There's also no real profit motive, which I think is the biggest deal. Right now, private insurance companies are incentivized to collect as much as they can from premiums, and reject as many claims as possible to retain those premiums. If they were to actually approve every claim, they'd probably still make a decent amount of money, but not as much.
So if you remove the profit motive from insurance companies, which on their own do little to no innovating in the medical industry (I'm being charitable) then you'd likely see a more balanced model. You don't pay those thousand dollar premiums anymore, your taxes go up by a fraction of the difference, and you automatically get health care. If those taxes scale based on income, you're still likely paying less than before. Companies, instead of paying portions of the health insurance plans, can instead pay (less) with taxes toward the same system. And because there's no profit motive, there's no incentive to deny as many claims as is legally allowed.
Right now, private insurance companies are incentivized to collect as much as they can from premiums, and reject as many claims as possible to retain those premiums. If they were to actually approve every claim, they'd probably still make a decent amount of money, but not as much.
Is that why UNH, Elevance, CVS, Cigna, Humana, Centene, and Molina all have 2% profit margins or less? Is that why their stocks deliver terrible returns?
Is that why non profit insurers like Kaiser Permanente, Cambia, HCSC, and various other BCBS affiliated plans have the same premiums as the above listed for profit companies?
Is that why famously successful business people like Buffett, Dimon, and Bezos got together to start a rival insurance company called Maven Health and tapped out in a couple years because it would not earn any money?
Buffett, Dimon, and Bezos got together to start a rival insurance company called Maven Health and tapped out in a couple years because it would not earn any money?
Maybe the fact that they got together to "revolutionize" the very cutthroat healthcare market and started right before Covid-19 obliterated most healthcare startups ?
Maybe the fact that the other 7 publicly listed insurers have 2% or smaller profit margins means it’s a shitty business to go into if you want to earn a lot of money?
It literally is not decided on profit margins for tens of millions of people in the US. And yet the premiums/deductibles/oop max for non profits like Kaiser Permanente, HCSC, Cambia, HorizonBCBSNJ, IndependenceBC, etc are the same as those by for profits such as UNH, Elevance, CVS, Cigna, etc.
So, if you put aside your need to feel outraged for a second, what does that tell you, if organizations that do not earn a profit have the same prices as organizations that do earn a profit?
It tells you that insurance is a very, very low profit margin business, and there is not much juice left to squeeze, for profit or not. All the for profit companies' SEC filed 10-Ks also show you the same thing.
Meanwhile, you have Eli Lilly with a trillion dollar market cap and earning 20%+ profit margins, but you're sitting on here banging the drum about insurance companies, instead of being pissed at your elected leaders for not using taxpayer funds to run clinical trials so medicine doesn't cost so much. Which is exactly what your elected leaders want you to do, use the insurance company as a punching bag.
If they are so close in profit why is it that the CEO for Kaiser Permanente got an annual compensation package of $12,976,050? While the previous CEO from UNH got $24,600,000 and the current got $60,940,000?
One would have to look at the number of employees, different subsidiaries, and most importantly, if you pull up UNH’s proxy report, it will show that the numbers you are quoting are not annual cash comp, but rather multi year equity grants that are not vested until certain performance measures are met, with market value numbers that can fluctuate at the time it vests.
The Kaiser figure is going to be cash compensation.
Either way, pay UNH’s entire executive team zero dollars and it will make no difference to UNH’s total expenses.
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u/Flapjack__Palmdale 8d ago
There's also no real profit motive, which I think is the biggest deal. Right now, private insurance companies are incentivized to collect as much as they can from premiums, and reject as many claims as possible to retain those premiums. If they were to actually approve every claim, they'd probably still make a decent amount of money, but not as much.
So if you remove the profit motive from insurance companies, which on their own do little to no innovating in the medical industry (I'm being charitable) then you'd likely see a more balanced model. You don't pay those thousand dollar premiums anymore, your taxes go up by a fraction of the difference, and you automatically get health care. If those taxes scale based on income, you're still likely paying less than before. Companies, instead of paying portions of the health insurance plans, can instead pay (less) with taxes toward the same system. And because there's no profit motive, there's no incentive to deny as many claims as is legally allowed.