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Comment by Brendinooo | Hacker News Reader

I just looked at the local marketplace plans. The absolute dirt-cheapest I could do for my family is ~$1,225/month premium with a deductible of $13,400 and out-of-pocket max of $21,200. Most of the structure is some form of "zero help until the deductible, then I pay 20%-40% of everything up until the OOP max".

In other words, I'm being asked to buy a product, and the cheapest form of it is to basically pay almost $15k in a year to hedge against someone getting cancer or whatever, and actively incentivizes me to not use it[0].

There is no meaningful shopping around, there is no incentive for me to do anything other than continue not smoking, there's no accounting for where I live or my health.

I dunno what the solution is. I'm just glad that the ACA included health sharing co-ops as an exception. Been doing that for awhile now and have saved a lot of money. (And they'll give me a discount if I get my weight down a little more!)

[0]: Because even if you get a free wellness visit or whatever, it's really easy for them to drop in some random test that ends up getting billed. Had this happen with my kids a few times if memory serves.

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So you have to pay like $30k out of pocket in a year before the insurance chips in a single dollar? And if you ever ask for a dollar, I can also reject your coverage.

How can I start an insurance company?

Broadly speaking yes, though to be fair I should note that if your household size is a certain number and your income is a certain number, that can come down. They cap the amount you pay in premiums to a certain percent of your income.

EDIT: https://www.healthreformbeyondthebasics.org/wp-content/uploa...

You don't pay the deductible for many typical services if you're in-network. We have a mid-tier United Healthcare plan, and we only ever pay a $25 copay per doctor visit.

United Healthcare's net profit margin is about half that of Chipotle in a good year: https://www.macrotrends.net/stocks/charts/UNH/unitedhealth-g...; https://www.macrotrends.net/stocks/charts/CMG/chipotle-mexic...

I pay around $1100 a month for me and my two children through my employer. Yes; I have a $25 copay for many services, but most are simply not covered under that $25 copay. They refused an age-appropriate colonoscopy last year. It's basically fucking useless and expensive.

So; is it worth it anymore? No. Is it necessary? Yes; unfortunately.

Yeah, I think that's a big part of the overall grievance. If we paid these high premiums and got great care, that'd be one thing. But I've almost never walked away from a sizeable medical expense in my family thinking I wasn't being ripped off somehow.

I just took a look at our annual medical contributions and employer's part.

We pay just over 10k for health insurance through our (different) companies. Our different employers cover almost 28k. So around 38k for insurance. This doesn't even include dental or vision which is separate.

It just seems so crazy how much we pay and still have deductibles. I understand we have small copays and get items covered like age-related screenings but this just feels excessive.

Just talk to people in the healthcare industry about what kind of patients they have. We cover a tremendous amount of treatments in the U.S., at an arguably unsustainable level of service.

My aunt had a kidney infection in Canada and my cousin had to pull teeth to get her scheduled for an MRI. My five year old got a black eye from running into a table and they scheduled him for an X-ray and CAT scan (“just in case “) later that same morning. Had the results by lunch. My dad had a non-emergency scan scheduled the next day, and an outpatient procedure for a kidney stent (to treat high blood pressure) within two weeks. Once the surgeon was in there he realized my dad didn’t need a stent after all.

Here in the US, I see wait times for medical care comparable from what I hear from my Canadian friends. I don't think we our system can really tout that as an advantage over theirs.

It's not about wait times, it's about excessive scanning and endless, marginal-benefit end of life care

The people who opposed socialized medicine by fear-mongering about “death panels” can’t now complain that their preferred system provides limitless, marginal benefit end of life care. That’s the trade off THEY argued for and said THEIR system could do.

What about the people living in the same country who didn't oppose socialized medicine or fear monger about death panels? Can they complain that their non-preferred system sucks every bit as much as they always knew it would, and advocate for improving it, or are they forever bound to suffer karmic justice for what other people did over a decade ago?

Where are you located? E.g. the average wait times for CT scans and MRIs in Canada is weeks: https://canjhealthtechnol.ca/index.php/cjht/article/download.... UK NHS is 6-18 weeks. Here in suburban Maryland I’ve never had to wait more than a day or two for anything.

I’ve never had anything that available (outside of urgent care which imo is not very good). None of this had an immediate need.

MRI a few years ago had a month and a half wait (not urgent but recommended).

Pediatrician? At least 3 months and thats IF they take new patients.

Allergist, 6 month waiting list.

My last PCP I had to book out 2 months in advance (the practice I wanted to go to was booked 6 months out).

We are also suburbs of a big city.

I live in the urban west. Most of the people I know have to wait weeks for pretty much anything.

When I had a serious accident involving multiple broken bones and the need for orthopedic surgery, I had to wait two weeks to get an MRI, although I did get a basic X-ray in the emergency room. Then another month (while being unable to move much, let alone work, and being in a great deal of pain) to get the surgery. That was me getting expedited scheduling. It also cost me a fortune out of pocket.

I pay 8% from my salary for mandatory government health "insurance" which is basically a tax as there are enormous waiting queues for something serious.

What is a typical service that you only pay $25? This year I had two shoulder injuries. I paid for every single thing (doctor visits, X-Ray, MRI, Physical Therapy).

For my family, annual screenings are around a $40 copay (no other bills after). I think I paid that for some age related screenings.

I only go to the doctor for the kids. So checkups, vaccines, ear infections, minor injuries, etc.

Profit margins are irrelevant if you inflate your costs to reduce them.

Not really... If you want more $s by inflating costs and keeping the margin constant, then you will need more capital for paying these higher costs. This additional capital will either come from equity or from debt. Currently both equity and debt are expensive....

Profit margin is quite relevant...

The capital comes from raising premiums.

Mine went from $3k/month to $3.6k/month this year.

Bonus points if you can steer the increased costs to providers you own. https://www.statnews.com/2024/11/25/unitedhealth-higher-paym...

>How can I start an insurance company?

One requirement is to be willing to earn returns less than SP500.

Look up profit margins and annual returns for UNH, Elevance, CVS, Cigna, Humana, Centene, and Molina.

You have a billion laws to follow, you’re used as a punching bag by politicians and customers, have to get the price of your service approved by a government employee, and for all of that, you earn a 2% to 3% profit margin.

No it will be a zero profit company. All of the revenues will go to my compensation and bonuses.

> for all of that, you earn a 2% to 3% profit margin.

Yeah -- it seems like a paradox that the insurance companies charge so many people so much money, yet struggle to make a profit.

I've heard that they spend a lot of money handling their "internal friction" -- reviewing claims, handling appeals, etc.

Health insurance premium revenue = medical loss ratio + operating costs + profit margin

Medical loss ratio is the money paid to healthcare providers. Operating costs end up being ~10%, across multiple publicly listed companies. This fact, plus 2% to 3% profit margins means any more cost reductions have to come from legislation, reduction in healthcare prices, or advances in automation.

https://www.oliverwyman.com/our-expertise/insights/2023/mar/...

https://www.kff.org/private-insurance/medical-loss-ratio-reb...

Uh huh, and for them to have inserted themselves between me and my doctor, what exactly did they contribute to the transaction and how much should I want to pay for such a privilege since apparently $30k a year isn't enough? A measly 2-3% for adding no value and creating friction, egregious, we must get the profits higher!

First of all, some or much of your premium is a wealth transfer (from young and healthy to old and sick). So consider that portion a tax (it literally is, just not collected by the government directly):

https://news.ycombinator.com/item?id=45800973

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

https://www.healthcare.gov/how-plans-set-your-premiums/

>what exactly did they contribute to the transaction

Obviously this varies based on personal experience, but the biggest benefit is usually covering the big expenses beyond the out of pocket maximum, such as premature babies, bypass surgeries, cancer treatments, hemophilia treatments, etc stuff that costs hundreds of thousands and millions of dollars.

Second would be negotiated pricing with healthcare providers. If you think you can do a better job negotiating, you are welcome to not pay the health insurance company (better referred to as managed care organizations), and see what kind of deals you can get.

Third would be services as an agent that knows something about healthcare to be able to discern necessary and unnecessary care, since most buyers are unable to discern that information. This is, of course, highly subjective based on personal experience and the lack of government audits here leaves much to be desired.

>how much should I want to pay

When you have 7 publicly listed managed care organizations along with numerous non profits such as the various BCBS and Providence and Kaiser Permanente all selling insurance at roughly the same price, it's sufficient to conclude prices are about as low as they can get in this business environment.

>A measly 2-3% for adding no value and creating friction, egregious, we must get the profits higher!

This sentiment really doesn't make sense, unless the goal is to just be outraged for the sake of being outraged, because it has been clearly shown that there aren't much profits to be had in the first place. It's such a shitty business that one will end up with more money by investing in SP500.

I think my sentiment is that with single-payer we could go from arguing about how expensive health care is and how much money should middle-men be able to extract from the system, to mostly just arguing about how expensive health care is.

Great. So this system provides guaranteed healthcare at the worst possible point, the emergency room, AND funnels these 'wealth transfer taxes' of yours through for profit corporations? Sounds like a really bad way to be doing this. Crazy also that we have a government insurance/payment program on top of this for old and sick people. So why have a government program and an additional private wealth transfer tax?

I have never met a normie whose insurance covers more than 1 million in yearly benefits. So no, they aren't covering millions of dollar claims.

> I have never met a normie whose insurance covers more than 1 million in yearly benefits. So no, they aren't covering millions of dollar claims.

Legally, an ACA compliant plan has to cover healthcare expenses more than the out of pocket maximum. “Benefit maximums” are not allowed under the ACA.

https://www.healthcare.gov/health-care-law-protections/lifet...

> Lifetime limits

>Insurance companies can’t set a dollar limit on what they spend on essential health benefits for your care during the entire time you’re enrolled in that plan. Yearly limits

>Insurance companies can’t set a yearly dollar limit on what they spend for your coverage.

Here is a famous example of a single healthcare recipient causing an insurer to stop selling insurance in a state:

https://www.desmoinesregister.com/story/news/health/2017/05/...

No, $13.4K before the insurance company starts chipping in. Also that would be total deductible for the family; there's a lower deductible per individual. (I.e., the deductible might be $2.5K per individual, and $6K for the family.) So if one person needs more medical care, the insurance company kicks in once you've paid $2.5K (or whatever amount) for that person's care.

The actual cost to treat "cancer or whatever" is extremely high in many cases. 15k a year to know you have that covered for a family isn't so bad given the true underlying cost.

A family member has a rare disease and I've gone through the details of the various treatments, how many people are involved in ongoing care and treatment etc. It's a lot of very well trained people spending a lot of time. A concrete treatment example - the process to create some blood plasma treatments is very complex, expensive etc. In the end, it will be millions of dollars of real underlying costs.

There is probably no cheap solution. Maybe GLP-1 type magic can put a real dent in the overall cost, but there will always be a desire to save people's lives even if the cost is very high.

> but there will always be a desire to save people's lives even if the cost is very high.

Also, Americans place extraordinarily high value on life. My wife's grandmother had cancer in her 60s and had a quarter of her lung removed. She then had a stroke in her late 80s. She was in rural Oregon, and they evacuated her via helicopter to Portland. They wanted to give her an aggressive treatment, but she refused, and passed away a couple of days later, having lived a full and complete life. She didn't have special health insurance or money saved up--she was a waitress before retiring, and had Medicare.

I took my dad (who is also on Medicare) to the ER three times in the last couple of months. There was nothing serious--his blood pressure was rather high and he got scared. Here in exurban Maryland, the hospitals aren't that busy. He got a non-emergency CT scan/MRI (I forget which) scheduled within a day, and an outpatient procedure to insert a stent in a kidney artery within two weeks. When the surgeon got in there with some pre-surgery diagnostics, he realized the kidney artery was fine and didn't insert the stent. My parents were upper middle class, but there's no way they paid enough into Medicare to cover the amount of medical care they've used just since retiring (last 5 years or so).

The whole system is setup to maximise the "care" whenever possible. IMHO it would be better with a universal healthcare that asked itself some tough questions. Start from a pile of money and calculate maximum impact backwards from there. But maybe that's impossible for the US. (It's satanic and/or communist or something.)

I like universal healthcare in principle, but I don't think the funding mechanism is the problem. We see the same cost inflation in the U.S. in sectors that everyone agrees should be publicly funded, like community colleges or transit. U.S. public spending on tertiary education is about 0.95% of GDP, which is higher than the U.K. (0.5%), Ireland (0.57%), Italy (0.62%), Australia (0.68%), and not that much lower than Germany (1.1%): https://www.oecd.org/en/data/indicators/public-spending-on-e.... Most of those countries have what Americans would call "free college," but we spend just as much as a percentage of GDP--and more in absolute terms--without college being free.

Our colleges simply spend way more money than European colleges. I grew up in Virginia, where George Mason University (GMU) is the second tier public school (behind UVA, William & Mary, and JMU). It's got a budget of $1.4 billion for about 40,000 students.

Compare that to Heidelberg University, which I understand is a renowned university in Germany. Excluding the medical school (which GMU doesn't have), the budget is about 629 million euros, or about $725 million, for about 30,000 students. GMU, which is not a world-famous university, spends almost twice as much money for only 1/3 more students.

It's not the funding mechanism exactly, that matters I think. But that there's no single entity which looks at the whole pot of money and allocates according to best health for the population.

The idea that some entity will make a good decision is almost certainly wrong.

The idea that such a system will at least be less horrible has legs though. Gestures in the general direction of Europe

Even single payer systems don’t have that. Conversely, the U.S. has huge cost inflation in education and transit as well, and those are centralized.

It's communist is the problem. Whose pile of money? If old Warren Buffett wants to spend a billion to extend his life by a year, who am I to stop him?

It's not like someone would forbid Warren Buffet from doing so. The government already set up a system that is all but in name compulsory. So, let's take a pile of the same size as the current system uses, but let it go through a single arbiter, with combined purchase power.

In some sense we have that - what is covered by medicare and the insurance companies is covered for the relevant people in those schemes.

We have a system like that for student loans—where the federal government itself originates and owns 90% of student debt—and it has led to massive cost inflation. What makes you think we’d implement a healthcare system better?

Yeah, maybe it's a lost cause. America is kinda special.

The federal government hasn't even lifted a finger to control undergrad education costs. In British Columbia, Canada where I'm from, the government sets limits on student loan coverage (seems to be CA$520/week right now) and universities don't get anything more from student loans. When my student loan disbursement occured, the form explicitly had $5000 of "unmet need" that I would need to scrounge up somehow.

If a universal healthcare system really wanted to, it could keep costs under control in a similar manner by telling hospitals to accept X amount for Y procedure or get bent. That the government doesn't swing its big dick on colleges in the US is entirely the fault of the government and a populace that always votes for "candy for dinner" vs. "eating vegetables".

> My parents were upper middle class, but there's no way they paid enough into Medicare to cover the amount of medical care they've used just since retiring (last 5 years or so).

It's a common misconception that the money we all pay into Medicare is going into a generational savings account, so we all need to "pull our weight" to make sure there's enough in there by the time we start withdrawing from it. Medicare is a pay-as-you-go system though – the money we pay into Medicare is being used by the people who are on Medicare right now, and when we're old enough to be using Medicare, it will be paid by the taxes of the young people who are working at that time.

Your parents shouldn't feel guilty for using more of the Medicare resources than they feel they paid in. That money was used up years ago by people who needed it back then.

I don't think the post was about guilt. It was about math.

Agree. As a society we probably need to accept that saving someones life when they are 80 maybe isn't worth $5 million or whatever. We have to map back to person hours and realize that it just doesn't add up in many cases.

We were SPECIFICALLY told this system could do this, that unlike socialized healthcare, it doesn't have 'death panels' (I believe the term the politicians used).

It was never sustainable. Because the model relied on healthy people subsidizing the people who make extremely poor choices (obesity, smoking, drugs or a combination of that). Obamacare's modeling predicted that significantly more healthy people would sign up, driving costs down. It didn't happen.

Now it is a system that ONLY the unhealthy benefit from. Everyone else pays for extremely bad choices.

Why is that only an major issue in the US? we have to step back look at the purpose and functionality of an insurance to realise something is fundamentally off in the calculation (Like this post does the napkin maths for).

Corruption greed and blooming price gouging in a market devoid of regulation is to me the only thing that can make the situation this bad.

We already know insurance companies pay less than the out of pocket price, so why is the premium so high that paying out of pocket can even come close to beating insurance.

I don't think it's fair to characterize unhealthy people as making bad choices. Many choices do affect health, but plenty of healthy people end up needing medical care every day through no fault of their own. Then there's the systemic issues of our healthcare system, low-cost low-quality food (HFCS and other garbage), and even if the consumer knows how to take better care of themselves, they may not have the resources to do much better depending on their life situation (think juggling jobs and taking care of kids, etc). So, I don't think it's strictly a choice to be healthy or to be a drain on the system.

So it was my extremely poor choice to inherit kidney disease? Or maybe it's my extremely poor choice to undergo dialysis thrice weekly so I can survive? Or my extremely poor choice to even bother living it?

There are a ton of reasons for ill health in this world before you should even suggest character flaws.

> Obamacare's modeling predicted that significantly more healthy people would sign up, driving costs down. It didn't happen.

It was intentionally fucked with. The requirement to get insurance was nulled out for those young, healthy folks. The end result was obvious - eventual collapse of the system.

https://en.wikipedia.org/wiki/Individual_shared_responsibili...

https://en.wikipedia.org/wiki/Tax_Cuts_and_Jobs_Act

> Obamacare's modeling predicted that significantly more healthy people would sign up, driving costs down. It didn't happen.

That's because the GOP Congress gutted the provisions that heavily incentivized healthy people to sign up.

We could also just do Medicare for All. Every other developed country seems to have figured that out but us :/

Obamacare is basically based on the Swiss system, so not every other developed country has Medicare for all (even the German system is “it’s complicated”). The main difference between the Swiss system and Obamacare though is the Swiss outlaw health insurance being provided as a benefit at work (so basically no group plans, almost everyone is in the same risk pools). Foreigners living in Switzerland need to document their purchase of Swiss health insurance.

Switzerland does have mandated universal health care, so essentially the same result as "Medicare for All". It's just implemented in a different form: mandatory basic insurance + supplemental insurance, instead of a single-payer system. A number of other European countries have something similar.

Yes, but that was what the ACA attempted, and there wasn’t just one simple model that America could have adopted to fix all its healthcare problems.

Agreed. The ACA was a compromise solution meant to move the US closer to a single-payer system, but was later stripped of many of its clauses, making it of much less value (though not rescinded altogether -- thank you, McCain!)

much of Europe force a fixes price table too. Different Insurance companies and private individuals pay the same amount for the same things. That create a even playing field where market forces actually help rather than hurt the outcome.

That seems... fine? That's $14,000 annually. For an income in the $75k-$100k range, Maryland health connection shows me a premium of $700/month for two parents/two kids. Judging by your premium and assuming 2 adults/2 kids, your income is probably over $200k. With that income in Canada, you'd be paying over $20,000 in taxes attributable to healthcare: https://www.fraserinstitute.org/sites/default/files/price-of....

Now you have to account for taxes you pay in the U.S. for medicare, and a risk-adjusted share of the deductible payments, but overall it doesn't seem that crazy.

Right I think a lot of upper income Americans don't understand how it compares globally.

Seeing what my UK colleagues deal with, a $200K income would land you solidly in the 40% marginal tax bracket over there, vs (if married) .. 22% here. US federal effective tax rate (before getting into deductions) would be like 17% on that 200k, for a $166k take home.. versus equivalent UK take-home would be as low as $123k (again not getting into deductions).

So UK similar income has $43k more in taxes.. to get you NHS? Doesn't seem like a great trade if in the US you have options starting from $14k?

Effective tax rates are not that easy to compare.

In fact, the portion of a US health insurance premiums IS a tax, based on your age! Not to mention the myriad ways tax policy (including the age rating factors that cause young people to pay a tax via their health insurance premium) vary among not only the 50 states, but the smaller jurisdictions within the states.

https://news.ycombinator.com/item?id=45800973

https://www.healthcare.gov/how-plans-set-your-premiums/

Sure. But if you make the calculation that granular, you also need to include employer-paid health insurance on the compensation side of the ledger. More than half of Americans have employer-paid health insurance, and employers contribute on average $17,000 per employee: https://www.business.com/articles/health-insurance-costs-thi...

Of course, that is why US employees should be able to have access to benefit costs in terms of dollars to be able to compare total compensation. Currently, that is usually only available after the end of a calendar year on form W-2 (box 12 code DD for health insurance premiums).

Technically, you have to get even more granular. If your employer subsidizes health insurance premiums, then you pay for health insurance with pre tax income. If your employer does not, then you have to buy with post tax income. The difference is thousands of dollars per year.

You even avoid FICA if you can max out your HSA via payroll withholdings, a decision solely made by your employer.

It’s actually amazing how many ways the US governments has come up with to screw young people and small businesses.

> So UK similar income has $43k more in taxes.. to get you NHS?

Well, and all the other services those taxes provide.

They wind up spending a lot less on healthcare. https://commons.wikimedia.org/wiki/File:OECD_health_expendit...

They spend less because their nurses make poverty wages compared to the U.S. My sister in law is studying to be a nurse. Starting pay is around $70,000 here. In the UK it’s like $42,000. She could make that much being a nanny around here.

https://www.commonwealthfund.org/publications/issue-briefs/2...

> OECD Health Statistics data show U.S. registered nurses (RNs) earn 1.5 times the OECD12 average salary. These data are adjusted for purchasing power parity. Using numbers of RNs in the U.S. from the Bureau of Labor Statistics,22 we computed total RN earnings using average U.S. pay and OECD12 average pay. The difference was $79 billion, or about 2 percent of 2021 NHE, representing approximately 5 percent of excess U.S. spending when rounded to the nearest multiple of five.

It's not nothing, but it's hardly the only reason, or even a particularly big one.

That's not the actual tax burden in the US, though. Because we also have sales tax, property tax, state income tax, and various required fees.

How are you getting $166k take home for a $200 salary? If I use one of those online tax calculator things for New York, I get a take home of $135,000 from $200k. Ok, so let’s try a lower tax state that still has a lot of economic opportunity. For Texas I get $150,000 take home. Once you start adding on the costs associated in the US with having a serious medical condition, it’s far from clear that you’re going to be saving a lot of money from lower taxes. You’ll save a bit if you stay healthy and pay a lot more if you don’t.

> In other words, I'm being asked to buy a product, and the cheapest form of it is to basically pay almost $15k in a year to hedge against someone getting cancer or whatever, and actively incentivizes me to not use it[0]

You are not paying $15k to hedge against someone in your family getting cancer in a calendar year.

You are paying $15k to pay for old and sick people’s routine healthcare, due to the ACA’s requirement that the highest premium to be at most 3x the lowest premium, and the requirement that premiums be only a function of age and tobacco use (i.e. no underwriting for health risks by factoring in pre existing conditions).

So an ACA compliant health plan’s premiums are far more comparable to a tax than an insurance premium since they are explicitly a wealth transfer mechanism from young and healthy to old and sick.

New York state takes this wealth transfer even further and mandates that age not be used at all to price premiums. I think Massachusetts only allows an age rating factor of 2.

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