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How much health insurers pay for almost everything is about to go public

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Re: How much health insurers pay for almost everything is about to go public

#21

Post by lotsofpulp »

jjoonathan wrote: post #14
lotsofpulp wrote: post #12

Earlier quoted context omitted.

If insurers’ customers were not price sensitive, then they would have higher profit margins than 5%.

The accusation here isn't that they are skimming a disproportionate amount, it's that they aren't doing their job, which is to put downwards pressure on provider prices.

The fact that there are at least 5 large insurers competing nationwide and all have 5% or less profit margins means there is lots of competition, and if they are not providing the best prices, their customers will go elsewhere.

See pharmacy forums as an example for all the pharmacists complaining about how independent pharmacies are so tough to operate due to ever smaller payments from insurance companies for the past 10 years.

Re: How much health insurers pay for almost everything is about to go public

#23

Post by lotsofpulp »

xboxnolifes wrote: post #18
lotsofpulp wrote: post #12

Earlier quoted context omitted.

If insurers’ customers were not price sensitive, then they would have higher profit margins than 5%.

In the US, isn't there regulations that effectively cap their profit margins? Since they have no incentive to increase their margin through negotiation, their only incentive would be to lower their costs below competition.

Medical Loss Ratio:

https://www.healthcare.gov/glossary/medical-loss-ratio-mlr

It says 80%/85% of premiums have to go back out as payments for claims.

> Since they have no incentive to increase their margin through negotiation,

I do not see why this would be true. The less an insurance company pays for healthcare, the lower the premiums or can offer and win more business.

Re: How much health insurers pay for almost everything is about to go public

#24

Post by wccrawford »

ch4s3 wrote: post #17
AdmiralAsshat wrote: post #9

Earlier quoted context omitted.

That would get in the way of unadulterated profit , you see.

Health insurers in the US have a cap on how much of premiums can go to profits.

Doesn't that just mean that they have an interest in keeping these costs high? The higher the costs, the larger that % is for the in absolute dollars.

If all the costs come down, they are allowed to make less money.

Re: How much health insurers pay for almost everything is about to go public

#25

Post by yardie »

logicalmonster wrote: post #19

Question to somebody who might know as this seems like a relevant thread to ask in. If a person wants to pay directly in cash/credit-card for services rendered by a doctor, do doctors' agreements with insurance companies generally prevent them from offering a cash discount to cash-paying patiences lower than the insurance company negotiated price?

Yes, not only do they offer it but some insurers will give you credit card gift cards to help pay for treatment. That is how dysfunctional our medical system is at this moment. Providers will lock insurers at one rate, negotiate a different rate for self-insured that could be lower/higher. And insurers get wind of this and try to sneak pay the self rate.

Re: How much health insurers pay for almost everything is about to go public

#26

Post by nimish »

wccrawford wrote: post #24
ch4s3 wrote: post #17

Earlier quoted context omitted.

Health insurers in the US have a cap on how much of premiums can go to profits.

Doesn't that just mean that they have an interest in keeping these costs high ? The higher the costs, the larger that % is for the in absolute dollars. If all the costs come down, they are allowed to make less money.

Bingo. This is why they loved the ACA. Only allowed one scoop of ice cream? Great I'll use an enormous scoop.

Re: How much health insurers pay for almost everything is about to go public

#27

Post by jjoonathan »

lotsofpulp wrote: post #21
jjoonathan wrote: post #14

Earlier quoted context omitted.

The accusation here isn't that they are skimming a disproportionate amount, it's that they aren't doing their job, which is to put downwards pressure on provider prices.

The fact that there are at least 5 large insurers competing nationwide and all have 5% or less profit margins means there is lots of competition, and if they are not providing the best prices, their customers will go elsewhere. See pharmacy forums as an example for all the pharmacists complaining about how independent pharmacies are so tough to operate due to ever smaller payments from insurance companies for the pas…

> if they are not providing the best prices, their customers will go elsewhere

Nope. Not if they can inject enough noise into the comparison process to hide the differences. There's a reason they threw so much money at getting bronze/silver/gold standards killed. They knew it was critical to avoid being squeezed.

> pharmacists complaining

Pharmacists are a tiny part of the bloat picture and it's always easier to put the screws to smaller players. Come back when drugs and hospital stays stop costing twice as much as the rest of the developed world, or stop growing 10% y/y (on top of regular inflation) and then I'll believe that insurance companies are doing their negotiating job.

Re: How much health insurers pay for almost everything is about to go public

#28

Post by magila »

wccrawford wrote: post #24
ch4s3 wrote: post #17

Earlier quoted context omitted.

Health insurers in the US have a cap on how much of premiums can go to profits.

Doesn't that just mean that they have an interest in keeping these costs high ? The higher the costs, the larger that % is for the in absolute dollars. If all the costs come down, they are allowed to make less money.

Yes, this is one of the more unfortunate unintended consequences of the ACA.

Re: How much health insurers pay for almost everything is about to go public

#29

Post by lotsofpulp »

jjoonathan wrote: post #27
lotsofpulp wrote: post #21

Earlier quoted context omitted.

The fact that there are at least 5 large insurers competing nationwide and all have 5% or less profit margins means there is lots of competition, and if they are not providing the best prices, their customers will go elsewhere. See pharmacy forums as an example for all the pharmacists complaining about how independent pharmacies are so tough to operate due to ever smaller payments from insurance companies for the pas…

> if they are not providing the best prices, their customers will go elsewhere Nope. Not if they can inject enough noise into the comparison process to hide the differences. There's a reason they threw so much money at getting bronze/silver/gold standards killed. They knew it was critical to avoid being squeezed. > pharmacists complaining Pharmacists are a tiny part of the bloat picture and it's always easier to put…

> There's a reason they threw so much money at getting bronze/silver/gold standards killed.

I am not aware of these standards being killed. I select a Gold HSA plan every year.

https://www.healthcare.gov/choose-a-plan/plans-categories/

> Come back when drugs and hospital stays stop costing twice as much as the rest of the developed world, and then I'll believe that insurance companies are doing their negotiating job.

> Come back when drugs and hospital stays stop costing twice as much as the rest of the developed world, and then I'll believe that insurance companies are doing their negotiating job.

How are they supposed to negotiate if there is only 1 hospital in an area or a drug company owns the patent to a drug so they are the only seller? The insurance company is mandated to cover emergency care at the hospital and pay whatever price for the medicine if it has sufficient efficacy data, per the laws.

When there are generic drugs available, insurance does pay less for those drugs.

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