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Comment by caturopath | Hacker News Reader

I'm not sure the for-profit approach is exactly what's to blame. HMOs like Kaiser are legally forced to spend a certain fraction (80% percent for the worst case, more for large group plans) of their premium revenue on medical services. They can't save and pocket the money like a traditional for-profit enterprise.

This doesn't seem like a money-saving measure exactly. The main AIs the article talks about is making sure nurses on their nurses' lines aren't being assholes. I guess this used to be spot checked before so you save on that? Maybe? It seems like they are trying to solve the problem of some of their nurses staffing their nurses' line not treating their patients the way they're supposed to.

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> spend a certain fraction (80% percent

Increasingly health insurance companies and healthcare providers are intertwined. So they may spend 80% on healthcare, but then a big chunk of that could go to the urgent care clinics that they own.

And even if they don’t own the provider, they don’t have much incentive to lower total cost because 20% of a larger number means more total profit.

> Increasingly health insurance companies and healthcare providers are intertwined.

Kaiser is an HMO. They are the insurer and try to have their employees, such as these nursing lines, perform almost all of their care. Shifting from one line of business to another is purely internal and can't game Medical Loss Ratio like your scenario.

> they don’t have much incentive to lower total cost because 20% of a larger number means more total profit

There is some bad incentive here for sure. That being said, insurers do compete on price so they lose customers if they charge more than other insurers. Also, regulatory rate review can decide whether they can raise premiums a given amount.

I’m not talking about Kaiser. I’m talking about companies like UnitedHealth Group Incorporated who own UnitedHealthcare the insurance company and Optum the healthcare provider.

> That being said, insurers do compete on price so they lose customers if they charge more than other insurers.

Yeah but that’s a second order effect. Most companies are incentivized to cut costs because they will directly realize the profit. Insurance companies are incentives to cut costs only to grow market share.

I understand the point of the profit limits, but I don’t think it works very well in practice. I think it would probably be better to just have private companies without that profit cap and add a government insurer to compete with them.

Right, but the article was about Kaiser and I was talking about the thing the article was about.

Sure, but the person you replied to said

>Maybe healthcare shouldn’t be primarily for profit?

Which is a far larger topic than what the article was about.

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