Comment by shimman

5 hours ago

Doctor salaries alone do not account for the hundreds of billions in profit that health insurance companies extract from us. You are right there is not a competitive market place because the US government cannot provide a universal plan for anyone. We all know the insurance companies would fold overnight as government welfare programs are extremely popular (just look at how much corporations love government welfare).

Odd how the most popular programs in the US, social security + medicare, are the ones with zero means testing.

Maybe let's not blame one of the few only noble professions left in our greed fueled world.

Blame the hospital administrators or pharmaceutical reps before you start blaming doctors.

13 comments

shimman

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rayiner  5 hours ago

It’s a red flag whenever someone talks about healthcare and they focus on health insurance companies and hospital administrators. It’s a sign that they’re working backwards from some ideological beef rather than looking at where the costs actually are.

Health insurance companies have profit margins around 5% or less. Hospitals are half that. A Subway franchise has a higher profit margin. That’s just not where your healthcare dollars are going.

  • metaphor  2 hours ago

    Hmm...sniff test sampling:

    - HCA[1]: FY25 profit margin = 9.0%

    - UHS[2]: FY25 profit margin = 8.6%

    - THC[3]: FY25 profit margin = 6.6%

    Yeah, a bit of disaggregation is likely needed here, but in these companies, labor expense as a percentage of revenue is on a declining YoY trend while revenue continues to grow.

    What's the prevailing ballpark ratio of doctors to all other hospital staff again? And what details are buried in that ever so opaque and increasing "other operating expenses" line item?

    [1] https://www.sec.gov/Archives/edgar/data/860730/0001193125260...

    [2] https://www.sec.gov/Archives/edgar/data/352915/0001193125260...

    [3] https://www.sec.gov/Archives/edgar/data/70318/00000703182600...

  • jgeada  4 hours ago

    If you have a fixed profit margin, the way to make more absolute money is to allow your costs to increase. Insurance companies have zero reason to negotiate prices down.

    • nradov  4 hours ago

      Well not quite. Health insurance is still a competitive business. Customers — both individuals and group buyers — are very price sensitive and while switching plans is a hassle they will change from Aetna to Humana or whatever if the difference is large enough. And many of the largest carriers are non-profit corporations so there's literally no "profit", although some of the employees are very well compensated.

      1 reply →

  • yunwal  4 hours ago

    The issue is not that health insurance companies make too much money (ok, it's not the only issue)They, along with the system they put in place introduce immense amounts of friction into every medical interaction and prevent doctors from practicing good medicine.

    • nradov  4 hours ago

      You're giving doctors a little too much credit. While most of them have good intentions and try to act in the best interests of their patients, something like a third of the care they deliver is considered "low value" in that it's not evidence based and isn't likely to benefit patients. While some of the friction caused by health plans is just pointless waste, the utilization management processes can actually nudge doctors towards practicing better medicine.

      https://www.bloomsbury.com/us/price-we-pay-9781635574128/

    • lotsofpulp  4 hours ago

      The insurance companies are not stopping the government from paying for everyone's healthcare. It's the other way around, governments are using insurance companies (better referred to as managed care organizations since they don't really sell insurance) to add the friction so that some people get more healthcare and some people get less.

      Who gets more and who gets less depends on who has political power (that's why the old and non working get subsidized by the young and working), and in a democracy, this question ultimately comes back to the voters.

      Bottom line is due to demographics and restrictions in the credentialing process (including for medicine itself, one of the costliest components of healthcare), there is nowhere near enough supply of healthcare relative to demand, AND due to the enormous damages awarded in lawsuits in the US, the cost of liability protection is sky-high and increases prices for every step of the healthcare chain.

      We need way more healthcare providers, and tort reform, and publicly funded medicinal trials, and without that we will continue to limp on with this bureaucratic maze to essentially reduce demand to manageable levels.

  • Sevii  4 hours ago

    The problem is that health insurance companies squander immense amounts of money on adjudicating claims. Huge amounts of GDP are spent on fights between insurers and providers over what is covered.

    • lotsofpulp  4 hours ago

      You can deduce that cannot be true using the medical loss ratios, which is money flowing out to healthcare providers. At roughly 85% or so, that means 15% is left for the entirety of the rest of the business, including adjudication.

      https://www.kff.org/private-insurance/medical-loss-ratio-reb...

      https://www.oliverwyman.com/our-expertise/insights/2023/mar/...

      That is not to say the adjudication process is done well. In fact, it is hugely wasteful, either intentionally or unintentionally, and the problem is that the government does not audit the insurance companies often enough, nor does it levy penalties sufficient to incentivize proper and efficient adjudication.

      The government should be doing constant random checks on claims to see if they were processed and adjudicated in a timely and efficient manner with a sufficiently low error rate on behalf of the adjudicators, and the government is basically doing none of that.

  • mukmuk  4 hours ago

    That is no longer true. What we have historically referred to as “health insurance” companies responded to ACA margin limits by becoming sprawling behemoths whose rampant self-dealing makes such profit margin calculations meaningless.

  • ses1984  4 hours ago

    Show us the data. You want to make the claim, bring the evidence.