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PaperclipPerfector  10d ago (text post)   2619 thread views

Small-Scale Question Sunday for December 8, 2024

Do you have a dumb question that you're kind of embarrassed to ask in the main thread? Is there something you're just not sure about?

This is your opportunity to ask questions. No question too simple or too silly.

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I hadn't seen any of those stories yet. The last is particularly interesting. I will Google it but a link from you may be nice too.

The problem with complaints about claim denial rates are that all insurers in America make more money the more claims they approve. They are only allowed to make a specified margin between premiums and claims.

There are only two "evil" reasons to deny claims:

  • Fewer approvals mean lower premiums. In any market with competition (not many in the US) then UHC can be cheaper
  • Denying Claims lowers administrative costs somehow and allows a greater allocation of margin to profit

They are only allowed to make a specified margin between premiums and claims.

If they've already reached their statutory minimum of 85% of premiums collected paid out in claims, doesn't paying additional claims reduce profits? I can see how there's a global incentive for all insurers to pay more claims in general, so that they stimulate cost growth in health care and premiums have to go up overall, but at some point they have to try to stop paying claims to cover admin and shareholder returns.

If they've already reached their statutory minimum of 85% of premiums collected paid out in claims, doesn't paying additional claims reduce profits?

For a given year? Yes. Then, the next year, they will destroy and recreate the plans with higher premiums.

at some point they have to try to stop paying claims to cover admin and shareholder returns

This is true, and I'd be interested to see how claim denial rates line up with a given FY cycle. They could be just vastly incompetent, making all of their customers hate them for no reason by being unable to predict claim demand, even with the vast swaths of data they have.

More likely though, it has to do with being lower price in any competitive market. After all - consumers generally don't see the premiums, but do see the denials. They may be making another $3k a year because their employer saved money on health insurance, but that's rarely transparent to an employee.

This is true, and I'd be interested to see how claim denial rates line up with a given FY cycle. They could be just vastly incompetent, making all of their customers hate them for no reason by being unable to predict claim demand, even with the vast swaths of data they have.

I am very curious about this as well.

Though comparing claims denial rates between insurance companies isn't useful without more context? It's true Kaiser has a denial rate of 7%, but aren't they famously (though not exclusively) an HMO? 7% seems low, if you ignore the fact that (pulling this out of my ass) 99% of medical providers are not allowed.

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