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Comment by robbiemitchell | Hacker News Reader

One of the benefits a profit motive brings to insurance companies is pushing back on improper billing by providers (doctors/hospitals) and negotiating lowest possible care and drug rates. Tech-focused insurers like Oscar also invest heavily to help guide members toward better care paths, which if done well lead to better care at less expense (for both the member and insurer).

Unrelated: one of the worst parts of insurance is the customer service quality. How does an internal, non-profit insurer staff itself to do this well? If they commit to this even at the risk of it being unprofitable, that would be most awesome —- but I’m skeptical.

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You're correct that a profit motive leads for-profit health insurance companies to push back on improper billing and negotiate prices, because whatever profit they are able to eek out goes to its shareholders.

But the same motive applies to co-ops. The member-owners of a co-op don't want their costs to be inflated by improper billing or inflated prices, because if they are able to reduce their expenses, then the member-owners benefit in the form of lower premiums.

In both cases, the shareholders want to get their money's worth, it's just that in the case of a for-profit company, those shareholders are often external investors, but in the case of a cooperative, all shareholders are also members.

For companies like Amazon, JP Morgan, Berkshire, it's blatantly clear they have a massive financial incentive to beat down the run-away cost of healthcare. They've got a million employees all up and down the economic tiers. It's a very big boon to their business, to have a smaller share of cost going into healthcare, where they can instead redirect that money into eg competing for labor with higher wages (especially relevant with the U3 at 4.1%).

Healthcare costs are so bad they're now a large, direct competitor to the Amazons and Berkshires and JP Morgans in a business well-being sense, as resources are finite. I like having these giants stepping up to the plate and targeting the healthcare system on cost. They tend to get their way; if a political rock (eg insurance companies) gets in the way, it'll get moved out of the way.

It reminds me of the 450 hospitals getting together to set up a not-for-profit generic drug company recently -

https://www.cnbc.com/2018/01/18/hospitals-plan-to-create-the...

> One of the benefits a profit motive brings to insurance companies is pushing back on improper billing by providers

And one of the reasons for the most complicated billing system in the world is for-profit Insurance companies.

> And one of the reasons for the most complicated billing system in the world is for-profit Insurance companies.

Not really. In fact, Medicare is responsible for most of the current billing system, not private insurers.

Medicare is relatively simple compared to most insurance companies and their rules.

Insurance providers write custom lines of business for employers per state and allow those employers to customize the coverage however they like. This happens annually with revisions done to exclude or include coverage as the employer dictates.

Insurance companies, and employers, come up with byzantine rules for what's covered, when it's covered, where it's covered, who is allowed to provide care, prerequisites before approving coverage, what brand of products are permitted in treatment, and on and on.

The net effect is that the rules are multi-variant to the point that they cannot realistically be validated or tested by humans. There are entire industries dedicated to maintaining rules management engines specifically for validating policies, coverage, and claims.

> Medicare is relatively simple compared to most insurance companies and their rules.

As someone who's actually had to deal with this complexity and implement software to facilitate it, I can assure you that Medicare is not at all simple, by any stretch of the imagination. It's not even standard or consistent within Medicare within a geographical region, even if you limit the scope to Part A and Part B, excluding coverage provided under Part C and Part D.

> Insurance companies, and employers, come up with byzantine rules for what's covered, when it's covered, where it's covered, who is allowed to provide care, prerequisites before approving coverage, what brand of products are permitted in treatment, and on and on.

This is exactly what Medicare itself does. The private insurers generally structure their terms in ways that are similar to what Medicare does. They're not identical, but it's not like Medicare is some haven of simplicity by itself that the private insurers complicate. Medicare itself is unbelievably complicated and abstruse by itself.

> There are entire industries dedicated to maintaining rules management engines specifically for validating policies, coverage, and claims.

Yes, that's true. And that would be true even if you only looked at Medicare patients.

It's not that Medicare is simple, it's not. It's that there are thousands of private insurance companies each holding thousands of lines of insurance each with their own set of rules comparably complex to Medicare.

Medicare is by volume the larges provider but size is actually a benefit because it means that it's dealt with more frequently and is more familiar to care providers.

A care provider isn't multi-regional, thus when they deal with Medicare it's mostly consistent. The interface is at least similar. However they can have 100 patients with United Healthcare and each patient will have a unique and different line of insurance.

Medicare isn't simple, it's just a small piece of a very big shit sandwich.

> A care provider isn't multi-regional, thus when they deal with Medicare it's mostly consistent. The interface is at least similar.

This is dead wrong. It's easier to deal with a small ha regional insurers than it is to deal with Medicare on the whole. And as I said in the original post, even within a region, Medicare is very heterogeneous.

> Medicare is by volume the largest provider.... Medicare isn't simple, it's just a small piece of a very big shit sandwich.

As you said yourself, it's the largest single piece of the sandwich. It also happens to be the core of it as well. Most of the complexity in the billing process stems from how Medicare structures and organizes its own billing, not the other way around.

This thread reads like you two are talking past each other, are you saying that cptskippy's point about individual lines on the provider side is either nonexistent or irrelevant?

> are you saying that cptskippy's point about individual lines on the provider side is either nonexistent or irrelevant?

I'm saying that the marginal complexity introduced by private plans is actually quite small compared to the complexity that Medicare already creates. Furthermore, the complexity that private insurers introduce is both directly and indirectly linked to the way Medicare structures its billing and reimbursement policies.

Thanks.

> It's not that Medicare is simple, it's not. It's that there are thousands of private insurance companies each holding thousands of lines of insurance each with their own set of rules comparably complex to Medicare.

They are actually overlapping problems, since some of those private lines are Medicare Part C or D plans (and some are Medicaid managed care plans, and some are both Medicare Part C and Medicaid managed care plans.)

> Not really. In fact, Medicare is responsible for most of the current billing system, not private insurers.

Medicare, Medicaid, Private Insurers, and the need for all of them to coordinate between each other all contribute significantly.

The need for all of them to sometimes coordinate with non-healthcare payers (e.g., property and casualty insurers) for some claims also adds some complications.

I think the causality flows the other way: the system being so complicated to navigate creates huge barriers to entry, which result in huge profits for whoever can navigate the whole system.

Whenever I want to feel sad, I think about how the most brilliant minds of our times are probably making a fortune at such zero sum transactions as gaming the health system and tax code.

> One of the benefits a profit motive brings to insurance companies is pushing back on improper billing by providers (doctors/hospitals) and negotiating lowest possible care and drug rates.

The ACA requires insurers to spend 80% of the premiums they take in on direct healthcare costs for their members. Inflated billing and high drug costs are actually helpful if they want to make a nice big profit. To a point, at least - they've gotta find the right balance between profit and people being unable to pay their premiums.

That only applies to the individual market, not employer insurance (small and large group.

Higher medical expenses don’t help. It only creates higher premiums, which members then blame on greed.

There are plenty of legitimate problems with providers, drug laws, and insurers. But insurers definitely don’t benefit from higher expenses.

Actually systemic higher costs do help. An older industry analysis found insurance to be competitive so they only way to grow profits for the industry was to grow costs. The trick is for insurance companies to find ways to get other insurance companies to pay more even if they have to also carry those costs.

AKA, 10% of 2 trillion is more than 10% of 1 trillion.

This is diametrically opposed to the facts. People need to stop making arguments like this about profit driven insurance when our system has the US spend the most per capita amongst modern nations with mediocre results.

Medicare is also more expensive per capita than most modern nations and its publicly funded.

That’s in large part because the costs of healthcare are crazy high, not the cost of insurance.

They are interrelated, yes. But fundamentally we are at a place where providers, especially hospitals, are billing insanely high rates for services compared to other countries.

It's nutty to me that yours is the first comment that I'm reading in this thread that has mentioned that. The provider part of this shit sandwich (to steal a phrase used elsewhere in this thread) is by far the more problematic piece.

When you use a service without paying for it (e.g., television, radio, Yoogle, Facepage, and so on), you are not the customer but the vector to get to the real customer who is paying. No, buying a TV or paying your ISP is not paying for the services you are accessing.

What Americans think of as “health” “insurance” fits this model. Providers are in the business of soaking their customers the various tax-favored third-party payers for all they can. Of course prices rise continually. People are stirred into a frenzy about rising costs and demand that politicians just do something! The insurers get more tax-favored money that providers happily mop up.

A non-profit ensurer staffs itself to have high quality customer service by pushing back on improper billing by providers and instead of returning that savings to its members investing it into higher quality employees, more training, and better systems to ensure that hospitality is a paramount concern.

Not always - the other way to mitigate billing inflation is to increase premiums (which would explain the last 20 years).

It's both. But there are also laws that limit an insurer's ability to push back. For example, ALL out-of-network emergency services must be covered, including all follow-up work that occurs as part of being admitted due to an emergency.

Out of network means the insurer and provider have not previously negotiated a rate. And emergency services are among the most expensive bills out there.

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