through ww2. Wikipedia[1] on the NHS suggests the same, through quotes by politicians.
[1]: https://en.wikipedia.org/wiki/National_Health_Service#Histor...
Extremists came from misery, and misery is what drives united states today
It's not just you.
A historical aside, the reason private health insurance was created in the US was World War 2.
I could be misremembering pieces, but the long and short of it was that salary compensation was capped/restricted during World War 2 and so companies began offering benefits outside of salary, private health insurance among them, to retain their employees.
> shows that the US never had a world war on the continent. All the other countries treat health care as a matter of national security
I forgot about the world-class healthcare the populations of Africa, the Middle East and the war-ravaged parts of Asia enjoy.
I agree there is probably a link between war and healthcare. But the link flows through civic pride and identity, and population-wide familiarity with the horrors of war, more than it does from any sense of military preparedness. (That said, I've never seen an American politician try to sell universal healthcare as a national security imperative. Hmm...)
There are plenty of countries with 'socialized' healthcare that had no wars in their territories.
And which countries would those be?
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I'm not sure I follow that argument - Canada shares a continent.
>It shows that the US never had a world war on the continent. All the other countries treat health care as a matter of national security.
Sounds like https://xkcd.com/1122/
For instance, Canada, which also arguably "never had a world war on the continent" has public healthcare. What gives? What about all the central/south american countries that don't have public healthcare?
Hey don't forget all those brutal incursions during the war of 1812.
"No nomimee whose first name contains a 'K' has lost."
...Until Kamala Harris in 2024. Took twelve years, but...
The incentive drives them to do sht like that.
Businesses are immortal unkillable people, per the Supreme Court.
If they kill people, they pay (small to them) fines.
Oh wait, the have special tax laws, depreciation, and deductions that real people can't use.
It's almost like he only recourse is to print out a gun and (censored)
Happy capitalism everybody.
Setting aside human health and agreeing that it should be outside capitalist endeavor would be incredibly damaging to human health. I can hardly imagine any policy that would reduce life years more than that.
Why then do countries with socialized healthcare have linger life expectancy than countries with capitalist-only healthcare system?
Do those countries use any practices or innovations developed by non-socialist entities, or are they entirely socialist-based?
I don't particularly care if health insurance is public or private.
DIRECT health care labor costs (doctor's, nurses, etc) are ~40-60% of TOTAL healthcare spending.
Smart people try to figure out ways to make our system better every day. If there was a silver bullet, we'd have already taken it.
Health insurance profits are ~1.2% of total health care spending, the cost of running it is approximately ~4% more.
It's always going to cost SOMETHING to run - whether you move it to the private or public sector is largely a rounding error.
If you take all those insurance jobs and pop them into the Federal Government - you're unlikely to see much efficiency gains (the most pro-medicare articles state it's 37% more efficient - that's an improvement of ~1.5% in total spending).
UHC had a net margin of 6.1% in 2024.
Sure, if all 6.1% of that went to spending instead of profits - health care would be slightly better.
But it's mostly a rounding error. Private health insurance profits are only ~1.2% of total spending.
Maybe you're focused on a ~6.1% margin, or ~$60B in total profits.
You're not going to get substantially better outcomes by simply having ~1.2%-2.7% more money to spend.
You'd need to bring down the actual cost of healthcare substantially - which isn't going to happen unless you pay doctor's and nurses way less money.
Pharmaceuticals are only about 9% of total US healthcare spending - even if you nationalize that (never going to happen) - you're still not getting substantially better / cheaper outcomes.
Profits on pharmaceuticals is <2% of total spending as well.
The only way you're getting significantly cheaper service is by reducing your biggest cost significantly - i.e. paying less for direct patient healthcare (doctor's, nurses, etc), and that's probably not a great strategy for getting better outcomes.
Who knows? NHS pays doctors dirt, and their system isn't obviously worse than ours. Some people think it's way better, others way worse.
Medicare administrative costs are around 2% of total program spending [1] compared to typically >10%. While what you're saying on the surface may be true from the numbers you are comparing, the fact of the matter is that healthcare costs are becoming more and more expensive during a time when many are experiencing a cost of living crisis.
The US gets a bum deal on costs and outcomes and while we can argue on which specific changes will move which specific needle I think it's clear that one of the major differences compared to the rest of the world is that running healthcare as a for profit enterprise has failed to deliver on the promise of good outcomes for as affordable a price as possible both on an individual and country wide level.
[1] https://www.politifact.com/factchecks/2017/sep/20/bernie-san...
> While what you're saying on the surface may be true from the numbers you are comparing, the fact of the matter is that healthcare costs are becoming more and more expensive during a time when many are experiencing a cost of living crisis.
Which has almost nothing to do with the amount of profits derived from private health insurance - that's only ~1.2% of spending.
Maybe it used to be ~0.8% - that delta is not moving the needle.
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I think this is a statistical artifact. Medicare preferentially selects the cohort of customers most likely to demand services from providers (that's the premise of the program). Fixed fees in, floating costs out. If you extended Medicare to 30 year olds, that 2% would, mechanically, soar; the same inputs from customers, but drastically lower service delivery.
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Honest question as someone who prefers single payer but acknowledged it's not a silver bullet: how much of the costs are nurses and doctors vs. admin? It seems to me there's a lot of overhead in passing the bills around to get paid. I just had my appendix out last year and got billed 8 times by 8 different firms, each with payment portals, call centers, billing providers, etc. I assume there's a lot of inefficiency internally too.
~40-60% is direct healthcare - not including admin or insurance labor costs.
Pharmaceuticals is ~9%.
Health insurance profits are 1.2%.
Other profits are x%.
Medical equipment, devices, hospital rents, etc are y%.
Most of the remainder is admin & insurance costs - only about ~2% of which is private health insurance operating costs (largely labor).
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I have good news! If you move it to the public sector, you will effectively pay doctors less money for the same work. That's because the way it works currently is that the doctors have to deal with private insurance bureaucracy. By freeing them from this responsibility, they have more time to take care of patients, which should effectively gets you more medical bang for your buck.
You're describing the federal system being massively more efficient - which is theoretically possible - but rarely happens in practice.
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It is already established fact that Medicare is more efficient than private insurance: https://www.healthaffairs.org/do/10.1377/forefront.20110920....
6.1% profit margins is a lot when it should not be for-profit in the first place. Why is anyone making a profit off of administering necessary services?
What is the operating profit of your local firefighter brigade?
What is the operating profit of the interstate highway system?
What is the operating profit of your local water/sewer department?
Not a single person in this country doesn't need healthcare at some point. It's not an optional for-profit good.
Medical Loss Ratio (MLR) is capped at 85% in the US which means 85% of revenue must go to patients. This is roughly inline with other countries with universal healthcare (MLR ranges from 85-95%).
The fundamental problem is that we don’t have enough resources to take care of everyone. Insurance companies are faced with the impossible task of allocating resources and making care/nocare decisions.
I don’t get the “endless profiteering” angle against insurance companies. If anything it’s the providers who are screwing over patients by gaming insurance and taking more than is necessary from the shared insurance pool of money.
But when UnitedHealth requires medications to be purchased from Optum health (with whom they share a parent company), they can jack up the price of a drug and keep some of that 85% too.
They own the physicians, too.
https://www.statnews.com/2024/07/25/united-health-group-medi...
To whom they pay higher "medical loss":
https://www.statnews.com/2024/11/25/unitedhealth-higher-paym...
The more revenue an insurer brings in, the larger that 15% slice of the pie. The fact that they have a capped MLR is beside the point.
> If anything it’s the providers who are screwing over patients by gaming insurance and taking more than is necessary from the shared insurance pool of money.
If the 85% gets larger, so does the 15%. Both sides gain when the cost increases.
I’m not an expert but I’m wary of anyone who has a simplistic view of what seems to be a complex system. This, plus looking at the profit margin of UHC paints a more nuanced picture (net profit margin is not that high. the dollar amount is high because the scale of the company is big). (Not that I want to make money from denying people healthcare, no matter how much internal logic there is to it…)
But it does seem like there’s a serious prisoners dilemma type situation going on in American health care. It’s easy to point fingers at someone else.
The situation is also coupled with a toxic political environment where a Trump voter can simultaneously be against “Obamacare” and think that Trump is going to improve access to healthcare, and a Harris voter can be pro Obamacare and ignore regulatory capture by pharmaceutical companies- e.g., both sides so convinced they’re right and the other side is wrong they won’t be seen to agree on anything common sense.
so by increasing the cost of patient care, they can take out more profits.
Insurance isn't a good industry to "get insanely rich". It doesn't have high profit margins. For one thing, the ACA mandates that insurance companies can't keep profits past a certain point.
My sense is that people expect too much from their health insurance. Subconsciously, we expect to experience no pain and live forever. When this inevitably doesn't happen, we blame insurance companies for not bankrolling infinite healthcare.
There is a max % take insurance companies can have.
The easy as hell solution to this is insurance companies collude with hospitals to charge patients more. 5% of 5000 is more than 5% of 2000.
In some cases insurance companies just buy up hospital chains and then bill themselves whatever the hell they want to.
The miracle of US healthcare is how at every step, work is done to minimize every party's ability to either use market power to lower costs, or to make people cost-conscious about their own expenses.
Insurance, in a vacuum, detached from an industry is a perfectly sensible way to try to spread risk. And as you say, this fair, reasonable insurance isn't about getting extremely rich, but about being the best at identifying where the risks are, and using market power to lower costs. But with healthcare, and especially with the US peculiarities, we manage to get minimal value out of it.
People getting care don't know their options, and how different the pricing can be. Insurers are capped by a percentage of services paid, so they really are happy if everything is very expensive. Providers band together into conglomerates that make sure it's hard for insurers to lower reimbursement rates. Pharmacy benefit managers build complicated schemes that let them take a bigger piece of the pie. They even purchase pharmacies, and restrict the expensive purchases for themselves, while the local pharmacy is squeezed. All in all, it gets very expensive, with minimal control of spiraling prices, and nobody that can lower costs is incentivized to do so.
We blame insurers because that's the people that get paid first, but yes, it's not really a matter of just insurers. It's a kafkaesque system that is basically impervious to significant reform. And for good reason: Every dollar we overpay is someone else's salary. A decrease in costs per person for the same care to match, say, Spain would involve a whole lot of people making a lot less money, including many losing their jobs. Not exactly a political winner, even though the country would be better off with more efficiency
Clearly with Private Equity entering healthcare this is patently false.
The article is about insurance company malfeasance, but this boils it down to mis-aligned consumer expectations about living forever in total bliss. That feels like a strange disconnect.