Comment by _DeadFred_
3 months ago
Percentage wise profits might not increase, but 10% profits on a $2000 plan make an insurance company (and execs) more than 10% profits on a $200 plan. It's in their interests and income stream for costs to constantly go up so they can get their 10% take. Efficiencies and price savings would actually hurt them (can't have plan rates go back down and only get their 10% off of $200).
That ignores competitive pressures. Commercial health plans aggressively negotiate rates with their network providers in order to get market share with cost sensitive customers. If your claim was accurate then insurers would just take whatever rates that providers set but the reality is that doesn't happen. Health plans routinely drop more expensive providers from their networks.
Rental companies have incentives to get market share with cost sensitive customers too. They would totally never have a system (or use colluding software) where everyones rates just go up.
Fun fact, people in fact can't just 'do without' for housing/medical care, so can't act in a manner that keeps the market in check. Therefor neither of those two segments can be treated as actual markets, or expect the typical benefits of actual, working markets.
> Rental companies have incentives to get market share with cost sensitive customers too. They would totally never have a system (or use colluding software) where everyones rates just go up.
If you're talking about RealPage, the actual effect it had was putting more units on the market and lowering rents, not raising them.
I'm surprised so many people miss this. The insurers have an incentive for medical costs to go up, so that their (capped) share results in higher profits.