[fatnoah]

>The wider implications of this are left to the reader.

IMHO, it's actually worse than we realize. The Medical Loss Ratio requirement is good because it requires insurance companies to spend 80% or 85% of premiums on health care. It's bad because one way for insurance companies to make more money is to have inflated health care prices to justify increasing premiums so they can get 80% of a bigger pie. It also gives them incentives to provide care themselves so they can capture some of that 80% spend.

> For the uninsured this sort of thing is actually really common. Had an online friend who had to get emergency treatment and they sent him a bill for $20k.

I experienced this personally with my own insurance. My bill was over $20k, and it took a year to convince the insurance company that removing a few feet of my intestines was actually emergency surgery. I ended up paying $800. My roommate in the hospital had no insurance and ended up not paying anything (which I did not begrudge them at all, since the reason for no insurance was debilitating back pain that led to unemployment)

[Aloisius]

> one way for insurance companies to make more money is to have inflated health care prices to justify increasing premiums

This only makes sense if they have no competitors since another insurance company would just steal their customers by having lower rates.

The truth is though, healthcare providers are ultimately responsible for prices.

[swiftcoder]

> This only makes sense if they have no competitors since another insurance company would just steal their customers by having lower rates.

This assumes the competitors are not all colluding to raise prices across the board

[lotsofpulp]

Then they must suck at collusion, given they can't even beat a risk-less broad market index.

SP500 10 year annual return: 14.6%

UNH: 13.59% Elevance: 10.79% Cigna 9.42% Humana: 6.1% CVS: 0.55% Molina: 9.42% Centene: 0.9%

Or, the likelier explanation, is that health insurance prices are highly regulated and have to get their prices approved by a government official(s), and B) they don't have a lot of pricing power due to the competition and they are not colluding.

[datadrivenangel]

Executives earn more based on revenues and thus prices and not stock returns.

[lotsofpulp]

See almost any of the proxy filings and you will see much of the compensation is based on hitting targets other than just revenue, and most of the compensation itself is equity:

https://www.unitedhealthgroup.com/content/dam/UHG/PDF/invest...

https://s202.q4cdn.com/665319960/files/doc_financials/2025/a...

The executives seem to have a heavy interest in equity returns.

[BobbyTables2]

Insurance companies are required to spend something like 80% of premiums on claims.

This sounds like a really good thing, almost everything coming in has to go back out…

What it really means is they love high “allowed” prices. They live on the 20% and want to see the pie as large as possible.

Healthcare costs go up? They raise premiums — win-win.

The road to hell is only paved with good intentions.

[xp84]

> since another insurance company would just steal their customers by having lower

LOL. Meanwhile, in real-life America, there are only four or five major carriers that control the market, and none of them are incentivized to do this "competition" thing you speak of by engaging in damaging price wars. Why would they when continuing to be part of the problem makes them more and more profits each year? See also: military contracting. Do you see them constantly undercutting each other? No, they buy each other, reducing the number of bidders on every contract.

[lotsofpulp]

>Why would they when continuing to be part of the problem makes them more and more profits each year?

In real-life America, they don't even earn enough profit to earn their shareholders a better return than SP500:

https://news.ycombinator.com/item?id=45736978

And in real-life America, the only people health insurance companies engage in price wars with is the state insurance regulator who gets to deny requested price increases.

[xp84]

Fascinating observation, thanks for challenging my assumptions here. Just seems to further point out how useless health insurers are, even to their shareholders.

My most sincere wish is that all insurers would be nationalized, every last employee summarily fired, and their HQs all imploded and replaced with memorials to all the people whose lives they have cut short over the years. Not a thing of value would be lost IMO. Worse than paying people to dig holes and fill them in again.

[astrange]

The military encourages them to buy each other because it's much easier to regulate an industry with fewer companies in it.

[Aloisius]

Four or five competitors is plenty for a healthy market.

Where I live, they do compete on price - prices vary by about 30% for similar coverage. They can't engage in the kind of price war you're thinking of since insurance companies, by law, have to maintain a fund able to cover costs, have to get rate changes approved by regulators and are largely banned from price discrimination.

I understand the desire to shift blame entirely onto insurance companies rather than providers. After all, one is all about money and the other is seemingly all about healing.

Heck, when a provider does bill people directly because an insurance company refused to pay, we blame insurance companies - even when the charges on those bills are highway robbery - like those in the article itself.

The fact is, the net cost of health insurance was about $279 billion in 2022. Meanwhile, $3.7 trillion went to healthcare providers, pharmacies and the like for care. The ones who stand the most to gain from higher prices are providers.

Frankly, decades of lobbying from the healthcare provider lobby to enrich themselves should have made it this obvious, but sadly, people see doctors as selfless angels and it blinds them.

[BobbyTables2]

Providers have certainly gotten greedy but still can’t compete against hospitals when it comes to ridiculous billing.

I practically damn feel sorry for surgeons when I see what they get from insurance versus the hospital for providing the operating room or bed.

[Izikiel43]

Aren't they doing some kind of turf non compete agreement like isps do?

I had read that comcast won't go into century link territory and viceversa, and something along those lines for the major isps, in order be local monopolies and set prices as they like.

[f1shy]

Fuck those assholes!!! From 20k to 500… how do you name that?

[Izikiel43]

> to justify increasing premiums so they can get 80% of a bigger pie.

Wouldn't it be 20% of a bigger pile?