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Comment by derektank | Hacker News Reader

You can negotiate all you want but ultimately the productivity improvements have to come from providers (hospitals, pharmaceutical companies) if you want to lower costs. There are ways to make insurers better agents (one simple step would be to make their customers the actual patients, rather than the employers of patients) but I'm not sure how much power they actually have to keep costs low

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Every dollar of profit an insurance company makes is an unnecessary cost. It should be returned to the customers because it means they were over charged. That’s the biggest opportunity for cost savings

I wonder why this is getting downvoted as I've had this exact same thought.

A most efficient insurance program would be a closed loop.

Any leftover money not spent on care would be used to reduce premiums the following year and/or be saved for higher claim years.

I wonder how that could exist in the US? Perhaps these health sharing ministries are as close as we'll get: https://www.medishare.com/

I like the wording leftover money. My index fund has an "expense ratio" of 0.06% or something like that. Any money that doesn't go toward a patient directly, including everything from CEO bonus to call center expenses should be added as an expense that does not go directly to the patient and this expense ratio should be advertised front and center everywhere.

However, I don't think the problem is truly fixable without Medicare for all or similar single payer scheme. There is just a huge gap in not just bargaining power but just knowledge of the market information between the seller (hospitals and health care providers) and the buyers (sick people) that a free market solution can't even work in theory. Even if you ignore the fact that I can't exactly shop around when I have an emergency any more than I can shop around when my house is on fire. The only viable solution is single payer and the sooner we get there, the better for everyone.

Healthcare cost sharing ministries can work for some consumers but there are loopholes which allow them to deny coverage for services that commercial insurers do cover. This can leave consumers with huge surprise bills.

https://www.nbcnews.com/health/health-care/health-care-cost-...

Commercial insurers are already required to rebate premiums if their medical loss ratio is below the limit.

https://www.cms.gov/marketplace/private-health-insurance/med...

A huge amount of physician / provider time (cost) is dedicated to insurer billing, coding, and documentation.

That’s correct. And I still baffles me that no substantial improvements have been made in that problem space. My grocery shop has a LLM powered Robo-assistant, and doctors are still copy-pasting (or even worse, re-inputting them by hand) text between various pieces of software on a daily basis.

I understand regulation plays a good role in that, but I can’t believe that it is the only reason..

Healthcare software is incredibly resilient against bottom-up replacement.

Huge feature lists, high standards for correctness, strict regulations, existing long-term contracts.

It's like the space industry before SpaceX. Everyone knows the incumbent is inefficient, but you can't compete without building the whole damn rocket.

LLMs are absolutely being used in medical transcribing. A doctor I know was just raving to me about Epic's new system. Now instead of staring at the computer during the whole appointment he has the epic LLM fill out the report from his notes and does brief editing which allows more face to face time.

That’s good to know! I’m guessing some hospitals are too stingy to pay for that feature then..

Even vertically integrated hospitals, insurances and pharmacies still suffer from the cost issue, so I think a large portion of the problem is more fundamental.

I think a substantial part comes from low risk tolerance and opting for high quality low volume care

The conversion factors for private insurance are 2–3x those of Medicare. There's plenty of room to lower costs. Either private insurance companies aren't interested in lowering costs or their claims process is so arduous that providers demand higher rates to deal with the high rate of denials and ever changing minutiae.

Providers are not the problem here.

Pharmaceutical companies and hospitals both have much higher profit margins than insurance companies and represent a much larger share of the total cost of healthcare than insurance companies so while I don't think they're the entire problem, they are at least part of it. You and another commenter make a good point regarding inefficiencies in claims processing but I'd be curious to know how substantial that is relative to the entire cost of care.

  much higher profit margins

That is an entirely worthless metric. Pharma and for-profit hospitals benefit from the insurance companies' perverse incentives to keep costs high. Higher cost for care means that the insurance companies can jack up the premiums to maintain their legally allowable margin. A 20% slice of a bigger pie is a larger amount than a 20% slice of a smaller pie after all.

Even better, insurance companies can wag their fingers at the doctors and all of Ayn's acolytes will chime in about how for-profit care is here to save humanity from the evils of doctors. All the while the for-profit insurance companies are laughing to the bank because they're disincentivized from negotiating more reasonable prices. There's a reason Medicare pays conversion factors that are about a third to a half of what for-profit insurance companies are willing to pay.

Even better, insurance companies have a captive audience. While the federal mandate to redirect your money to for-profit insurance was struck down, five states (and DC) have their own individual mandates.

> Either private insurance companies aren't interested in lowering costs

They aren't. Since their profits are capped at 20%, reducing costs means reducing profit as well, so they are actually incentivised to keep costs high.

> their claims process is so arduous that providers demand higher rates to deal with the high rate of denials and ever changing minutiae.

I think this is also the case

You can negotiate all you want but ultimately the productivity improvements have to come from providers (hospitals, pharmaceutical companies) if you want to lower costs.

Why would they turn productivity improvements into lower costs, when they could instead turn them into higher profits? Big health insurers such as UHC practice "intercompany eliminations", as it's known; they own those providers you mention and use increasing charges there to get around the limits on how much of the insurance premiums they can keep for themselves. It's in their interests for the charges to go up, especially on anything that's actually cheap. Productivity improvements is just more profit to launder through the providers they own for the purpose of laundering those premiums.

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