Now, granted, that can also happen because Alex fat-fingered something in a cell, but that's something that's much easier to track down and reverse.
Privatized insurance will always find a way to pay out less if they could get away with it . It is just nature of having the trifecta of profit motive , socialized risk and light regulation .
It's the nature of everything. They agree to pay you for something. It's nothing specific to "profit motive" in the sense you mean it.
There are many other entity types from unions[1], cooperatives , public sector companies , quasi government entities, PBC, non profits that all offer insurance and can occasionally do it well.
We even have some in the US and don’t think it is communism even - like the FDIC or things like social security/ unemployment insurance.
At some level government and taxation itself is nothing but insurance ? We agree to paying taxes to mitigate against variety of risks including foreign invasion or smaller things like getting robbed on the street.
[1] Historically worker collectives or unions self-organized to socialize the risks of both major work ending injuries or death.
Ancient to modern armies operate on because of this insurance the two ingredients that made them not mercenaries - a form of long term insurance benefit (education, pension, land etc) or family members in the event of death and sovereign immunity for their actions.
Source?
That's a feature, not a bug.
We also have to remember all claims aren't equal. i.e. some claims end up being way costlier than others. You can achieve similar % margin outcomes by putting a ton of friction like, preconditions, multiple appeals processes and prior authorization for prior authorization, reviews by administrative doctors who have no expertise in the field being reviewed don't have to disclose their identity and so and on.
While U.S. system is most extreme or evolved, it is not unique, it is what you get when you end up privatize insurance any country with private insurance has some lighter version of this and is on the same journey .
Not that public health system or insurance a la NHS in UK or like Germany work, they are underfunded, mismanaged with long times in months to see a specialist and so on.
We have to choose our poison - unless you are rich of course, then the U.S. system is by far the best, people travel to the U.S. to get the kind of care that is not possible anywhere else.
I disagree with the statement that healthcare insurance is predominantly privatized in the US: Medicare and Medicaid, at least in 2023, outspent private plans for healthcare spending by about ~10% [1]; this is before accounting for government subsidies for private plans. And boy, does America have a very unique relationship with these programs.
https://www.healthsystemtracker.org/chart-collection/u-s-spe...
John Oliver had an excellent segment coincidentally yesterday on this topic.
While the government pays for it, it is not managed or run by them so how to classify the program as public or private ?
My take away is that as public health costs are overtaking private insurance and at the same time doing a better job controlling costs per enrollee, it makes more and more sense just to have the government insure everyone.
I can't see what argument the private insurers have in their favor.
So obviously the company that prioritizes accuracy of coverage decisions by spending money on extra labor to audit itself is wasting money. Which means insureds have to waste more time getting the payment for healthcare they need.
More compliance or reporting requirements usually tend to favor the larger existing players who can afford to do it and that is also used to make the life difficult and reject more claims for the end user.
It is kind of thing that keeps you and me busy, major investors don't care about it all, the cost of the compliance or the lack is not more than a rounding number in the balance, the fines or penalties are puny and laughable.
The enormous profits year on year for decades now, the amount of consolidation allowed in the industry show that the industry is able to do mostly what they want pretty much, that is what I meant by light regulation.
https://riskandinsurance.com/us-pc-insurance-industry-posts-...
Meta alone made $62bln in 2024: https://investor.atmeta.com/investor-news/press-release-deta...
So it's weird to see folks on a tech site talking about how enormous all the profits are in health insurance, and citations with numbers would be helpful to the discussion.
I worked in insurance-related tech for some time, and the providers (hospitals, large physician groups) and employers who actually pay for insurance have signficant market power in most regions, limiting what insurers can charge.