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Comment by OldSchool | Hacker News Reader

I worked as consultant at a major west coast-based health insurer in 1993. A family plan, that is, two adults plus any number of children, was $300/month; a figure that wasn't far off from the cost of a studio or 1 BR apartment at that time anywhere but the most expensive coastal cities.

Today, that family plan, even as a HMO, can easily be $3000/month. I would guess that mythical apartment is maybe $1200/month now.

So what happened Health Care? how has the caregiver:administrator ratio changed in the past 30+ years? You've performed about 3x worse than Real Estate in terms of value, yet you're not quite as visible and complained-about because you hide behind employment. Hmmm.

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Because your 1993 health insurance covered far less.

There was no out of pocket maximum, you were denied for pre existing health conditions, and a surprise bill could show up anytime.

Now, you can buy health insurance even if you know your anemic kid will need $1.5M of treatment in the year, and it will only cost you ~$10k to ~$15k per year.

To be clear, today’s health insurance premiums are not premiums either, they are taxes, due to the legal ban on underwriting health risks and caps on premium price ratios between various ages. For example, my kid is going to use up more healthcare than he will probably ever earn in his life, before he even turns 7. Your premiums are what is paying for that, aka wealth redistribution via “premiums”.

All fine. The only part that I have trouble with in your message is the 1.5M number. Why should something like anemia cost 1.5M a year of treament? And out of that 1.5M a year to the hospital, how much goes to:

a) administration b) health care claims administration (a huge %age of the gap) c) private equity profit numbers

Do we even know? Is it ruly worth 1.5M?

I ask because an MRI costs thousands in the U.S. And if I go oversees and pay out of pocket it costs something like $300 out of pocket - and I'm talking the U.K. here, not Turkey or Mexico. How do you explain that?

> Do we even know? Is it truly worth 1.5M?

I don’t know what worth means, but the price is the price. I can see all the bills that the insurance company pays the hospital, and the hospital collects $80k per dose of medicines like

https://www.asparlas.com/

And $100k+ for

https://www.blincyto.com/

And $10k to $15k for other infusions (can happen two times per week).

The hospital is owned by the government.

In general, pharmaceutical companies have huge profit margins and profits, and doctors earn a decent amount of money in the US, especially specialists. Also, liability is huge in the healthcare space, with awards in the millions and tens of millions.

>How do you explain that?

Bottom line is a lot of people earn a lot less money in other countries.

We use an insurance model. Get upset how insurance works. Then complain it’s broken. Either it’s insurance or it’s wealth redistribution.

In the US, it is explicitly wealth redistribution, from the young and healthy to the old and sick. It is still called an insurance premium because it is more politically palatable.

Unless you don’t intend to age, you too will become old and sick. As will, hopefully, almost everyone else.

How is it wealth redistribution when most people will start as recipients, then move to being the donors and will then become the recipients again?

Because there is no guarantee that the donors now will receive the same benefits when they are older. It's almost the opposite, given demographic trends. For example, 20 to 30 years ago, getting consultation by a doctor was easier, but now you often have to get consultation from a physician assistant, if you're lucky, or more likely a nurse practitioner, who are far less qualified than doctors.

Also, ACA started in 2010, so all the people receiving the most healthcare now (age 50 to 65) had a good chunk of working years where they never paid into the system, but they received a lot of benefits. Also, there is no mandate to pay the premiums in the US, so many people don't pay into it at all, until they need the healthcare.

Unless your (kid's) care is denied because it's a pre-existing condition. Or for some other pretext.

In 1993, it would have been. In 2026, he cannot be denied coverage due to Affordable Care Act passed in 2010.

However, because more people are getting more healthcare, like my son, premiums are higher. Which, as I explained, are not premiums, but rather taxes. So OldSchool is comparing a $300 per month premium with benefit maximums to $3,000 per month taxes, which are not comparable.

And it’s not the insurance companies that cause the $3,000 premiums, it’s the medicine manufacturers and hospitals and doctors. My son is on medication that costs $80k per dose, and each infusion visit is $10k at least. And, of course, the legal liability each step of the way.

To be fair, I suspect lots of the increase in premiums comes from the removal of the individual mandate. If not everyone contributes, then any insurance system works much less well.

I'm not sure where you live, but I'm a consultant and buy my own health insurance for a family of 4. I pay around $1200/month. This includes doctor visits and prescriptions.

My wife had both of our kids on this plan and my deductible was $3,000.

"So what happened Health Care"

Health insurance stopped being insurance when the government forced them to cover everything. You are paying for risks that will never apply to you.

The startup I started working for has a fake health plan,(no network, prior authz and reimbursement issues for everything serious). So I just priced our family of 4 for rudimentary PPOs on the BCBS in our state. Our COBRA offer was 2400, ACA Individual market was 2200-3300, Small group plan thru my wifes LLC was 1700-3000. These plans mostly have 6-8k deductibles and out of max out of pocket $17k.

So I guess if you have a serious condition its post tax $40k/year until bankruptcy or death. How are you supposed to earn an extra 40k if youre not healthy enough to work. This is actually an insane system!

> Health insurance stopped being insurance when the government forced them to cover everything. You are paying for risks that will never apply to you.

The pooling of risks is literally what makes it insurance. If any part of health insurance is arguably not actually insurance it's the annual preventative care that is certain to apply to you.

Yes, but classically insurance wouldn't allow a guaranteed bad bet in. Health care is way worse then the classic 80/20 (20% of the people generate 80% of the costs). Pruning even just a fraction of these ultra high cost humans massively reduces the cost for everyone else which is what insurance companies used to do before the government stepped in.

(I mean a lot of this discussion is fucked because healthcare is literally your life but the point still stands)

The 20% of the people are likely to include nearly 100% of the population over time.

With socialised health care you don't just avoid the corporate tax of insurer profiteering, you're saving money in return for access to care when you need it.

Because - sooner or later - you will.

> Health insurance stopped being insurance when the government forced them to cover everything. You are paying for risks that will never apply to you.

Your entire message is extremely localized to your state. In New York State, the state marketplace a, are only HMOs with limited networks, b, are expensive with high deductibles, c) don't have all that much coverage. In California, by contrast, the plans are a lot more extensive.

In many states, no one pays 1200 a month for a family. My COBRA would be 1200 a month, and if I went with a marketplace plan probably closer to 800. Me. Alone.

And yes, paying for risks that don't apply to you is how insurance has to work, or the insurance companies go bankrupt.

Have you assessed the size of United Healthcare?

The number of paper pushers and executives is sustained by your premium.

Premiums also pay large bonuses and stock buybacks!

Health insurance companies have profit margins of 2%, and owning their stock gives you a terrible return. Buybacks are just a tax efficient way of giving out dividends, which is expected of any business, and a large portion of health insurers are non profits.

This is all public information, there are 7 different publicly listed insurers to look up 10-Ks for and all the various Kaiser, Cambia, and other BCBS non profit orgs also have open financials.

However, pharmaceutical companies do have 20%+ profit margins, and do have phenomenal returns, and do do buybacks, since they can afford it. Next up is probably the software companies (Epic, etc), the legal firms, the hospitals, and the doctor groups.

Have you seen the profit margins of pharma companies, hospitals, and doctor groups?

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