Comment by qwytw
21 hours ago
> All insurance should be non-profit.
Aren't their profits regulated regardless? If all insurance companies became non profit and let's say total prices dropped by 3-5% that still wouldn't change the situation dramatically?
There are many factors, e.g. amongst other things American doctors are better paid than just about anywhere else in the world.
> Aren't their profits regulated regardless?
Yes and no. It's sort of a weird thing where insurance is somewhat regulated nationally but also regulated in a piecemeal fashion state by state.
There's a non-government standards body called the NAIC which provided national guidance for insurers. Most (all?) states basically say that "if you follow NAIC standards, you are good".
> If all insurance companies became non profit and let's say total prices dropped by 3-5% that still wouldn't change the situation dramatically?
It's a huge mess. It's not even really a profit vs non-profit thing but rather "what's the motivation". One major issue is that the ACA put in a loss ratio of 80%. Which isn't a terrible thing in principle, it forces insurance companies to spend money on treatment. The problem is it also means that the profit of insurance companies is tied directly to how much they spend on healthcare. As a result, they are incentivized to spend more, not less, on medical treatments so they can justify higher premiums.
This is a big part of why I think universal public insurance is a must. Basically the only organization that's motivated to keep costs as low as possible is the government.
> American doctors are better paid than just about anywhere else in the world.
This is a problem, but the bigger issue and why doctors are paid so well is because becoming a doctor is one of the more costly and hard to do things in america. There are limited spots, schools, and residency requirements that severely restricts the number of possible doctors we add per year. That drives up the their salaries.
I have a nephew going to medical school in Idaho of all places, and he's looking at $500k in debt by the end of the whole ordeal.
> One major issue is that the ACA put in a loss ratio of 80%. Which isn't a terrible thing in principle, it forces insurance companies to spend money on treatment. The problem is it also means that the profit of insurance companies is tied directly to how much they spend on healthcare. As a result, they are incentivized to spend more, not less, on medical treatments so they can justify higher premiums.
Investors care about margins, not absolute dollar figures. If your non-medical costs are capped, the incentive would be to reduce your other costs to preserve or maximize profits.
So the 80/20 rule is unlikely to have caused anything. More likely it's too low, and the profit ratio that can extracted and passed to investors is still higher than most investing alternatives, which is why it keeps attracting more investment. Without the 80/20 rule we would have seen the same thing or worse, though perhaps slower premium increases but less treatment delivered.
Really this all points to structural problems in the market. Naively we might presume there's not enough competition, and there could be many reasons for that--over regulation, lack of transparency. But it's more complicated than just that because medical treatment, particularly the most costly treatments, presumably have very high price elasticity [citation needed]. Over the long term, investors are just gonna keep trying to draw as much from the well as they can. The problem with public single-payer is that the basic demand curve dynamic doesn't magically change, so rather than complain about high prices people complain about shortages, OR the government just keeps borrowing to maintain satisfactory treatment access until they can't borrow anymore.
Maybe the only solution to rising healthcare costs is to slow down the pace of medical advancements. People love to point out how cheap care is elsewhere, but the most advanced and costly treatments usually become available in the US first, taking years or even decades to spread. (Note, higher prices on pre-existing tech subsidize the cost of bleeding edge treatments, so comparing MRI prices isn't very helpful.) Moreover, people elsewhere don't really know about them so it doesn't detract from their perception of the quality of care they receive. If you're dying and the doctor says there's nothing he can offer you, then that's that and no ill feelings toward the medical establishment. If he says there is something but it's gonna be crazy expensive or there's a shortage/waiting list, now your pissed.
The bigger factor in the American system is taxes. If everyone in the healthcare industry stack, from suppliers to nurses, is exempt from federal and state taxes, healthcare costs could come down by 70%+.