[aschampion]

At one point in 2020 a majority of insured Americans treated for COVID (>80%) had the majority of their COVID-related treatment waived by the insurer. However, most insurers have been terminating these waivers since January.

Also, to any non-Americans its always important to put this in the context that "waiving" here means you're still paying thousands per month (between employer and individual) in premiums and likely hundreds in various flavors of co-jargons anytime you step the foot in the door of a care provider even for "covered" care. Insurers always like to portray just providing the service you pay more for than you would in most of the rest of the world as altruism on their part. The major insurance companies providing these waivers (Anthem, UnitedHealth, etc.) all saw order $B profit increases over the pandemic.

[lotsofpulp]

Anthem profit margin is down:

https://www.macrotrends.net/stocks/charts/ANTM/anthem/profit...

UHC margins also do not indicate profiteering:

https://www.macrotrends.net/stocks/charts/UNH/unitedhealth-g...

Same with CVS/Humana/Cigna:

https://www.macrotrends.net/stocks/charts/CVS/cvs-health/pro...

https://www.macrotrends.net/stocks/charts/HUM/humana/profit-...

https://www.macrotrends.net/stocks/charts/CI/cigna/profit-ma...

It is always interesting to me when people claim insurance companies earn a ton of profit when their profit margins are always in the 5% or lower range. How much smaller should their margins be? Even retail businesses like Walmart need a couple percent of profit margin to survive.

[sixQuarks]

Insurance companies have a vested interest in making sure that healthcare costs keep going up. It’s a counterintuitive notion because you would think they want healthcare cost to go down. The reason they want high cost it’s because they’ll be making that small margin on the higher revenue

[kazinator]

Insurance companies also have a particular interest in making sure that uninsured healthcare costs are sky-high, while they negotiate better insured costs.

[maest]

Incidentally, this is also why tobacco manufacturers don't really mind high cigarette taxes: it puts a higher floor on the cost of a pack of cigarettes, which means the overall profit is larger.

[gruez]

Why does it set a higher floor? The tax goes to the government, the tobacco company doesn't get to keep it.

[maest]

I don't understand your objection. The cost includes all tax.

[gruez]

Suppose the following price breakdown for a pack of cigarettes:

    cost: $3
    profit: $1
    tax: $1
    total price: $5

The government decides to increase the tax by $1, now it's

    cost: $3
    profit: $1
    tax: $2
    total price: $6

As you can see, the total price went up $1, but the tobacco company's per-unit profit is the same. They can increase the price by more than the tax (eg. hiking the price by $1.5 rather than $1), but that's equivalent to hiking the price $0.5 without an associated tax increase, which they can do at any time.

[kazinator]

Any added margin that makes your product more expensive, that does not go into your pocket, is bad for business.

It's basically a form of someone stealing from you.

The user was willing to pay $4.50, all of which you could have had, but $0.50 went to a parasitic third party.

We can look at it from the point of view of the transaction between the buyer and seller being arbitrarily robbed of $0.50.

We can also look at it from the POV of the supply-demand curve: fewer units are sold of the more expensive product.

Both these effects hit you: you're selling less because it's more expensive, without you getting any more of the extra per-unit revenue.

[rayiner]

Ask any industry if they want a fat tax on their products to take advantage of the effect you describe.

[dctoedt]

Don't tax you, don't tax me — tax that fellow behind the tree. --- Sen. Russell B. Long (among others) [0]

[0] https://quoteinvestigator.com/2014/04/04/tax-tree/

[lotsofpulp]

Only if the higher profit from higher sales price makes up for the possible decrease in sales from higher price.

[lotsofpulp]

So does every business. But just like every other business, they have competitors too, so they cannot expect their profits to rise simply because they keep increasing their cost of goods sold.

Either way, that is not relevant to the claim that was being contested, which was “insurance companies are profiting extra from covid than they normally would”.

[rsfern]

Interesting point. I read the original point as contesting the idea that insurers are going to have to eat a loss.

In the end I think both perspectives are insightful: insurers aren’t in the red for 2020, but they’re also profiting from COVID less than they “normally would”

[bko]

That's my big problem with the healthcare debate. People think that its because of "profit", but if you look at the profit margins of all participants, they're all reasonable. Even if you could shift that profit over to consumer surplus, you're still looking at crazy high health care spending.

Something deeper is wrong with America's healthcare system. I think the third-party payer system and onerous regulations distort the market in costly ways. Just as the simplest example, if you want to open up a health care provider you need a "certificate of need" in most states. This means a board of current health care providers in the are determine whether there is a real "need" in the neighborhood for a competitor.

> Certificate of Need (CON) laws are state regulatory mechanisms for establishing or expanding health care facilities and services in a given area. In a state with a CON program, a state health planning agency must approve major capital expenditures for certain health care facilities. CON programs aim to control health care costs by restricting duplicative services and determining whether new capital expenditures meet a community need.

Ah yeah, lets reduce costs by restricting "duplicative services"

https://www.ncsl.org/research/health/con-certificate-of-need...

[542354234235]

The US wastes $150,000,000,000 a year (the most per capita in the world) in pushing paperwork directly because of our “competing” individual insurance provider model [1]. The US spends the most overall per capita by far on healthcare, while also not even covering all residents. Despite having poor health outcomes and lower life expectancy, the US is the leader in expensive diagnostic imaging and prescription drugs [2]. Its almost like the “competing” private insurance model creates large amounts of wasted effort in trying to extract profit, as well as perverse incentives to push high profit interventions while ignoring actual health outcomes.

> In countries where hospitals receive global, lump-sum budgets, garnering operating funds requires little administrative work. Per-patient billing, on the other hand, requires additional clerical and management staff and special information technology systems. In countries where there are multiple payers, as in the United States, billing is even more complex, since each hospital must negotiate payment rates separately with each payer and conform with a variety of requirements and billing procedures.

> Higher spending appeared to be largely driven by greater use of medical technology and higher health care prices, rather than more frequent doctor visits or hospital admissions…Despite spending more on health care, Americans had poor health outcomes, including shorter life expectancy and greater prevalence of chronic conditions… Even though the U.S. is the only country without a publicly financed universal health system, it still spends more public dollars on health care than all but two of the other countries…

[1] https://www.commonwealthfund.org/publications/journal-articl...

[2] https://www.commonwealthfund.org/publications/issue-briefs/2...

[bko]

Ah yes, competition is what causes higher prices. We just need one organization creating the products and services for a given industry and setting prices.

I wonder why no one else thought of this and why we don't apply it to everything we produce

[542354234235]

>Ah yes, competition is what causes higher prices.

Since no one said that, I don't know what you are talking about. This has nothing to do with competition being bad or good. The US isn’t the only country with private insurance. The US model competes in a fee-for-service model, instead of based on things like positive health outcomes through global budgeting, like Germany or Canada. The US model has providers negotiate prices which each individual insurer, with the actual costs being hidden and complex, instead of a transparent “all-payer reimbursement rate” for each provider[1]. Maryland, the only state to use global budgeting and all-payer reimbursement, is saving over $100,000,000 per year on healthcare spending compared to the national average[2].

I really do not understand how people can act like quality healthcare at lower prices is some utopian dream, and not the reality in every single high-income country except the US. That people can look at the US spending 3 times more money on paper pushing as the next highest country, while not even cracking the top 10 in spending on preventive or long-term healthcare, and throw their hands up and say “its unsolvable!” [3] How people can look at the American’s barely middle of the road health outcomes and think the out of control spending is somehow actually leading to quality care. The condescending dismissive attitude in the face of mountains of data from working healthcare systems around the world is truly stunning.

[1] https://www.americanprogress.org/issues/healthcare/reports/2...

[2]https://www.healthaffairs.org/do/10.1377/hblog20170131.05855...

[3] https://www.pgpf.org/blog/2020/07/how-does-the-us-healthcare...

[bko]

>> Since no one said that, I don't know what you are talking about.

> The US wastes $150,000,000,000 a year (the most per capita in the world) in pushing paperwork directly because of our “competing” individual insurance provider model

When you have real competition and the final user pays, as opposed to a third party, you'll naturally have a model in which people pay for outcome as opposed to fee for service. If I take my car to be repaired, I just want the mechanic to fix it at the lowest cost possible. I don't care how many services they have to run. It works in every other aspect of our economy, including safety critical sectors. For instance, I may pay for a safer car as opposed to a cheaper less safe car.

I just want a system in which I can make my own decisions regarding my health.

I don't know why people argue that the US has a free market in health care. It does not, as you have plainly stated. There's a lot of intermediaries and parties involved that are highly regulated and influenced by the state. US spends as much in public spending in health care as other countries. I would prefer to remove the complexity, allow actual competition and remove third party payer as much as possible. Your solution sounds like more of the same but better, which doesn't make sense

[boruto]

From personal experience between USA and Germany, I can say quality of health care in US is many many times better than in DE.

[retrac]

A great deal of service provision in many countries' systems is private. Even here in Canada, "socialist" medicine often boils down to a private clinic billing the public insurer. Though the major hospitals are usually owned and operated by non-profit corporations, or the local government.

[asimpletune]

Generally speaking the adage is “profit is an opinion, cash flow is a fact”

[lotsofpulp]

That adage is more useful when looking at individual companies, or maybe new businesses.

For long established, highly regulated operations, I would expect consistent profit margin figures across pretty much all companies in the business to represent a pretty accurate view of the situation, and to show if they are earning extra profit due to COVID.

[aschampion]

I didn't say margin, I said profit, and you can click a tab over on any of those pages and see overall gross profit is up in 2020. What kind of rational baseline is assuming that increasing margin is the default neutral state? How is that a stable dynamic for any system?

[lotsofpulp]

I have never heard of a business that reaches $x of profit and then switches to pricing everything so that they get $0 of profit.

And why would I be concerned with gross margin? If insurance companies were profiting more than normal from COVID, then it would show up in the profit margin figure.

[93po]

> I have never heard of a business that reaches $x of profit and then switches to pricing everything so that they get $0 of profit.

Isn't this the business model of tons of huge companies? Amazon famously ran at very deliberately low profits for years. Uber and Lyft have margins so low they're losing tons of money in an attempt to get market share.

[lotsofpulp]

>Isn't this the business model of tons of huge companies? Amazon famously ran at very deliberately low profits for years.

No. Operating at low profit margins is not the same as reaching $x of profit and then selling everything at cost.

>Uber and Lyft have margins so low they're losing tons of money in an attempt to get market share.

These do not seem relevant, as most businesses, by and large, year after year, are not giving away products or services to try and gain marketshare.

[plorkyeran]

Eschewing profits now to fuel growth with the intention of making large profits later is the exact opposite of that.

[paulcole]

> any non-Americans its always important to put this in the context that "waiving" here means you're still paying thousands per month (between employer and individual) in premiums and likely hundreds in various flavors of co-jargons anytime you step the foot in the door of a care provider even for "covered" care.

Where did you come up with “thousands” and “likely hundreds”?

Just so the non-Americans reading this have a data point, I’m a single person with Type 1 diabetes who pays $200 a month for my insurance premium (my employer also pays $200 a month). I also pay about $110 a month out of pocket for insulin, $1500ish a year for my glucose monitor, and pay about $250 total a year in various co-pays to see a primary care physician, endocrinologist, and ophthalmologist (maybe 6-7 visits total. This is on a “Gold” plan (the best offered by my employer).

[aschampion]

The average gold plan in the US is $575 premium per person per month. For the average household that would be thousands. The average monthly healthcare cost across all "levels" is about $975 per person.

[paulcole]

So just to be clear this was pretty exaggerated right?

> "waiving" here means you're still paying thousands per month (between employer and individual) in premiums

I get it that American healthcare sucks but let’s at least try to be accurate about how much it sucks.

[542354234235]

If anyone wants a more useful comprehensive data point. Between Insurance premiums and out of pocket spending for services, the average American spends $4,516 a year. Oddly enough, the US also spends $4,197 a year in public spending, the third highest in the world, without the “costly” universal healthcare. Combined, the US outspends all other countries by a large margin. But with that spending we have less doctors, less doctor visits, poorer health outcomes, and lower life expectancy. But we do lead the world in prescription drugs and expensive diagnostic imaging.[1] We also waste $150,000,000,000 a year on paperwork (highest per capita in the world) because hospitals have to haggle with a bunch of different insures for every single thing.[2]

>In 2013, the average U.S. resident spent $1,074 out-of-pocket on health care, for things like copayments for doctor’s office visits and prescription drugs and health insurance deductibles. Only the Swiss spent more…As for other private health spending, including on private insurance premiums, U.S. spending towered over that of the other countries at $3,442 per capita—more than five times what was spent in Canada ($654), the second-highest spending country…Even though the U.S. is the only country without a publicly financed universal health system, it still spends more public dollars on health care than all but two of the other countries…Higher spending appeared to be largely driven by greater use of medical technology and higher health care prices, rather than more frequent doctor visits or hospital admissions…Despite spending more on health care, Americans had poor health outcomes, including shorter life expectancy and greater prevalence of chronic conditions [1]

[1] https://www.commonwealthfund.org/publications/issue-briefs/2...

[2] https://www.commonwealthfund.org/publications/journal-articl...

[paulcole]

Wow, I'm more average than I suspected. My total is ~5400 give or take a bit.

[542354234235]

>Wow, I'm more average than I suspected.

Story of my life.

[eob]

Your employer is paying the difference for you. As part of their health plan setup, they select what percentage of the plan to cover for their employees and their dependents.

[paulcole]

No. I oversee our HR/benefits. Company pays 50% of premium, employee covers other 50%.

[uzakov]

> Also, to any non-Americans its always important to put this in the context that "waiving" here means you're still paying thousands per month

Also important to remember the "take home" pay in the USA vs other countries. For many software engineers from the USA it would be significantly more than in other countries, for example due to the fact that there are a number of opportunities to earn good 6 figure salaries

[Joeri]

Do also take into account that the median wage in the US is only around 35K per year. Clearly most americans are not in line for a 6 figure salary, nor will they ever be.

[uzakov]

No dispute there, please see my comment below to "glenngillen"

[kingsloi]

That's one of my biggest arguments (see my post history). I am super fortunate I am a software developer and earn a decent salary in the US. I pay $700/m for the highest plan my employer offer.

I know I am lucky. I've met many, many people who aren't as fortunate. I worked for 204 days from my little girl's ICU room. I was able to make ends meet. My fight is for the average American, the $30-45k earners, who don't WFH, and have sick kids in hospitals - and are forced to work to keep their benefits, while their kid is alone in the ICU.

[uzakov]

I am really sorry to hear about your personal loss, by no means my goal was to create negative reaction.

[glenngillen]

Most people in the US aren’t tech workers though. And the pay disparity for many other roles, especially in the middle-low ends of the spectrum, are not very competitive compared to other countries with nationalised healthcare.

[uzakov]

Absolutely, no dispute there. I thought it might be worth pointing that out, since Ycombinator has a lot of IT visitors.

[nicoburns]

My understanding is that it's mainly only software development that has such a disparity though. Doesn't help much if you're not a software dev (or you lose you job due to ill health).

[uzakov]

Yeah, I think another field(though I could be wrong on this one) that pays much better in the USA VS other countries is finance. Outside of these field the situation is very different