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Comment by zoomablemind | Hacker News Reader

> "... A separate regulation that applies to insurers has not been finalized."

This part of the puzzle is still missing. IIRC the providers are required to use patient's insurance (and the associated prices), when patient does have an insurance. So, for example, if cash price is lower, than the effective negotiated price (factoring in the deductible and copay), one would still be required to pay the insurance-based price. Granted, in most cases patient would have no idea about what are those prices are until getting the bill. Hopefully, this part will get more transparent.

This is especially noticeable with the high-deductible plans available under ACA.

It's getting harder and harder to clearly see the interests of providers and those of insurers separately from each other. Especially with the recent consolidation in the healthcare sector.

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Indeed, I think insurance and health providers collude to jack up prices. “Saving” a heavily inflated price makes the insurance look good. The provider can use the high prices as a bludgeon against the uninsured.

n=1, but I've sat in the room in contract renewal negotiations between a big insurer and a hospital.

There was no collusion, it was two sides that nearly hate each other arguing over rates. Hospital wanted more, insurer wanted to pay less.

I can imagine this being true at a micro level. But at a macro level, Obamacare has a rule that insurers can have a maximum profit margin of 20%. So you have two ways to increase profits in the long run:

1) Increase number of subscribers. Possible to do, but the market is pretty saturated.

2) Raise prices of healthcare overall. 20% of larger costs is more than 20% of smaller costs.

Intuitively, lowering costs would seem to be a money-making proposition, but if you are already at the 20% margin, it doesn't actually help you.

>Obamacare has a rule that insurers can have a maximum profit margin of 20%. So you have two ways to increase profits in the long run:

>1) Increase number of subscribers. Possible to do, but the market is pretty saturated.

>2) Raise prices of healthcare overall. 20% of larger costs is more than 20% of smaller costs.

The 20% profit margin also has to cover the insurer's operating expenses. After covering the costs, an insurer typically makes 2-3% in profit. Also, the insurance industry in aggregate is typically paying 85%-86% of premiums as medical services, so they still have incentive to negotiate prices with hospitals[0].

The insurance industry is likely to make a greater profit in 2020 due to the pandemic. Consumers have deferred a lot of their medical procedures, but their premiums have stayed the same.

[0]https://content.naic.org/sites/default/files/inline-files/20...

> The insurance industry is likely to make a greater profit in 2020 due to the pandemic. Consumers have deferred a lot of their medical procedures, but their premiums have stayed the same.

COVID will have drive up overhead, and also insurers will have COVID medical costs. If the net of the added medical costs of COVID and the reduced medical costs from deferring care is negative on medical costs, insurers will be driven over the 20% excess premiums cap and have to refund down; they don't get extra credit for COVID overhead.

If it increases medical costs in net, they'll have to pay the increased medical costs plus the increased overhead out of the same premiums, and so really lose.

The only way insurers win out of this is if medical costs are down enough to pay for the added overhead before hitting the 20% cap where refunds kick in.

(Or through external windfalls outside of the whole premiums and medical costs system, like if they manage to get forgivable PPP loans or something.)

Correct. I received a refund check from my insurance company this year because they did not spend 80% of premiums on healthcare.

Then insurance’s negotiating position is much weaker than an individual, because it is likely the individual can get up and walk away and do business elsewhere, but the insurance must cover some hospitals.

Probably more-so collusion between health providers and medical equipment companies.

As long as the insurance company isn't losing money between total paid premiums minus total claims, they don't have any incentive to care about overcharging. Artificially high medical prices do however work to their advantage during claim negotiations with health providers (e.g. "We know that piece of plastic you charged $1000 for only cost you $10, how about we give you $200").

> The provider can use the high prices as a bludgeon against the uninsured.

While I am sure that happens, my experiences in that past of being without insurance most places gave me a discount for paying in cash. Up to 30% at some clinics. This is especially true for smaller providers as dealing with insurance companies was a huge time and resource suck so they preferred cash patients.

Right, but that is usually 30% off a big number. If the provider had to deal with customers walking away for high list prices then that number will likely come down more than 30%

For most insured, payments that go towards the deductible make more sense than payments that don't, even with a fairly large difference in price.

That really depends on the individual/family. Most years our costs are much closer to zero than to our deductible.

In our case, specificly, the only exceptions have been things know significantly in advance where it would really be practical to be able to shop around.

Yes of course it depends on the size of the deductible and predictability of spending.

Average deductible is ~$1700, at that point the differences either need to be huge, or additional spending needs to be very predictable.

Source for $1700: https://www.kff.org/health-costs/press-release/benchmark-emp...

It's a clever success of the insurer lobbying effort. They have successfully convinced the US that it's the hospitals that are the problem not the insurers who control the revenue streams of hospitals.

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