[Ididntdothis]

My theory is that insurance companies don’t try to save money as long as they can pass the cost to the patient or whoever pays the premiums. Otherwise I can’t explain the insanity of the charges hospitals are getting away with.

[novok]

If your limited to a certain percentage of costs as your profits, you have an incentive to increase costs. Hospitals and insurance enter into an unholy pact to increase costs implicitly as a result.

[Klinky]

Doesn't gaming the system to increase profits by increasing costs show malevolent motives which would not be fixed by removing profit restrictions? I mean if you're "evil" with regulations, why should I trust that removing regulations will make you "less evil"? It sounds like a crook asking you to remove the handcuffs.

[nickff]

Removing the profit regulations has less to do with enabling greed (which exists either way) than it does with aligning incentives.

The idea is that you want the insurance companies to profit from patients getting timely, cost-effective care, rather than incentivizing them to drive up costs and delays.

[Klinky]

Why would they not increase executive pay, raise prices and deliver worse service? Private industry is not perfect at utilizing resources or delivering great products all the time. You just assume they will deliver a better product, but their undermining of the current system shows that profit over patient outcome is already their top priority. Deregulate so the crooks are less crooked has blown up in our face before.

[Ididntdothis]

If you remove the profit regulations insurances will keep doing exactly what they are doing now while making more profit. The won’t pass savings to the patient unless forced to do so. Health care is just a very bad area to apply regular economics. As far as I know most countries have some kind of price control including the US with Medicare.

[nickff]

You are proposing a cost spiral due to greed; why doesn't this happen in every industry which provides 'essentials' but has no profit-limiting regulations?

Examples would be grocery stores, clothing, transportation, etc. You can say 'this one is different' about every single industry, but why does that difference matter?

[Balanceinfinity]

The American healthcare industry is fascinating for a number of reasons. First, when insurance is involved you have the person seeking the service completely removed from the person paying for it - which almost always will result in overconsumption. Then, you have life or death issues, which people won't apply their usual cost/benefit analysis. Do you need a new car? Depends, is it worth the added expense. Do you need brain surgery even if the chance of success is 4%? Will it possibly extend my life? Yes, no matter how much it costs.

[Ididntdothis]

Because in all these industries pricing is relatively clear, customers have some level of understanding of the product and they can choose between competitors. In US health care you have zero pricing information, the employer chooses insurance based on their needs, not the patient’s, and people are not in a position to judge the quality of procedures so they do what the doctor tells them. It’s not a functioning market and probably can’t be.