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Notes -
I find numbers from 4% to 6% profitability for insurance companies. Why are those numbers "absurd"? It looks to me as comparatively modest profit margin. Wikipedia shows 371b revenue, 23b net income on 273b assets for United in 2023 - I would want to hear an explanation why those numbers should be considered "absurdly profitable"? How much would be reasonably profitable, given that some zero-risk savings accounts paid out around 5% at the same time?
Pharma does seem to be much more profitable, with 25-30% profit margins being common for companies like Pfizer and Merck.
Profit as in profit margins is not egregiously high, but 4-6 percent of hundred of billions of dollars is a lot of money that could be spent elsewhere.
Moreover financial success can be spent on the company - inflating salaries for executives, finding no need to trim administrative fat, more general reinvestment.
I'm usually pro-CEO pay. Let people like Elon make a fuckton of money if they are bringing value, but the insurance companies are only bringing value by fucking over American citizens are further destabilizing an already fragile healthcare system.
So they are profitable in the sense that they help some people get rich at the expense of Americans, not profitable in the sense that they have excess profit margins.
Sure, I could always explain how I would better spend somebody else's money. My point here was however that these profits have been characterized as "absurd". I don't see how it is appropriate.
I don't think you could seriously defend the premise that this is the only thing they are doing.
I though it was properly fixed in 2010? Or at least a lot of people told us it would be. I wonder why nobody asks those people any questions about why our system has become so fragile after they fixed it so well? Why nobody even mentions that happened at all? Health insurance industry is one of the most thoroughly regulated industries of all, yet literally nobody discusses why no responsibility belongs on that side.
That's pretty much describes any American company, doesn't it? Now I think it's up to you to point our why existence of profitable businesses in America is a bad thing. I have lived in a country where there were no profitable businesses (at least not legal ones) and I tell you, I wouldn't advise anybody to get sick there. Not an experience I'd ever want to repeat.
I think it would be helpful to know if you are steel manning or not, because it I can adjust the level of detail here, American insurance companies are comically evil, United even uses a company called "EviCore" to automate the fraudulent denial process.
Outright fraudulent (but difficult to fine and prosecute) activity is rampant and the lobbying arms have created some truly excessive vampirism on the American population (ex: PBMs, Medicare Advantage plans).
They are absurd because any amount of profit or excess spending involves making healthcare more expensive, lower quality, or outright fraudulent activity. Everyone Agrees American healthcare is fucked and this is one of the biggest causes and the place to save the most money.
Every cent of all those CEOs multi-million dollar salaries is involved in not creating a higher quality product, but siphoning away money from taxpayers while providing the lowest quality product they can, knowing they can take advantage of regulatory loopholes and the lack of this environment functioning as an actual market.
Let me rephrase this, any amount of money over replacement generated by an insurance company is fucking over Americans. When Apple saves 5 cents on an iPhone the American people are missing out on 5 cents, when United saves 500 dollars on a patient that is money they were contractually obligated to pay that they managed to weasel their way out of (again, frequently fraudulently!) that the taxpayer, hospital, or patient is now on the hook for. It's much more directly a zero sum game.
I don't know anybody involved who thinks that except maybe some Obama democrats.
Absolutely not. It is regulated, but given the constant unmanaged fraud and all kinds of malfeasance it is either regulated ineffectively, or more likely the regulations were written by the lobby. That seems more accurate given the way they manage to skate by on practicing medicine without a license.
I've already made my zero-sum pitch above, but I'll note that these companies function more like defense contractors. They do something that is important and benefits Americans but the money and influence they have is totally de-tethered from the actual value they bring to the table, a lot of regulatory capture is involved, and billions of dollars are constantly falling off of trucks and not benefiting anybody.
Certain industries shouldn't be profitable because that leads to cost-cutting and therefore death. I want my air-traffic controllers to be inefficient but safe as hell because the government has their hands so far up those guys asses. Healthcare is largely the same, but Health Insurance is not.
I'm not asking for the government to get involved and have single payor, that's a recipe for its own separate problems. I want things like CEOs getting paid a few million max, because maybe then you'll get CEOs who are less efficient and finding legal ways to commit fraud.
EDIT: This post says it much better than I could manage: https://www.themotte.org/post/1287/culture-war-roundup-for-the-week/276661#context
Again, this is true for every commercial company. Maybe in a glorious socialist paradise nobody makes any profit and still everything works just fine, too bad America is not a glorious socialist paradise and no country on Earth is or ever will be, because it is all an ignorant fantasy. In real world if you want shit to be done, you better pay people for doing shit, and yes, that means profit over replacement costs, otherwise they'd just go do something profitable instead. Healthcare is not some magic thing - any service you want you'd have to either pay for it or force people to do it by some other means. Experience shows people being threatened don't work that well. People having no motive to work better also work not that well - which you kinda sorta start to realize right here:
Welcome to the Real Government, as opposed to the Unicorn Farts Land Imaginary Ideal Government, which people somehow imagine could exist and take care of us all. The real government is humongously inefficient and corrupt, always has been so and always will be. So the obvious solution, of course, is to give it even more powers? Because if they have even more power, they surely stop being inefficient, corrupt and stupid - just because... of what exactly?
It is entirely possible to operate more efficiently and not cause death - in virtually any industry, including health care industry. Any seasoned professional would be able to point out dozens of ways.
I'm not sure how making the CEOs paid less is going to motivate them to commit less fraud. Let's say you are a worker on a puppy feeding factory (ignore the question why such factory exists), and you have a decision - if you choose one random puppy, and let it go hungry for a day, you can save some money, at the cost of a puppy suffering. Obviously, you have an ethical choice to make here. Now I come in and cut your salary in half. How exactly did it make you more motivated to make a more ethical choice? I mean, I understand the basic desire to stick it to those filthy rich assholes, but I am not sure how you get from there to incentivizing them to behave in ways you like them to behave.
Most companies can say, cut some labor, reduce the cost of manufacturing, remove some features. If the product becomes terrible people will stop buying it.
That doesn't apply here.
United's business model is:
-You are forced to buy eggs from us from your employer.
-You pay a yearly fee for eggs.
-When you ask for the eggs. 1/3 of the time you get an egg, 1/3 the time you get an egg that expired a month ago, 1/3 the time you get no egg at all.
-Sometimes if you complain long enough they'll give you an egg a year later.
-They were required to give you a fresh egg by law, they just didn't do it.
-The CEO's job at most companies is to reduce the cost of eggs, or provide lower quality eggs. The CEO at a health insurance company is finding new ways to not give people the egg they paid for, and trying to figure out how to do this without getting the government mad.
-Things like PBMs and Medicare Advantage plans are flat-out scams somehow permitted by the government, likely through some form of regulatory capture that bring the system much closer to collapse. These are complicated but to briefly explain the latter, medicare advantages plans are when a private insurance company takes everyone healthy/cheap away from Medicare, gets paid to do so (as if they were unhealthy), doesn't cover their coverage when they do need it, and as soon as they actually get sick punts them back into the medicare pool. If that sounds ridiculous and like that couldn't be a thing....that's why it is a scam!
Now, whose fault is that? Certainly UH CEO didn't put a geis on America to make it impossible to shop insurance providers, and yet... Whose fault is that and who could change that? Somehow nobody is interested in talking about it.
But why? Why you can't just go to the store and buy eggs, why you have to pre-pay them via some kind of ridiculous complex arrangement? Imagine you buy your bacon, orange juice and english muffins in a normal way, but have to go through this weird arrangement for eggs - aren't you going to ask what the heck is going on, why I can't just buy eggs like any other normal grocery item?
That's not true. Insurance CEOs also can reduce costs and provide lower quality service (e.g. generics vs. brand medications), denial of coverage is by far not the only tool in their arsenal.
I think several of your comments center around "the current system has some huge gaping flaws" which...yeah no argument from me.
That's not what we are talking about though. Fundamentally United makes a ton of its money from fraud. Therefore I think any amount of profit is absurd. Stop committing fraud! They seem to have managed to dodge regulatory oversight somehow but that doesn't change that a lot of what they are doing is some combination of illegal, fraudulent, a breach of contract, or a scam. A higher percentage of stuff is deeply unethical but that is more questionable to criticize.
I have significantly less problem with them making money legitimately but until they do any amount of profit is absurd.
Some people (which may include you?) have a more winning focused attitude - if the system will allow the activity (illegal or not) than its fine, old school Sirlin stuff.
However if the system allows this kinda stuff you'll have gross negative externalities like the impending collapse of U.S. healthcare and the likely copy cat increase in violent populist activity.
I cannot tell you the number of times my interaction with an insurance company has boiled down to "yeah we were always going to cover this, as we were contractually obligated to, but I wanted you to spend 5-10 hours of your own time suffering to make it happen, maybe next time you'll just take the loss or tell the patient they are better off paying cash for their medication."
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