Comment by m16ghost | Hacker News Reader

Comment by m16ghost | Hacker News Reader

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>The Affordable Care Act introduced the newer perverse incentive of insurance companies tolerating higher prices. Because if you can only pay your execs bonuses based on 20% of your total spend, insurance companies can pay execs more if the underlying claims they're paying cost more. 20% of a $1,000 MRI isn't as juicy to your C levels as 20% of a $10,000 MRI.

If this perverse incentive were true, then you would expect the medical care costs to rapidly increase after the passage of ACA, but medical trend has actually slowed down since then[0] [1].

You can also look at the total dollar spend on hospital and medical expenses for the entire health insurance industry [2]. After the passage of ACA, there was a large increase in medical spend as more people obtained insurance coverage, but the increase in medical expenses year over year has settled back into the 5% range, which doesn't seem that perverse.

[0]https://www.statista.com/statistics/720767/medical-cost-tren...

[1]https://www.pwc.com/us/en/industries/health-industries/libra...

[2]https://content.naic.org/sites/default/files/2021-Annual-Hea...

Having no idea what the real trend is, couldn't any other factors counteract the perverse effect, making both parent's and your observations true at the same time ?

For instance rhe sustained efforts that lead to ACA peobably didn't stop there, and more effort surely were made to reduce healthcare cost from there. If ACA could be passed in the first place, it wouldn't be surprising if other effective actions were also passed as well ?

>Having no idea what the real trend is, couldn't any other factors counteract the perverse effect, making both parent's and your observations true at the same time ?

Absolutely. There could be other factors that are counteracting the effect, including those within the ACA itself since the bill contains many changes to healthcare, not just the restriction on medical loss ratios.

From your second link, except in the last year, healthcare spend has been outpacing inflation by more than 2 to 1. The economics of scale are backwards in healthcare, I find that perverse.

UnitedHealth total comp have been rising for C levels, except the CEO who recently left, who stayed around 17mil. https://www.salary.com/tools/executive-compensation-calculat...

I think we can agree that something will need to change as medical trend cannot outpace inflation forever. I don't think the issue is with executive compensation, because even if insurance companies magically could perform all their services for free, you would only reduce premiums by less than 20%.

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