[OpenDrapery]

If you profit off sick people, are you motivated to move toward a world with no sick people? If you profit from prisons, then you need to fill you prisons. Problem is, that as a society, we should aim toward not needing prisons at all. Therein lies the rub.

If I profit off of you being sick, then I need to keep you sick.

[skybrian]

Generally speaking, insurance companies profit if they don't have to pay out, which is why they sometimes pay for prevention.

But this has other problems. Incentives are tricky.

[hidenotslide]

Normally that would be true, but under ACA profits are capped at 25% of premiums. They can increase profits only by increasing premiums, which can be justified by rising costs. Private insurance companies in America have no incentive to lower healthcare costs.

[skybrian]

Well, that's true if they hit the cap and have no competition. If they don't have a 25% profit margin yet, they can still try to increase profits by cutting costs. There is also the strategy of lowering prices to increase market share.

The downside I was hinting at is that as a patient, cutting costs isn't always what you want. If it means more prevention or paying less, it's good. Otherwise it'll probably mean worse service.

[stale2002]

Insurance companies are more like gyms, actually.

They profit much more if you pay them money but never use their service.

[collyw]

My friend had an insurance company that reduced his premiums if he checked in at the gym a certain amount of times per month.

[collyw]

Two areas where the "free market" capitalism of America seems like a stupid idea.