Comment by bloppe
3 days ago
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.
You can't assure us of that; the facts say otherwise.
https://www.epatientdave.com/2017/06/16/the-effectiveness-of...
Why provide personal assurances on the internet? That seems like a "trust me bro" approach.
So tell me, what is the relative cost efficiency of the U.S. Healthcare System vs France/GB/etc..?
People like to use the term government bureaucrat as a thought stopping term, when combined with trust me bro "assurances" it seems extremely hollow.
Give me a data/financial analysis instead of something that sounds like the advice two old dudes sitting in front of a five and dime pre-internet.
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.
You're looking at the wrong numbers. Annual revenue for all of UnitedHealth Group was $370B. Only part of that was UHC insurance premiums. UHG is a huge conglomerate with multiple lines of business, some of which are unrelated to medical insurance or PBM. If UHG spun off the pure software parts of Optum it would be one of the country's 20 largest tech companies.
https://www.unitedhealthgroup.com/investors/financial-report...
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?