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SoftTalker

Insurance profit is limited to a percentage of what they pay out. So the more they pay, the more money they make.

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Also the largest insurers increasingly own the doctors you’re seeing too.

Also the pharmacy you get your drugs from.

Also the entity that negotiates prices between pharma companies and your insurer.

More healthcare consumption = better, across the board

Even when it's not the insurer, it's at least a hospital. Many a doctor around me that used to have a private practice sold to one of the hospital chains, as they promised more money than by owning, solely due to superior collective action advantages. A large insurer can bully a private practice into cutting costs, but a hospital network that handles 40% of ERs in the metro area? The insurance company can lose. So everyone makes more money but the people paying insurance.

On top of that the ACA prevents new physician owned hospitals from being established and placed restrictions on expansions of existing ones

Are you talking about Certificates of Need? Those have been around for a lot longer than the ACA [0]

[0] https://en.wikipedia.org/wiki/Certificate_of_need#History

To be fair, this is because there's long-standing [but disputed] evidence that healthcare providers drive up costs/utilization when they can refer to hospitals they have equity stakes in.

Messy business!

> More healthcare consumption = better, across the board

more paid money for less healthcare consumed = better for insurence

thus all the declined treatments

Not quite true. If you own the providers, getting people to pay deductibles and copays (i.e. getting treated) will yield way more money than just having them pay premiums.

But undercutting the other insurers/providers should earn you more, if it were competitive, which I guess it's just not

Correct, which is another reason why they are buying the healthcare providers. It allows the insurers (“pay-viders”) to strong arm independent doctors and smaller insurers out of the market.

Ok, I get it now. No other explanation has made sense so far, it's a cartel.

The insurers are legally obligated to pay out 80-95% of their premiums for treatment. So the only way to grow profits is to spend 2x and much and charge 2x as much. Sure you only make the same 5-20% margin, but it's on 2x the revenue so it's 2x the gross profits.

Uh, no… they want to deny claims. The best situation for insurers is that you are healthy for a while, then abruptly die of something that cannot be treated.

They are accepting claims that are way more expensive than in any other country, so I don't think this is their game

Uh no, they don't. Not if they're also the ones who provide healthcare. Simply denying claims isn't even remotely close to the financially (and obviously not the politically) optimal strategy.

The optimal strategy if you own both the insurer and the provider is a combination of premiums, copays, deductibles, and maybe even some totally unnecessary care to drive up volume.

Lower margin on dramatically higher volume is still dramatically more money. Lower margin actually provides political cover for your $400 billion revenue years.

Oh, that's important info. Also such a rule suggests that health insurance isn't a competitive market.

There's no such thing as a “competitive market” in the real world.

Global commodities are not competitive?

What commodity isn't ruled by intergovernmental agreements, a cartel, a monopsony or something else?

Please name just one.

Gold

Gold isn't really a commodity. It's mostly used and traded as an asset.

Yes there is.

You first have to agree on a definition of free in this context. When Adam Smith was writing the Wealth of Nations most of the transactions in the market were between entities with more or less comparable power. Local people bought stuff from local suppliers. This is very much not the case any more when it comes to transactions involving private individuals on one side and corporations on the other.

This is true but beside the point. I don't care either way what you count as a "free" market or whether such a thing exists, you can just say that health insurance is less free than almost any other market.

Name a single one then.

It's funny to see that this was my most downvoted comment ever on HN.

Looks like blasphemy against the “free market” religion isn't tolerated here.

All the other kinds of insurance

Ah yes, like the health insurance market, so competitive it took a CEO murder to fix abusive practices from the dominant actor.

How compelling of an example, really.

To clarify, "other kinds of insurance" means not health insurance

wow, why would they cap it that way? that makes no sense.

It makes a ton of sense in theory. In a fair market, you would want to prevent the insurer from charging super high premiums that let them make a large profit relative to the cost of care provided.

The problem is that it doesn't stop there. There is a second order effect.

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