What should insurance companies be concerned about?

The following is an excerpt from a letter to the editor of the New York Times. Profits are derived from volume. That is, more insured, more profits even if the profit per person is lower. Profit margins for large insurers are right in line with those of regulated electric and gas utilities, another vital service. 

… both Obamacare and Trumpcare suffer from an insurmountable problem: For-profit health care is a contradiction in terms. Insurance companies are most concerned about profitability, and profits are derived from high co-payments and premiums, discrimination against those with pre-existing conditions, expensive prescription medications (often with adverse side effects), excessive high-tech screening and surgical solutions. These approaches are not affordable for many people and may not produce good health, which frequently depends more on healthy diet and lifestyle choices, which are not profitable.

But look at the acual statements. Insurance itself does not encourage high tech screening or surgery, quite the opposite in fact. Although it’s existence makes such practices more feasible. Even if you isolate the delivery system, much of the problem is patients demanding more and doctors protecting themselves if patients don’t get it. 

But the fundamental issue here is that we don’t accept the fact that what we buy to pay our help our health care bills is insurance  (or used to be). And that insurance must reflect the risks of providing it. There is nothing that health insurance does that is not part of all kinds of insurance, but we can’t accept that fact, we see it instead as a vehicle to simply pay all our bills and some not even treating a health care issue … but we don’t want to pay the price. 

If we want to remove incentives to provide more health care, perhaps we should put all health care providers on salary and all facilities on strict budgets … and then what consequences are we willing to accept. 


1 reply »

  1. I get it. I have gotten it for a long time. I understand that insurance companies are not the problem here. Maybe you have some insight on how much insurance companies have raised the prices of their administration costs to self-insured large corporations. I am betting it has been relatively flat throughout the decades. Just like a regulated utility, their profit margin is constant therefore something else is causing insurance premiums to rise. It is either the cost of providing care or the technology of providing that care (drugs and high tech equipment).

    I guess people mistake an insurance company restrictions placed on services as a method that an insurance uses to maintain their “profit” instead of a method to control costs. An insurance company is not the federal government. If the insurance pays out more in benefits per year than it collects, it is out of business because it cannot pay its employees. Insurance companies do not have the ability to just keeping issuing debt.


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