Yeah, it is really a shame. It would be great to see some new competition in the pharmacy benefit managers and pharmacy sector
If they want to go vertical the whole way, then retail pharmacies are also not a money maker (see Walgreens’ figures, and CVS pre Caremark and Aetna merger). Then there is getting into the provider side, such as employing doctors and owning and operating hospitals. This side has more margin, but is very liability heavy and very risky to get into.
And Kaiser Permanente already does the entire healthcare vertical, but even they are not able to offer measurably lower premiums.
The biggest margins are in pharmaceuticals, but that requires billions of dollars in investment and many years to develop, all for what? At the end, you might as well sell your own medicines at a high margin.
I feel like a lot of the costs in medicine have to do with liability, and without tort reform, there is not much any business can do about costs.
They wanted to reduce medical costs, and therefore their insurance costs, basically. I worked in a health tech company when this news broke years ago and was skeptical then. Health care is a hard industry with tons of perverse incentives and opposing interests. Any solution for our health care costs will include government regulations and laws. The private sector cannot, on its own, do it.
If there’s multiple huge companies operating with similar, small profit margins over the course of 10+ years, it probably means they have optimized as much as possible within the constraints of the existing system. Hence, I would conclude that any further optimizations would have to come from changing the constraints.
The three companies all self fund their employees insurance, so the goal was to cut out some of this bloat by providing services directly to employees.
The Amazon Care implementation was amazing, it's unclear why it failed. I would speculate its because costs are dominated by services they didn't provide (emergency rooms etc).
Yet other plans are able to compete on the west coast.
People are certainly willing to pay more for PPO plans which give them more options but personally I’ve never run into problems with KP. And the California rule which means hospital charges for HMO patients are capped at the deductible for an out of network ER visit is hugely important. Otherwise you get nickel and dime’d by all sorts of charges for each professional who sees you in the ER and some hospitals even went after patients for $1000s when they charges more than the insurance company would pay. https://www.sfchronicle.com/bayarea/heatherknight/article/In...
The No Surprises Act took care of these issues nationwide as of Jan 1, 2022:
https://www.npr.org/sections/health-shots/2023/02/28/1159786...
> The office told KHN that the "participating provider" contract does not override the laws barring out-of-network charges in emergency situations. "Danielle had an emergency and Regence acknowledges it was an emergency, so she cannot be balance-billed," said Stephanie Marquis, public affairs director for the Washington state Office of the Insurance Commissioner.
Medicine is life-or-death. It would make sense that carelessness and dangerous products would cause serious damages including to the point where certain providers and drugs are not commercially viable because they literally do more harm than good.
The US healthcare market is a complete clusterfuck. Other countries get comparable outcomes from universal healthcare for about the same outlay as we already spend on public healthcare.
It is a good value, and works well for those who 1) aren't particularly involved in directing their own care or 2) are extremely aggressive in asserting themselves. People in the middle get frustrated.
Kaiser has a reputation for being incredibly inflexible and rationing care to a degree that makes it a non-starter for anyone who has any healthcare needs beyond routine care (assuming they have an alternative to choose from). They have incredibly restrictive network rules, and they make it much harder to access non-routine care (additional hoops to jump through, etc). It's a very frustrating experience unless your care needs happen to align exactly with what their actuaries have determined is optimal.
This is not really surprising - it's exactly what you'd expect would happen when an insurer is directly responsible for clinical care (as much as integrated capitated healthcare systems pretend otherwise by using different terms to describe themselves, at the end of the day, that's exactly what they are: medical practices run by health insurance companies).
KP may officially be a non-profit, but their CEO rakes in millions and their physician group is a separate for-profit entity.
There are some providers that make heroic efforts to provide quality care, but the overall culture seems to be very bureaucratic and big-co checkbox exercises.