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Comment by ma2rten | Hacker News Reader

At least in theory insurance companies should look out for price, because they want to be cheaper than other companies.

But, free market just doesn't work for health care. In a life or death situation people would pay anything.

FYI, in the US insurance companies are regulated such that: "No more than 20 percent of premium revenue can be spent on total administrative costs, including profits and salaries."[1]

So the difficult thing is they are incentivized to increase revenue to increase profits, and cutting costs won't result in more profit.

[1] - https://www.verywellhealth.com/health-insurance-companies-un...

Yep. And a lot of big companies are self-insured, so the "insurance company" is actually just an administrator for the big company's insurance pool. Thus reducing the cost incentive even more. Competition could help, but there just aren't a lot of insurance administrators that can run plans for the biggest companies, so there is little competitive pressure on price.

Yep, also I think the barriers to entry for the insurance market are extremely high. Not only is there a huge fixed cost of actually negotiating rates with every individual doctor/hospital, there's also the fixed cost of getting individual employers to consider you for their business. These and some other factors leave the insurance market with just a few insurance providers, who can let prices run away and simply charge higher premiums/deductibles without fear of competition from a "start-up" insurance provider.

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