alt Hacker NewsHealth insurance's issue is probably how it induces pure waste everywhere as everyone has to play this dance of ever escalating paperwork which consumes a lot of labor. It's not profit, it's waste. Same with the ever increasing amount of admin. Why is that admin increasing? I estimate insurance or requirements created by insurance is part of the cause.
There is also a lot of other smells of a lack of a competitive market. Very opaque pricing, limits to how many hospitals can be opened in a region, needing paperwork to push against that limit, limits in residency slots, the entire hazing ritual of residency in the first place, limits in opening medical schools, ever escalating requirements to become a doctor, restrictions against doctor owned hospitals or clinics, the fact something like an epipen is still not out of patent and not having many clones by now, large barriers to make medical devices and medications, while simultaneously having great issues with generic drug quality, a horrible food system compared to Europe, while simultaneously having a much harder regulatory state medically compared to europe, etc.
Replies
Honestly, health insurance has a lot wrong. Things like the 80/20 rule can create some weird incentives. Normally an insururer would want to minimize the costs of what they insure, but if non-claim overheads plus profit has reached 20%, then they can't negotiate lower costs without losing profit, and are actually incentivized to either get more claims or negotiate worse prices.
This is besides all the inefficiencies, and nonsense. For example even if a patent hypothetically knew exactly how long a procedure would go, exactly what personnel would be involed and how, exactly how much anesthesia/sutures/other billable supplies were used, and that there were no complications, and even if they know that no denial of coverage would happen, it is not structurally possible for them to know the out of pocket costs, except for the handful of surgeries that get treated as package deals. It would literally take dozens of hours of phone-calls to the hospital's and each provider's billing department to get the exact codes and amounts they would submit, and then trying to get insurance to price the hypothetical bill, or provide you with sufficient information to price it yourself. And obviously a bunch of the information we are assuming the patient has are unknowable until after the fact.
Part of the problem is insurance has a huge rule engine for deciding which line items are covered by not-allowable (meaning they get written off), plus insurance contract rates are only public for hospitals (so no info for providers that bill separate), and even then the data files don't always contain sufficient data to determine which of the multiple allowable rates for this procedure with this insurance at this facility, with these caveats actually applies).
This is spot on. It’s not that I think health insurance companies are making insane profit margins. It’s that their very existence in the system is a pure negative and in fact a moral blight. Inflicting profit into a system that is entirely dedicated to human health is by definition a conflict of interest for basically everyone involved, even if it operated at a hypothetical 100% efficiency.