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Comment by Detrytus | Hacker News Reader

This is a top-level example but you do not have to look at the top, really. The whole private insurance system is a scam at every level. I mean: I immigrated to US couple years ago, and I can tell you that any hospital visit, or a diagnostics, such as CT scan or ultrasound are 15-20x more expensive here than in my home country (which is in the EU).

Funny thing is: if you tell the hospital that you do not have an insurance they will charge you a price that actually sounds reasonable, say $700 for a CT scan (which is still like 2x more than in my home country, but then the US is a high cost of living place), but if you do have insurance they will try to extort as much money as possible from your insurer: initial bill will be like $10k, and then they will settle for, say, $6k.

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>The whole private insurance system is a scam at every level.

All for profit insurance must by definition bring in more than it pays out. From cars to homes to health to pets.

If instead of paying all your premiums, you'd be far more likely to be able to afford the services that the insurers are supposedly paying for. Like, yeah, there's a chance you need a new engine, and a small chance that all of your monthly car insurance totals up to less than the cost of the engine, but the entire point of the company is that they know that it is far more likely that you will end up paying more for their service than you'd have actually payed for turns out the only thing that ever went wrong was a small crack in your windshield.

On car insurance, you have a competitive market with actuaries trying to identify actual risks, and that, with their prices, modify bad behavior and purchases of cars that are expensive to repair. So all in all, you can end up with very narrow margins, and end up ahead only on the float between receiving premiums and paying out. Health insurance, especially how it works in the US, with no public system williyto cover all the expensive stuff for catastrophic situations and chronic conditions, would compete by trying to fail to insure risky people. But since most insurance is handled by employers, all the levers for that fail too, so it's an especially bad insurance system. Home insurance, car insurance, normal life insurance... all more competitive and more beneficial economically, as their efforts lower costs overall.

>fail to insure risky people

Why can't they just charge higher rates to more risky people. If you are a risky driver you pay more, and if you have a risky body you should also pay more.

> All for profit insurance must by definition bring in more than it pays out. From cars to homes to health to pets.

Well yes, but you are paying for reduced variance, which itself has a value.

>...Funny thing is: if you tell the hospital that you do not have an insurance they will charge you a price that actually sounds reasonable, say $700 for a CT scan

That has not been my experience. Insurance negotiates lower rates and without insurance, the full fare price suggested price has always been higher.

Providers are contractually forbidden by insurers to show you the much lower "out of pocket+ price schule if you have insurance. It's why the first question posed to new patients is always " do you have insurance?"

I'm clueless about healthcare economics, but this sounds fishy to me. Why would insurers go along with that? In fact I would expect insurers to be in a much better position to bargain with a hospital than a private party. Actually it's if the hospital were billing the govt (not as motivated as a private party) where I would expect that overcharging to creep up and up.

Insurers can only spend 15% of premiums on admin spend (e.g. salaries, etc). That means if the CEO (and everyone else) wants more money, they need to pay more money to the hospitals, so their 15% cut grows.

Also, for beyond that, unspend premiums have to be refunded, which also cuts into the potential admin spend bucket, so it's best to always ensure your paying as much as possible in claims.

Plus, patients hate denied claims, because typically your forced to sign paperwork saying your responsible for anything insurance refuses to pay.

And with most health insurance spending being locked to employer benefits, the big market is the group market, which means your stuck with either getting your job's option(s), finding a new job, or not getting insurance basically.

In other words, you don't have a price choice as an individual in a group.

>typically your forced to sign paperwork saying your responsible for anything insurance refuses to pay

Now that is some sick shit. Making every doctor's visit a gamble you might lose, discouraging people from seeing a doctor.

It's even worse when they claim to be "in-network" and they make you sign that. To me, the entire point of being in network is I shouldn't have to worry about the provider filing claims correctly on my behalf, and if there is an issue, it should be on the "network" side, not my side.

Hm, seems to be a bit of a contradiction between what you’re saying in terms of “insurers want to pay more” and the infamous tendency of insurers to deny claims as much as possible?

Well, they also need to ensure they aren't spending past their premiums coming in...

Alot of insurers the past few years have actually gone bankrupt from ballooning costs and claims.

So, they want costs to go up, so the next year they can up the premiums, so they can then up their admin spend, but the costs still need to below the premium. And they can't just up the premium without an associated rise in cost, because groups are owed their premium money back if it isn't paid out.

This is true and I have seen it in many cases.

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