alt Hacker NewsThis is addressed in the first paragraph of the pdf, with comparisons drawn to other industries and financial instruments where such income is not considered revenue. One can of course disagree whether it should be accounted this way, but the concept is not outlandish.
“This measure, while a standard accounting metric, obscures the strong financial performance of financial intermediaries such as health insurance companies, whose revenues are mostly pass-through payments between insured individuals and their health service providers. […]”
It seems to me that this document is almost entirely an argument for changing the accounting rules because of this distortion.
Seems to me that the argument is really "are my premiums a passthrough to medical providers" and I have a really hard time answering Yes to that.
If they are, then what do we call it when my medical expenses surpass my premiums? Negative passthrough? Contra passthrough?
What do we call it when I pay premiums for a year, never use a dime of it, and then cancel my insurance? I don't get that money back, nor does it get passed through to medical providers.
Do life insurance companies consider my premiums to be a passthrough to my eventual benefit payment or do they count them as revenue?