This is regulation everybody should be able to get behind. How are these markets supposed to function efficiently with healthy competition if critical information like this is hidden away?
There isn't a specific rule that explains this but there is a whole system that begets this as the most efficient system by the current players.
thr salient point for me is that people should be able to see prices before they commit to contracting to pay them (e.g. by receiving healthcare).
With wages, employees (and employers) get to see their price before committing. So the need for transparency seems like it would need a different justification.
For example, declining prices of labor indicate to suppliers of labor to reallocate labor supply to other fields.
Increasing prices of labor indicate to suppliers of labor to reallocate labor supply to that field.
https://you.com/search?q=George+Akerlof+information+asymmetr... https://www.investopedia.com/terms/g/george-a-akerlof.asp
For the record, what Adam Smith actually meant by "free" was "everyone is free to participate -- barriers to participation are controlled for and mitigated to the best ability". This requires regulation to discourage and ideally eliminate monopolistic behavior.
Left libertarianism is summed up as: live and let live. Very different.
If all the costs come down, they are allowed to make less money.
Compare to tech companies’ profit margins.
Anyway I just think saying a 5% profit margin is small because other businesses have larger profit margins is kind of naive. I mean if through competition insurance companies' profit margins dropped to 2%, then the current status quo of 5% would seem crazy.
It's all just a matter of perspective. Saying 5% is low because other businesses have higher profit margins doesn't make much sense since the businesses are totally incomparable.
For those purposes, a 5% profit margin indicates that health insurance companies do not have the pricing power that many other industries have. They actually have some of the lowest, which is fine, but then the claims of them being in control go out the window.
Whether or not 5% itself is too high can be determined by looking at the competition. There are at least 7 other major publicly traded health insurers competing against each other, all with nearly the same profit margin.
So either they are colluding with each other and there is corruption on a massive scale, or, the current parameters of the health insurance business simply result in a ~5% profit margin. If you think you can do better, then you are betting that you can do the job better than all the employees at these 7 companies, which is a lofty claim.
Answer is that they do not control the size of the scoop (as the original poster I replied to implied).
Insurance companies wrote the bill.
It’s typical old school GOP policy of leveraging private sector actors with public sector dollars. It’s not awful policy, but did create bad cost incentives and encourages cartel like health networks.
It’s also similar in nature to the Swiss system. Not a lot of GOP voters in Swiss cantons.
So while you could increase your costs so that you can increase your premiums thus getting 5% of a larger pie, that assumes that you can increase your premiums without losing customers to competitors.
For the most part, on the ACA marketplace, all the plans are pretty similar, so price is really your main differentiator.
Perhaps the obstacles of switching providers makes this competition less of an issue.
That is $675,000,000,000.00 they can take from us and instead of using for healthcare or even healthcare administration, it's just additional money that they took.
When did they take it?
All the 10-Ks are showing me 5% or less profit margins.
Prices paid in other countries are irrelevant due to numerous factors, such as cost of living, purchasing power of local currency, legal liabilities, and most important, whether or not it is taxpayer funded healthcare which means all sellers are dealing with 1 buyer, which is the nearly the exact opposite of the US, where it is all buyers dealing with 1 seller (hospital or drug manufacturer who owns the patent).
They can get there by overpaying for care or by refunding money/charging less. But they can’t get there with increased internal administration spending.
A deductible is an amount of care that you’re solely responsible for. None of that money goes to an insurance company.
Almost all real markets deviate from those requirements. Sometimes these deviations aren't enough to prevent the market from producing close to maximally efficient outcomes, and sometimes they are enough to make the market produce outcomes nowhere efficient.
This is one of the reasons why an economics degree requires coursework beyond Economics 101. :-) Economics 101 is the equivalent of Physics 101 where we mostly ignore things like air resistance and friction or Electronics 101 where we ignore things like parasitic capacitance and parasitic inductance of component leads and keep frequencies low and time scales long enough that we don't have to worry about speed of light delays between different sides of our circuits.
It's the courses after the 101 courses were you start to get messiness that is the real world of economics or physics or electronics.
Anyway, when a real world free market deviates from the requirements to produce a maximally efficient output one of the ways to make it work better is to use regulation to try to make it behave as if the missing requirement held.
A good example is when you have a good that costs the maker a significant amount to make but that anyone can easily copy perfectly at close to zero cost. A free market will tend to not be efficient for that good because makers have trouble making a profit (or even staying in business). Consumers pay near zero for their copies and so can consume as much as they want, which makes them happy, but there will be much less variety available than consumers want.
A long time ago the approach to that was to just not have a market for that kind of good. Makers would find some rich patron who was willing to pay to have new goods made. Free copies might still be made for the masses, but the rich patrons gained social status among their peers by being patrons of famous makers so would keep patronizing makers.
A regulatory fix is to make it so only the maker is allowed to make copies of their goods. You can then have a decent market in those goods. It's still not ideal because although it solves the problem of the market getting makers to make it does raise the price to consumers above the theoretical free market price which should be near zero.
Another approach would be to have the government pay the makers, and then let anyone freely make copies. This is probably the way to get closest to maximal efficiency but it raises the problem of how to have the government decide with makers to support. One approach to that is to try to track which things consumers are actually using, and then pay the makers proportionally to that usage.
Another issue with that approach is where should the money for the makers come from? It could come from general government revenues but then you have the problem of deciding how much should be used for this. Also you will have people who don't like these kind of goods and object to their tax dollars going to support them. Another approach is to tax use of these goods to fund the makers, or tax something that correlates well with use of the goods.
Let's not overlook that an approach that requires tracking of consumer use might require surveillance that, in the hands of someone who wants to do something less benign than just figure out how to allocate maker pay, could be used for evil purposes. That might be too high a price to pay just to get the most efficient levels of production and consumption of this particular good.
Real economics is complicated and messy.