What do you think happens when a company has limited margins? Hint: almost all companies try to make a profit (which is fine). If the margins are unrestricted, the company can cut costs to increase profit, which is a good thing. If the margins are limited, the company must raise revenue to increase profit. For an insurance company (or a utility, and California has exactly the same broken rule for private utilities), this means raising rates or premiums.
It gets worse. If an insurer raises rates, they are required to spend 80% of that money! They are required to be inefficient! If the insurer reduces their outflows by 5% by doing a good job, they lose 5% of their profits by law. So they are basically required to do a bad job.
* Health care costs were growing out of control before these laws, which seem to have slowed that trend short-term but not long-term as the industry pivoted.
We do not have this in healthcare. Providers form cartels - at least in Northern California, this is so bad that the state AG is investigating (not very effectually) [0]. Customers generally can't even tell what a provider charges, so there is no price competition. There aren't many insurers, and they compete on so many incomprehensible dimensions that customers can't usefully choose. (And the most useful thing customers can look at is the network, but see the above issue with provider cartels.) Pharmacy benefits are highly corrupt and incomprehensible.
[0] We have Sutter Health, UCSF, Stanford, and Kaiser. There is very little in the way of independent providers left. Sutter Health in particular has aggressively merged with any available competition.
> An actual, non-corrupt, free market where customers are not locked in and there are more than just a handful of providers
I’m not suggesting an unregulated market. I’m suggesting a market in which antitrust laws are aggressively enforced.
I know someone that worked for BCBS and they had the nicest parking garage and a park on top of the building. Always renovations being done. I believe they even bought buildings nearby in the dense part of the city. I also think this person talked about getting a bonus.
They had some high tech security along with low tech security. It was pretty impressive at the time. 24/7 security, got to use their parking garage to for some sports game on a sunday.