Comment by tyre
1 day ago
> It would be in the insurance companies’ interests to band together to fund the research so they can save huge amounts of money in the long term but they do not do this.
Insurance companies do not want cheaper care.
In the US, insurance companies must spend 80% of premiums on care. So if you pay $1k/mo, they have to pay out at least $800/mo in care. (Not to you specifically, but averaged out across all subscribers.)
This is a cap on their potential profits. They always have to pay out 80% of premiums for care, so how do they make more money?
Well, imagine care is twice as expensive. Instead of paying $800, they have to pay $1600. That sounds worse, but, instead of $200/mo, they now $400/mo for themselves!
So, no, paradoxically, it is not in the interest of people paying for the treatment to save money. Quite the opposite.
It's worse than this. Their cap is 80% of the Insurer's profit. Not the Insurer's Parent company. So often the parent company will own the Insurer as a subsidiary and own the Pharmacy, Hospital, Healthcare etc under the parent company.
This way as costs go up, it's really just bypassing the 80%. Because the hospital can charge the insurance subsidary X amount, and then the hospital profits to the parent company.
There needs to be a law in the US that health insurance organizations cannot be owned by anyone who owns a healthcare provider. Nor can the insurance company own healthcare providers.
We've allows the Ma Bell of healthcare to exist.
I tried to explain to people in The Netherlands this exact problem when they were thinking about switching from single-player to a commercial insurance company model.
Insurance companies always have an incentive to make healthcare services expensive. They have even more incentive to make healthcare expensive and do deals on the backside where their suppliers give them a kickback. Even better if said kickback comes via a side door.
So we went for the commercial insurance companies. It took them 4 years before they change the drug choice from decentralised (Pharmacies deal with drugs companies, received small discounts which funded a good quality of care) to centralised (Insurance deal with drug companies, receives kickbacks) and the Pharmacies funding was drastically cut leading to worse quality of care and more drugs being used. Double-whammy because in the previous system the Pharmacy did medication reviews which almost always result in a reduction in drugs (the thing with drugs is that quite a lot of them are given to reduce side effects of other drugs, the original drug gets cancelled but the side effect reducer gets forgotten and just continues ad infinitum).
Health insurance has been super inflationary since then when controlled for quality of care.
> Insurance companies always have an incentive to make healthcare services expensive.
No, it's when their profits are capped by regulation that they have this incentive.
Insurance of other types absolutely seeks to reduce claims payouts.
> So, no, paradoxically, it is not in the interest of people paying for the treatment to save money. Quite the opposite.
I'll assume they're on company insurance. Which is often "self-insured" in that the company actually foots the bill as opposed to the insurance company.
Why don't corporations just drop insurance companies that decide to not allow cheaper medicines?
UNH is so big because its customer Apple has its own pool. Apple deducts $24k/y for your healthcare. Healthy 29 year old male doesn't use anything. UNH denies the claims anyway. It gives that money back to Apple, which doesn't give it to you.
The 80% rule has a lot of loopholes. It doesn't apply to employer funded plans. There's a reason UNH is so big!
Employer funded plans are not all the same. Large entities with a lot of money (like universities, big firms) self-insure. Thus the insurance company in those cases is simply managing all the administrative sides of insurance while the plan owner is the actual insurer of risk.
There’s an article about how a Wall St employee’s expensive care came up in C-suite meetings, as a real world consequence of this
4 replies →
Large swaths of US insurance are underwritten by employers, with the insurance companies acting as contracted administrators. Employers don't have the incentives you list.
Great, just work a well paying megacorp white collar job and you'll get slightly less fucked on healthcare.
What about the other 90% of the country?
You could get angry about anything I say, I don't really care, you do you.
I guess Medicare and Medicaid also don't have the incentives. Nor does Tri-care or the VA. My employer self insures as far as I know, and we are a few hundred people. Maybe 90% is a bit off?
1 reply →
They operate with similar supply and demand constraints and competition, even with prices increasing
>Insurance companies do not want cheaper care.
Why is there a continuous stream of healthcare providers threatening to or becoming out of network for various managed care organizations because they cannot come to an agreement on healthcare prices?
I suspect it's because the insurance companies are not in control. The idea would be to drive up costs when they profit on both sides (example: United and OptumRx) and push down reimbursements elsewhere.
We baked the snake charmer problem into the law?
Good lord.
> snake charmer problem
Perhaps you mean the "cobra effect" [0]? I think that's an apocryphal story about killing snakes, rather than using them in a performance.
[0] https://en.wikipedia.org/wiki/Perverse_incentive#Historicity...
So the meaning of what I said was slightly obscured but actually easy to apprehend?
oookay.