[dan-robertson]

The competitive incentives between insurance companies in the US have pretty unfortunate consequences, and it would probably be good for people if rules could be changed in a way that socialised costs more across ages, etc. But so long as insurance companies are expected to be profitable, this argument is pretty poor.

The bird’s eye view of a health insurance policy is that you have some amount in premiums coming in, some amount of administrative expenses, some amount of profit/loss, and the rest is claims going out. As a percentage of premiums, the profits and expenses are pretty tiny. The reason for claims being denied is making the numbers balance out so as to not have the insurance company risk going bankrupt (insurance regulators tend to want insurers to be only writing policies they expect to make money on on average as insurance companies going bankrupt is bad for other policyholders). If you have a policy where you pay more in premiums, you can expect to have more claims approved.

The big reason healthcare is so expensive is not so much the small profits made by insurance companies as the large costs from providers (some is profit, some is remuneration for well paid doctors, some is having more expensive facilities or equipment or treatments than necessary). You could imagine a world where the insurance company is more of an agent for the patient, trying to avoid providers overcharging to keep premiums down, but that’s not the world we live in. There don’t seem to be good competitive pressures to reduce the costs from the providers. If you compare this to places where people often pay out-of-pocket for healthcare, providers can be much more conscious of this, eg for dental work there can be a choice of having a tooth removed, and then various different qualities of filling that can cost different amounts.

[zelias]

It's almost as if we could solve the problem by having only one payer (a "single-payer", if you will) primarily motivated by patient interest instead of profit motive exerting downward pressure on costs.

[dan-robertson]

I don’t think that’s sufficient without mechanisms to keep down providers’ costs. Eg if a hospital decides to have private rooms for patients as opposed to open wards, should the single payer have to pay more? What if they just decide to charge a higher rate for surgery? Or prescribe a name-brand drug instead of a generic? I think you can look at the fights between Medicare and doctors unions in the US for examples of this, where the doctors seem to do a much better job of winning over public sympathy (though they have even more success when it’s an insurance company declaring they will pay Medicare rates for a procedure).