Thread: How much profit do Health Insurance Companies make on the policies they sell?

Right, it's essentially the only thing liberals have: the Ponzi scheme. That is, make a lot of healthy, low-risk people buy insurance that they won't use in order to pay for the sickly, high-risk people who use lots of insurance. It would be the same as saying that everyone in the United States must own hurricane insurance for their homes so that we can pay for people who live in the actual high-risk areas.

And the basic error at the bottom of all this is that healthcare is a "right." If you buy that one premise, then all the rest must follow.

Originally Posted by Good1

Forcing everyone to buy insurance, though quite possibly illegal, brings in all those young, healthy bodies into the risk pool and, in theory, should "average out" the higher risks and mitigate the increase in the premiums they bring.

Those young, healthy bodies will be able to buy catastrophic (i.e higher deductible, lower premium) plans not meeting the actuarial requirements to which Exchange plans are otherwise subject. The functions you're describing aren't served by insuring young people, they're served by the risk adjustment, reinsurance, and premium subsidy components of the law.

The individual mandate exists to deter adverse selection. If healthy, disinterested people could be (voluntarily) excluded from the risk pool permanently or semi-permanently or at least penalized for late enrollment, you likely wouldn't need it. After all, that's how HIPAA has been able to put restrictions on pre-existing condition exclusions for the past decade and a half. But allowing anyone to draw from the pool without ever having to pay in creates very bad incentives. The mandate's purpose is to correct that.

That was a lengthy way of saying that people who generally don't need health insurance but who can afford it should be made to buy it. Which is fine, except the people who generally do need health insurance and cannot afford it are given it for free. And it's paid for by the people who generally don't need health insurance but who can afford it.

Originally Posted by Good1

This argument was most recently resurrected with the "debate" over Obamacare. One of the basic tenets of his plan was to insist insurers take all comers which, as we know, greatly weights the premiums the rest of the (average and lower) risks pay. So, to somewhat counter that, the Obama drones added in the provision that EVERYONE must purchase insurance.

Forcing everyone to buy insurance, though quite possibly illegal, brings in all those young, healthy bodies into the risk pool and, in theory, should "average out" the higher risks and mitigate the increase in the premiums they bring.

So Obama made one bone-headed error and, then, instead of reversing the bone-headed error, he made a 2nd, possibly illegal, bone-headed error to rectify it.

You are correct, Good1!

The next thing you know, the Democrats wil be telling us what kind of cars we must pourchase to help out their good freinds in the organized labor movement!

Originally Posted by Greenbeard

Those young, healthy bodies will be able to buy catastrophic (i.e higher deductible, lower premium) plans not meeting the actuarial requirements to which Exchange plans are otherwise subject. The functions you're describing aren't served by insuring young people, they're served by the risk adjustment, reinsurance, and premium subsidy components of the law.

The individual mandate exists to deter adverse selection. If healthy, disinterested people could be (voluntarily) excluded from the risk pool permanently or semi-permanently or at least penalized for late enrollment, you likely wouldn't need it. After all, that's how HIPAA has been able to put restrictions on pre-existing condition exclusions for the past decade and a half. But allowing anyone to draw from the pool without ever having to pay in creates very bad incentives. The mandate's purpose is to correct that.

"Risk adjustment" is another term for forcing insurance companies to take all comers and forcing those who are not insured, by choice, to purchase insurance.

Personally, I agree with making catastrophic coverage available to those who have difficulty buying a health plan and for those more hypocondriachal members of society who tend to hit the MD or ER for every sniffle. It would greatly reduce their costs and preserve the risk pool for the low and middle risks.

But mandating insurers to cover anyone who asks, like mandating private citizens to buy insurance they don't want, is not the answer.

Personally, I'd rather not have health care treated as a commodity to make a profit off of. It's immoral and expensive for the public at large. Eventually, our market-based health insurance will collapse, while a few of the CEOs make off like bandits.

Originally Posted by Rude Boy

Personally, I'd rather not have health care treated as a commodity to make a profit off of. It's immoral and expensive for the public at large. Eventually, our market-based health insurance will collapse, while a few of the CEOs make off like bandits.

That is the route it's been forced down, anyway: Way too many people simply do not understand that most insurance companies are regular, every day, profit driven corporations. Today, every (or most) politician you meet on the street wants you to believe insurance is a public utility: Available to everyone at no or low cost and a "right."

Simply put, they're wrong.

Originally Posted by Good1

That is the route it's been forced down, anyway: Way too many people simply do not understand that most insurance companies are regular, every day, profit driven corporations. Today, every (or most) politician you meet on the street wants you to believe insurance is a public utility: Available to everyone at no or low cost and a "right."

Simply put, they're wrong.

That's why I'd rather do away with a for-profit entity "insuring" my health care. Hopefully, one day, this country will come to its senses and join the rest of the civilized world in sharing the responsibility for taking care of our sick and vulnerable.

Originally Posted by James Cessna

Dear colleagues,

I have been having some discussions with some liberal friends in another discussion group about the “pros and cons” of government-run single payer health care.

As you would imagine, these people are for government-run single payer health care because they are very opposed to our private insurers who actually make a small profit off the policies and coverage they sell to the public.

My liberal friends are not aware the profits made by the private insurers are very small. Here is some good factual information you can use if you have discussions with people who share these same views that "profit" of any kind and for any reason in our health care delivery system is somehow bad!

By the way, if you have more recent information than this on the profits made by private insurers, I would love to see it!

Nothing good can ever come of government healthcare entitlement. Nothing good comes of any government entitlement. So I'd say only cons and no pros.

Originally Posted by C-B-M

That was a lengthy way of saying that people who generally don't need health insurance but who can afford it should be made to buy it. Which is fine, except the people who generally do need health insurance and cannot afford it are given it for free. And it's paid for by the people who generally don't need health insurance but who can afford it.

People getting "free" insurance are insured through Medicaid. That's funded through general revenue, it doesn't require you to be in a private insurance pool to help pay for it. People with private insurance plans, on the other hand, will be contributing to their plan costs.

Originally Posted by Good1

"Risk adjustment" is another term for forcing insurance companies to take all comers and forcing those who are not insured, by choice, to purchase insurance.

Not, it isn't. It refers to an assessment on health plans with lower than average health risk and the transfer of those funds to plans with higher than average health risk. Health insurers won't be able to turn away applicants based on risk, but they also won't be penalized relative to their competitors if they should happen to draw a higher-risk clientele. HHS just put out a draft white paper on the subject in the last week or so (following draft regs that came out in July).

Personally, I agree with making catastrophic coverage available to those who have difficulty buying a health plan and for those more hypocondriachal members of society who tend to hit the MD or ER for every sniffle. It would greatly reduce their costs and preserve the risk pool for the low and middle risks.

We know health spending is concentrated on a small segment of the population, with 5% of Americans accounting for about half of national health expenditures and 50% accounting for virtually no health spending--that's why we use an insurance model in the first place.

But it's not as though the expensive segment of the population is getting a free ride:

Out-of-pocket costs can impose a significant financial burden on individuals and families. These expenses include deductibles, copayments, and payments for services that are not covered by health insurance. Over half the people in the top 5 percent of all health care spenders had out-of-pocket expenses (not including out-of-pocket health insurance premiums) over 10 percent of family income. More specifically:

• Thirty-four percent had out-of-pocket medical expenses that exceeded 10 percent of family income.
• Eighteen percent had out-of-pocket expenses in excess of 20 percent of family income.

I don't know what fraction of those high-spenders you consider to be hypochondriacs but I'm unconvinced that simply asking for ever-higher out-of-pocket spending on their parts is a solution to anything.