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Comment by yadaeno | Hacker News Reader

Even the various single payer models in Europe and asia still have insurance companies.

The difference is that in these systems the government has some stake — whether it’s providing the public insurance fund, or owning the company itself — so that the government is financially incentivized to reduce costs.

In the US case everything is private so all parties are incentivized to increase costs as much as possible.

We really should to copy the Bismarck model. Public owned “public fund”, heavily regulated private insurance and care.

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Competition among insurance companies in most other systems (like the Bismarckian system) is far more constrained and so consumes far less capital. A huuuuge portion of health insurance premiums just go toward spending on ads to pull members from other insurers and otherwise retain your own (especially while they are paying into the plan rather than pulling from the plan, at which point you’re happy to lose them).

> A huuuuge portion of health insurance premiums just go toward spending on ads

Wrong.

"I̶n̶ 2̶0̶2̶3̶ a̶l̶o̶n̶e̶, t̶h̶e̶ f̶o̶u̶r̶ b̶i̶g̶g̶e̶s̶t̶ i̶n̶s̶u̶r̶a̶n̶c̶e̶ c̶o̶m̶p̶a̶n̶i̶e̶s̶ i̶n̶ t̶h̶e̶ U̶.S̶. p̶a̶i̶d̶ a̶ t̶o̶t̶a̶l̶ o̶f̶ $̶3̶.7̶ b̶i̶l̶l̶i̶o̶n̶ t̶o̶ g̶e̶t̶ t̶h̶e̶i̶r̶ n̶a̶m̶e̶s̶ o̶n̶ y̶o̶u̶r̶ s̶c̶r̶e̶e̶n̶s̶" [1] (EDIT: It's less than $30bn [3].) out of $1.5 trillion of premiums collected [2].

[1] https://www.bankrate.com/insurance/car/insurance-advertising...

[2] https://www.cms.gov/files/document/highlights.pdf

[3] https://www.emarketer.com/content/us-healthcare-pharma-ad-sp...

1. Your $3.7 billion figure is about auto insurers

2. I misspoke and meant "marketing" broadly, not ads in particular. This all fits under administrative overhead which is one of the major sources of inefficiency between private health plans in the US compared to Medicare/Medicaid.

> misspoke and meant "marketing" broadly

Do you have a figure for this?

Sure: Private insurance overhead is around 15% (up to 20%) while Medicare/Medicaid overhead is around 2%.

They are both insurance programs.

Aside from variations in fraud detection efforts (which Medicare/Medicaid should do more of), what justifies such a gap?

It's various methods by which they grow and retain market share, which Medicare/Medicaid don't need to do.

> Sure: Private insurance overhead is around 15% (up to 20%) while Medicare/Medicaid overhead is around 2%

This doesn't say the difference is in marketing.

I believe there should be a government backed, credit union style, non profit operating in every industry as a baseline for companies to compete against.

I don’t think that would work. The big insurance companies would find a way to undermine that. But also, the government insurer would end up with the most expensive patients who can least afford premiums, and then the libertarian types will use that to show how the government isn’t as efficient as the private sector.

I have no idea what the actual solution should be, though.

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