There are laws enacted by our elected government (Democrats under Obama) that say exactly how much overhead is acceptable for a health insurance company, and all business expenses and CEO pay comes out of that portion. If they collect too much in premiums to and their profits exceed that percent, they have to refund the insurance members.
Health insurance has a fixed profit margin on claims paid. Denying claims costs them money. Pay 10 billion in claims and they make 2 billion. Deny half the claims and they make half as much.
The ACA’s loss ratio rules don’t apply to self-funded plans (many large employers use these) even if they’re administered (and possibly re-insured) by a health insurance company, which is usually the case. Just doesn’t apply at all.
Certain plans also allow much lower loss ratios, like 60/40 for expat plans.
A provider that manages to have a lot of new plans in a given state in a given year is immune from loss ratios rules in that state, for that year. I don’t know how gameable this is but my WAG would be it’s only state insurance commissions preventing this from being the case in every state, every year, for every provider, and keeping it to only some states in some years for some providers (I bet the biggies manage to rotate their state[s] and have at least one most years)
So a company the only business of which is health insurance can easily spend far less than 80 or 85% of income on payouts, and only need maintain that ratio on some subset—possibly small—of the premiums it’s collecting.
I don’t know how the game of this affects decisions for insurers that also own providers, but I bet there’s something beneficial there and that’s why they’ve been snapping up provider offices for the last several years.
Most of that makes sense to me. there is a self funded plan, my understanding is that the employer is collecting (and usually subsidizing) the premiums.
At the end of the day, my experience is that my UHC healthcare is about 10% more than healthcare from non-profit Kaiser, and Kaiser is far more stingy with services.
I think there is a hell of a lot wrong with healthcare in the US, but I don't think that constitutes murder just because the stakes are life an death.
Ethics depend not just on the outcome, but the processes that leads to that outcome.
The incentives in healthcare are terrible, but it is the government which has structured the system and those incentives.
Denied claims mean less profit for the insurer. They only get to keep a percent of what they pay to hospitals. Do you have a response to that?
One of the primary jobs of insurance companies is to vet claims. If we didnt want that, you could just make a shared bank account and let doctors and hospitals bill anything they want to it. You might save 10% on overhead, but it would collapse instantly.
If that were true then United Healthcare wouldn't have rolled out an automated system that (reportedly) denies ~90% of people regardless of their actual need.
I'm not going to stick up for UHC, which is an obnoxious company, but do you honestly believe UHC is denying 90% of claims? Have you thought the implications of that claim through?
What "problem"? You're not being clear about what you're trying to say. That a particular insurer has done bad things? Nobody was going to take the other side of that argument.
Health insurance has a fixed profit margin on claims paid. Denying claims costs them money. Pay 10 billion in claims and they make 2 billion. Deny half the claims and they make half as much.
look up that ACA 85/15 law