Medicine is big business. Insurance exists because people are betting against their health. Profits this high indicate insurance is REALLY GOOD at getting people to bet against themselves.
Study reveals UnitedHealth's profit margins four times what it claimed [pdf]
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Re: Study reveals UnitedHealth's profit margins four times what it claimed [pdf]
#32Earlier quoted context omitted.
At the same tiem, lately I've been inserting small typos in my writing just to signal that it's not LLM generated. Nothing is a bigger red flag than a wall of text with perfect grammar and punctuation.
> Nothing is a bigger red flag than a wall of text with perfect grammar and punctuation. So you're choosing to punish well-written text?
Typo-free text. Typo-free text used to more be likely to also be well-written, but now it’s likely not to be.
But also, obviously, they’re being a gadfly for funsies.
Re: Study reveals UnitedHealth's profit margins four times what it claimed [pdf]
#33> Conventional accounting measures portray large health insurers such as UnitedHealth Group (UHG) as earning relatively low profit margins because they treat premium dollars that are subsequently paid out in medical claims as revenue. However, these medical claims are pass-through costs, not income retained by the insurer. I don't understand this claim. Doesn't every business have costs to make its goods and services…
I believe they are saying that only the portion of premiums paid by UHG customers _that are not_ spent on paying out claims should be counted as UHG revenue. That is if I and my employer pay UHG $18,000 over the course of the year and UHG pays out $2,500 to my doctors and to cover my prescriptions, only the remaining $15,500 should be counted as UHG revenue. The thinking here is that because UHG is legally obligated…
Not sure I'm buying it tbh. I'm no fan of the American healthcare system, but we don't need to invent new accounting to make it look worse than it is.
Lots of businesses and industries have legal obligations to pay money for various things at various times, they don't treat that as pass through...it's revenue and expenses. Money is fungible.
Re: Study reveals UnitedHealth's profit margins four times what it claimed [pdf]
#34Earlier quoted context omitted.
An intuitive explanation is that financial products are, approximately, buying and selling as part of the same transaction. You can't separate the "selling premiums" part from the "paying out claims" part. This is true of life insurance, investment firms, and banks. It's also true of marketplaces that connect buyers and sellers, like Etsy. Groceries stores are buying from suppliers and selling to consumers, but those…
I work for an insurance company so can shed some light here as this article is written by someone that clearly doesn't understand how the business model works. Fundamentally every insurance company is governed by 3 ratios, loss ratio (what percentage of premium is paid to make the buyer of the insurance whole), expense ratio (cost of doing business, paying staff, keeping office lights on, paying vendors) and combined…
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Re: Study reveals UnitedHealth's profit margins four times what it claimed [pdf]
#35Medicine is big business. Insurance exists because people are betting against their health. Profits this high indicate insurance is REALLY GOOD at getting people to bet against themselves.
People are extremely risk averse on this, which makes sense.
Re: Study reveals UnitedHealth's profit margins four times what it claimed [pdf]
#36Earlier quoted context omitted.
At the same tiem, lately I've been inserting small typos in my writing just to signal that it's not LLM generated. Nothing is a bigger red flag than a wall of text with perfect grammar and punctuation.
Lol, LLMs do some thing better, and some things worse than humans. And you're showing your humanity by purposefully being worse at LLM qualities, instead of beign good at human qualities?
It's literally virtue signalling (Human> AI)
Re: Study reveals UnitedHealth's profit margins four times what it claimed [pdf]
#37Earlier quoted context omitted.
I believe they are saying that only the portion of premiums paid by UHG customers _that are not_ spent on paying out claims should be counted as UHG revenue. That is if I and my employer pay UHG $18,000 over the course of the year and UHG pays out $2,500 to my doctors and to cover my prescriptions, only the remaining $15,500 should be counted as UHG revenue. The thinking here is that because UHG is legally obligated…
Not sure I'm buying it tbh. I'm no fan of the American healthcare system, but we don't need to invent new accounting to make it look worse than it is. Lots of businesses and industries have legal obligations to pay money for various things at various times, they don't treat that as pass through...it's revenue and expenses. Money is fungible.
I respectfully disagree. Should Stripe or VISA count all charges made with their network as revenue?
Re: Study reveals UnitedHealth's profit margins four times what it claimed [pdf]
#38The nice thing about stuff like this is that you can check the stock price to see if it's actually meaningful. You're not gonna surprise a bunch of wallstreet analysts with a finding that profits are actually 4x, and if you do, the gap up in stock price would be near instant.
That being said, while $UHG has had a good year, the stock is still underwater from where it's been since 2021, and no noticeable movement from this report.
Re: Study reveals UnitedHealth's profit margins four times what it claimed [pdf]
#39> Conventional accounting measures portray large health insurers such as UnitedHealth Group (UHG) as earning relatively low profit margins because they treat premium dollars that are subsequently paid out in medical claims as revenue. However, these medical claims are pass-through costs, not income retained by the insurer. I don't understand this claim. Doesn't every business have costs to make its goods and services…
I'm not an accountant and don't claim to have a clean answer to how it should be accounted, but I hope I can highlight the conundrum. Suppose you run a brokerage or some kind of marketplace enabling transactions. Should all transactions passing through your platform be considered your revenue ? Or only the part that stays with you for the services you provide, while deducting the component which is simultaneously dir…
All of this might be relevant in a conversation between accountants or investment analysts, but it's pretty obvious the "study" chose this particular methodology to get a number that makes insurance companies look as bad as possible. In this context, using their methodology does more to obfuscate/mislead than to clarify. If you say that UHI has a profit margin of 15%, most people would interpret that to mean that per $1000 worth of premiums paid, they make $150, which is exactly what happens. Their argument of "they charge $1000 in premiums, but of that $800 is paid out as costs, therefore their margin is 75%" is more confusing.
Re: Study reveals UnitedHealth's profit margins four times what it claimed [pdf]
#40Earlier quoted context omitted.
Insurance companies often have a parent company. That parent company owns healthcare providers and pharmacies. So it goes something like this United Health Group -> United Health Insurance United Health Group -> Sunshine Hospital. United Health Insurance has a profit cap, it’s a % of revenue. Sunshine Hospital has no cap. So Sunshine Hospital charged United Health Insurance X$ and that profit rolls up to United Healt…
>United Health Insurance has a profit cap, it’s a % of revenue. Sunshine Hospital has no cap. So Sunshine Hospital charged United Health Insurance X$ and that profit rolls up to United Health Group. That doesn't really work as a strategy unless UHI cornered the insurance market within a given region, otherwise they'd lose business to competing hospitals. You might then say "hospitals aren't competitive, they're (regi…
Uhh...? We know for a fact that this is how it works.
It's actually far more insidious.
The payer will have non-owned providers on their network, and by virtue of processing those claims they will understand a lot about the provider. They use this info to decide which providers to acquire. If the provider declines acquisition, the payer will use their member population (i.e. customers/patients of the provider who are covered by the payer) as leverage in negotiations against the provider, effectively crippling their business.
Once a practice is sufficiently maimed, they come back with another acquisition offer, and ta-da, the big player gets bigger.
Yes, all of this only works if the payer is large relative to other payers. There was a period of history where this was a caveat, now it's just an observation about history. Now, there is 1 or 2 mega-players in each region. They've divvied up the country into their own territories and will extract rent henceforth.
It's very important to understand that this model also eliminates all incentives to reduce costs of care. There is not a single player in the entire ecosystem who is incentivized to reduce cost of care except patients, but even there, most patients' health insurer is selected by their employer. Then what is an employer going to do? Select a health plan that doesn't have any local healthcare providers?