Just How Profitable Are Healthcare Insurers? • Hacker News Board

Re: Just How Profitable Are Healthcare Insurers?

#41

Post by roboneal » Tue, Mar 09, 2010, 7:16 AM UTC

owinebarger wrote: post #39

roboneal wrote: post #38

Earlier quoted context omitted.

Does your auto insurance pay for your defensive driving courses? Your homeowner's policy pay for additional smoke detectors? Your life insurance policy pay for a treadmill? What would those policies cost if they did?

To some extent, they do in the form of a premium rebate, though it is unlikely to be large enough to be a substantial reimbursement for a single policy period - perhaps over the life of the policy the cumulative rebate might cover the up-front cost. I haven't worked in casualty, only health, so I can only speculate. The better comparison would be with Worker's Compensation insurance, where the loss control mechanisms…

Do the insurance companies pay for safety equipment or training in their customer's workplaces? No.

Employers pay those costs themselves in return for rate reductions. Not sure how that differs from any of my other comparisons (auto, life, homeowner's).

I think you have to admit that one's health care premiums have nothing to do with that individual's "actuarial" risk to the insurance company. There is not a single form of insurance that follows that pattern. NONE.

Re: Just How Profitable Are Healthcare Insurers?

#42

Post by owinebarger » Tue, Mar 09, 2010, 12:41 PM UTC

roboneal wrote: post #41

owinebarger wrote: post #39

Earlier quoted context omitted.

To some extent, they do in the form of a premium rebate, though it is unlikely to be large enough to be a substantial reimbursement for a single policy period - perhaps over the life of the policy the cumulative rebate might cover the up-front cost. I haven't worked in casualty, only health, so I can only speculate. The better comparison would be with Worker's Compensation insurance, where the loss control mechanisms…

Do the insurance companies pay for safety equipment or training in their customer's workplaces? No. Employers pay those costs themselves in return for rate reductions. Not sure how that differs from any of my other comparisons (auto, life, homeowner's). I think you have to admit that one's health care premiums have nothing to do with that individual's "actuarial" risk to the insurance company. There is not a single f…

They forego revenue in exchange for the loss control. It's economically equivalent. This is like those discussions of whether taxes that are charged directly to businesses are paid by the business or by their customers.

As for the other, I admit health care insurance has its own peculiarities that make it a distinct field of insurance. And, no, your last assertion is incorrect. I have the advantage of having actually worked in the group pricing department of a major health insurer, so I'm not just speculating here. In lieu of further banging my head against the wall, I'll point out that the syllabi for the SOA's actuarial exams are available to the general public - just look in the "education" section of their site.

Re: Just How Profitable Are Healthcare Insurers?

#43

Post by CWuestefeld » Tue, Mar 09, 2010, 2:05 PM UTC

pw0ncakes wrote: post #29

tullius wrote: post #27

Earlier quoted context omitted.

Companies are much better managed now than they were a few decades ago. Think about the fact that corporate raiders were able to buy large companies in the 80's, split them apart and sell their constituent lines of business for more than the companies were previously worth. CEO pay has simply increased in line with the market capitalization of the largest public companies.

The stock market is a poor arbiter of whether a business decision is good for the long run. Traders are good at outguessing each other in the short term, but have no sense of the long term.

Again, how about a citation? On what basis do you believe that they're not reflecting the long term?

Re: Just How Profitable Are Healthcare Insurers?

#44

Post by DennisP » Tue, Mar 09, 2010, 2:47 PM UTC

Their profit is irrelevant to me. The important number is their medical loss ration: how much of my premiums go into actually paying for healthcare. In the U.S., shareholders get antsy if insurers pay more than 80% of their premiums on healthcare, and some insurers pay less than that. In France, Germany, and Japan, private non-profit insurers spend over 95% of premiums on healthcare. (Source: The Healing of America by T.R. Reid)

One expense for U.S. insurers is medical underwriting - the army of people they employ to find reasons to deny you coverage. The reason they have to do this is that their competitors are doing it. Anyone who provides better coverage at a good price will be swarmed by sick people and go out of business, so they are in an arms race to provide the worst coverage they can get away with.

Level the playing field by, eg., requiring coverage of pre-existing conditions (as the countries I mentioned do) and this arms race goes away.

Re: Just How Profitable Are Healthcare Insurers?

#45

Post by roboneal » Tue, Mar 09, 2010, 4:05 PM UTC

owinebarger wrote: post #42

roboneal wrote: post #41

Earlier quoted context omitted.

Do the insurance companies pay for safety equipment or training in their customer's workplaces? No. Employers pay those costs themselves in return for rate reductions. Not sure how that differs from any of my other comparisons (auto, life, homeowner's). I think you have to admit that one's health care premiums have nothing to do with that individual's "actuarial" risk to the insurance company. There is not a single f…

They forego revenue in exchange for the loss control. It's economically equivalent. This is like those discussions of whether taxes that are charged directly to businesses are paid by the business or by their customers. As for the other, I admit health care insurance has its own peculiarities that make it a distinct field of insurance. And, no, your last assertion is incorrect. I have the advantage of having actually…

"They forego revenue in exchange for the loss control."

You obviously don't understand insurance outside of healthcare, if the insurance companies' underwriters and actuaries do their job right - the profit/revenue of all policy types is the same regardless of risk.

High risk=High rates, Low risk=low rates. Revenue/risk is balanced.

We all suffer spiraling healthcare costs because there is little correlation to what you pay for healthcare insurance and your overall risk to the insurer.

"Group underwriting" only exists in the healthcare industry - no where else.

Re: Just How Profitable Are Healthcare Insurers?

#46

Post by anamax » Tue, Mar 09, 2010, 4:40 PM UTC

jbooth wrote: post #23

anamax wrote: post #22

Earlier quoted context omitted.

Insurance companies are, however, subject to "the law". Govt agencies mostly aren't. Feel free to compare Medicare's dispute process with that of an insurance company. And remember that some people can switch insurance companies while no one can switch Medicare. We can make switching insurance companies easier. Switching "single payers" is, by definition, impossible.

The government is indeed subject to the law, much more stringently than insurance companies in fact. Try doing something nominally illegal in a government agency. The government can pass laws, of course.. but the insurance industry can hire lobbyists. Seems like an awful uphill battle to beat those guys, based on the last 60 years of healthcare reform history. Harry and Louise can be pretty influential. Medicare's di…

> The government is indeed subject to the law, much more stringently than insurance companies in fact. Try doing something nominally illegal in a government agency.

You're talking about rules for employees. I'm talking about interaction with clients. When the DMV says "no", you're basically hosed.

> Well, I'll tell you one thing, Medicare doesn't spend the 20 million to deny 21 million dollars in claims like I outlined above.

Actually, it does. More to the point, the rules are such that it doesn't have to spend much money to deny and there's almost nothing that you can do about it.

> We should make switching insurance companies easier, but that doesn't get us anywhere if they're all embracing the same bad practices.

Competition results in better customer service in every other industry, why is health insurance different?

> I don't have the option of starting an insurance company out of my garage like you could with a tech startup

Actually, you do. All it takes is some money and a decent risk model, and you can bootstrap by providing services to companies that self-insure, which significantly reduces the money required.

> That's the tradeoff.. as far as which is more effective, we could look at every other industrialized country which gets better outcomes for a fraction of the cost

Not on comparable populations.

Re: Just How Profitable Are Healthcare Insurers?

#47

Post by anamax » Tue, Mar 09, 2010, 4:43 PM UTC

protomyth wrote: post #24

anamax wrote: post #21

Earlier quoted context omitted.

> this point, given how messed up the health care system is (law, super expensive EOL care, high entry cost for doctors and nurses, poor non-emergency care situation), can you really do the right things. Which of those factors are due to insurance companies? If you don't fix them, how likely is it that any "new" system will be any better?

Those factors are the landscape the insurance companies operate in. The biggest problem is that I don't see any of the actual legislation doing anything about actual input costs to the system or increasing competition.

> The biggest problem is that I don't see any of the actual legislation doing anything about actual input costs to the system or increasing competition.

Not to be rude, but where have you looked?

Besides, if that sort of legislation is what is required, how does its absence justify doing something else?

Re: Just How Profitable Are Healthcare Insurers?

#48

Post by protomyth » Tue, Mar 09, 2010, 6:11 PM UTC

anamax wrote: post #47

protomyth wrote: post #24

Earlier quoted context omitted.

Those factors are the landscape the insurance companies operate in. The biggest problem is that I don't see any of the actual legislation doing anything about actual input costs to the system or increasing competition.

> The biggest problem is that I don't see any of the actual legislation doing anything about actual input costs to the system or increasing competition. Not to be rude, but where have you looked? Besides, if that sort of legislation is what is required, how does its absence justify doing something else?

Well, the last time it was on one of the senator's websites. I admit I was skimming to look if some things were changing for certain currently funded programs, but I kept my eye out for other stuff.

Politics are political. Each party is funded by people who want parts of the current system to stay the same or change for their benefit. Trial Lawyers (D) and Drug Companies (R) for example have huge stakes. I ignore what a politician says and look at the actual documents. I admit, lately, it has been really hard to get ahold of bills. I worry about the urgency that doesn't let a bill be posted and reviewed before voting.

Re: Just How Profitable Are Healthcare Insurers?

#49

Post by anamax » Tue, Mar 09, 2010, 9:46 PM UTC

protomyth wrote: post #48

anamax wrote: post #47

Earlier quoted context omitted.

> The biggest problem is that I don't see any of the actual legislation doing anything about actual input costs to the system or increasing competition. Not to be rude, but where have you looked? Besides, if that sort of legislation is what is required, how does its absence justify doing something else?

Well, the last time it was on one of the senator's websites. I admit I was skimming to look if some things were changing for certain currently funded programs, but I kept my eye out for other stuff. Politics are political. Each party is funded by people who want parts of the current system to stay the same or change for their benefit. Trial Lawyers (D) and Drug Companies (R) for example have huge stakes. I ignore wha…

> Well, the last time it was on one of the senator's websites.

That's better than nothing, but if you looked at a Repub senator's website, you're unlikely to see all Repub proposals, let alone Dem proposals. The reverse is also true.

> I ignore what a politician says and look at the actual documents. I admit, lately, it has been really hard to get ahold of bills. I worry about the urgency that doesn't let a bill be posted and reviewed before voting.

I agree with all that.

Re: Just How Profitable Are Healthcare Insurers?

#50

Post by protomyth » Tue, Mar 09, 2010, 11:31 PM UTC

anamax wrote: post #49

protomyth wrote: post #48

Earlier quoted context omitted.

Well, the last time it was on one of the senator's websites. I admit I was skimming to look if some things were changing for certain currently funded programs, but I kept my eye out for other stuff. Politics are political. Each party is funded by people who want parts of the current system to stay the same or change for their benefit. Trial Lawyers (D) and Drug Companies (R) for example have huge stakes. I ignore wha…

> Well, the last time it was on one of the senator's websites. That's better than nothing, but if you looked at a Repub senator's website, you're unlikely to see all Repub proposals, let alone Dem proposals. The reverse is also true. > I ignore what a politician says and look at the actual documents. I admit, lately, it has been really hard to get ahold of bills. I worry about the urgency that doesn't let a bill be p…

You know, I really don't remember which party, it was a pointer over to the full house's site. This hiding of bills has to stop. It is the information age and I had a lot easier time getting the full text of a bill ten years ago.

I'm just worried everyone is going to have the same "end of fiscal year no money for you" that has plagued the reservations under IHS. The sad part is the coverage of the news media is so poor on these, that the few stories that have gone out are thought of as aberrations instead of the day to day reality. I just wished the gov (both parties) would prove they could get it done with the limited population already served before moving on.