If health insurers need to pay out 80% for medical claims and can keep 20%

[dkf]

Won't they increase payouts to doctors to also increase the dollar amounts they can keep? Isn't the incentive to inflate costs?

[enki23]

1. er.... huh?

only if they get a kickback from the doctors somehow, under the table, and get away with it completely.

[dkf]

4. Let's say the doctors Bill is $100. If the negotiated price is $50, the doctor gets $50

And the health insurer gets to collect premiums of $62.50, paying out $50 to the doc and keeping $12.50. But if they decide to pay $100, they charge premiums of $125 where the doctor gets $100 and the insurer keeps $25. They have just doubled their revenue by paying more to the doctor and charging higher premiums.

[OneTenthofOnePercent]

10. This situation assumes collusion.

If you are going to artificially raise prices to reap more profit, you must be assured your competitors do the same or they can undercut you and take all your customers.

Let's assume Blue Cross decide to keep thier standard rates. Lets also assume Aetna decides to double thier payouts in order to double thier revenue. To stay solvent, Aetna would likely have to double their premiums. Employers and customers would not like this and jump ship to Blue Cross. Blue cross just made ALOT more money than Aetna by doing nothing extra.

As long as there's no collusion or antitrust violations, the companies should remain in check.

[dkf]

13. They don't tell you what their u and c charges are.

And it varies from company to company. I know this because my insurer said the amounts even change from doctor to doctor, and it depends when they signed the contract.

[OneTenthofOnePercent]

16. They don't tell you, but the money must come from somewhere.

If the Insurance Company is pocketing more real money then they are paying the doctors more real money. All of this incrase in payouts and witholdings must come from somewhere: Customer Premiums.

If a company plans to pay out X% more and keep X% more simply because of a new regulation... incoming premiums better be increased by X%. Customers/Employers do SEE what they pay.

[obxhead]

17. You are too funny.

You honestly think all of the insurance companies have not been colluding quite effectively for decades? Really?

For sale, going really cheap.

[OneTenthofOnePercent]

25. For sale, going really cheap:

Look at my previous post you replied to and indicate WHERE I stated that I "think all of the insurance companies have not been colluding quite effectively for decades"...
You wont find it because it isn't there. I did not post my opinion or what I thought. I simply pointed out the FACT that the situation presented in the OP requires the assumption of collusion. Nowhere did I state my support or denial of the concept that there may be collusion occurring.

[obxhead]

29. Quoted from your own post.

"As long as there's no collusion or antitrust violations, the companies should remain in check."

By saying this it implies you believe it is already in place or that it will suddenly begin to occur. Insurance companies have been in collusion since their creation. Just look at how they worked so well together and with Obama to bring us this terrible HCR.

[BzaDem]

36. No, actually, saying that does NOT imply it is already in place or will occur. Logic fail. n/t

[BlueDemKev]

20. That's true

Competition between the insurance companies (i.e.--they'll all be jockeying for customers who are adamently against paying high premiums), should diminish the chances of having medical costs artificially-inflated.

[WingDinger]

11. Hint, pharmacies charge $10 per months prescription. They charge MUCH more than that to those that h

have copay. They have jacked the costs so that after they negotiate their real price, the copay pays all costs in reality. And the health insurer makes out like a bandit.

[rfranklin]

2. It seems logical that you would want to increase the costs if...

you are able to keep 20% commission.

[Schema Thing]

3. how would that benefit the insurance company?

[Statistical]

14. Um which is worth more 20% of $100 or 20% of $200.

The higher the "cost" of service the higher their 20% cut is.
Would you rather have a 20% commission on a $20K car or 20% commission on $50K car.

The way the "compensation" structure is setup their is no incentive for them to push for lower prices by providers. Why? They can't keep extra profit by lower medical costs but they get a 20% cut of a larger pie if costs go up.

[Schema Thing]

21. The latter, of course.

[Statistical]

22. Well that is the reason it benefits an insurance company.

They get a 20% cut of the total cost. If that cost is higher their profits are higher. Since they are capped at 20% of total cost a way to raise profits is to simply raise what they pay Dr. Dr win, insurance company wins, consumer not so much.

Essentially there is no incentive in driving down healthcare costs because doing so would drive down their profits (which are directly linked to the cost of care).

[Schema Thing]

26. This is such an over simplification.

The insurance company gets 20% of premiums collected, not "cost", subtle but important difference in practice. Premiums will now have to be justified. There will be real actual competition at work. They now have no lifetime limits, and soon will have no annual limits. Medicare, Medicaid, CHIP, and the new co-ops aren't going to play along. The customer base really IS at the bleeding edge of being able to afford ins co products even now (that's why we finally were able to pass *something*).

[Statistical]

28. Your right it is 25% of the cost.

20% of the total means 80% spent on care, 20% on administration.

So technically it is 20%/80% = 25% of amount spent on care can be skimmed by the insurance compamy.

If the COSTS are higher then their cut is higher. If they actually lowered cost then their cut would decline. Can you imagine any company working harder to lower costs in order to lower their profit.

[notesdev]

5. "Isn't the incentive to inflate costs?"

Duh

Remember the whole purpose of the bill in the first place? It was to bring down the skyrocketing costs of health care. If there's anything in the bill that actually does that, it's buried so deep that no one can find it.

[The Magistrate]

6. They Will Use It As An Excuse To Jack Thir Premiums, Sir, Certainly

Doubtless to the point where they run themselves out of business over the next few years....

[dkf]

8. But if this is considered a necessity, won't it be pushed to the point of unaffordability?

[Hoyt]

9. Don't bring reality into the discussion.

People will definitely seek the most affordable insurance policies. When the Exchanges kick in -- and with the lack of pre-existing condition exclusions -- we can move from insurers who game the system to more affordable coverage. There are hundreds of insurers and I believe one or two will provide an affordable policy (within the constraints of our current system). Once they do, others will follow.

Unfortunately, health insurance will never truly be affordable -- even under a single payer or public option -- until we make tough decisions on how care is delivered, what is covered, etc. That discussion hasn't really started.

[dkf]

12. You are very right.

I didn't realize a DNR means not even trying to give CPR if a person is having a heart attack right before you. I thought it meant not being hooked up to machines if you are brain dead or something.

I have to admit it threw me for a loop being asked to approve something that drastic before anything had happened, but I guess in cases of dementia some would say a DNR is the right thing to do. I'm still torn on that. Can't a person with dementia have a decent quality of life?

[The Magistrate]

15. For Most, Sir, It Is Already Unaffordable

[freshwest]

19. Agreed. It is for me. This year, more so. I'm outta their game.

[harun]

7. It will balance out. Of course they will use it as an excuse to raise premiums

but it does limit the worst offenders. Those who just felt their purpose was to collect peoples money then use that to fight having to pay for anything. Which is only every for-profit insurer out there.

[Schema Thing]

18. Review of Health Plan Premium Increases

Requires the federal government to create a process, in conjunction with states, where insurers have to justify unreasonable premium increases. Provides grants to states for reviewing premium increases.

Implementation: Plan year 2010




From: http://healthreform.kff.org/timeline.aspx

[lumberjack_jeff]

23. No, because they don't want their premiums to rise faster than the competition.

Buyers of insurance shop on the basis of the premium.

[Schema Thing]

24. State Efforts to Make Health Insurance More Affordable

Rate Review: Spotlight on State Efforts to Make Health Insurance More Affordable

The Patient Protection and Affordable Care Act creates a new federal role to examine “unreasonable increases” in the premiums charged for certain individual and small group health plans. Under the health reform law, the U.S. Department of Health and Human Services (HHS) will work with state insurance departments to conduct an annual review of unreasonable rate increases, and insurers must provide justification for such increases to HHS and to the public via their websites. The new law also allots $250 million for state insurance departments to enhance their process for reviewing proposed rate increases.

This study examines the existing laws and regulations in all 50 states that currently govern the review process for health insurance rates. It finds dramatic variations across states, with some states having with no authority at all and others with robust authority to review and approve or disapprove rates before they are implemented. Researchers also interviewed insurance regulators in 10 states (Alaska, Connecticut, Colorado, Idaho, Louisiana, Maine, Ohio, Pennsylvania, South Carolina, and Wisconsin) to see how different levels of rate regulation work in practice.

The study was conducted by researchers at the Georgetown University Health Policy Institute and the Kaiser Family Foundation.
Report (.pdf)

Sortable State Table

[Edweird]

27. I've been certain for a while that what you are describing is what got us where we are today.

So, the answer is "yes". You've seen it happen, and there is nothing to prevent it from happening further. We *DO* have this lovely RW individual mandate now, though.

[Bandit]

30. Insurance IS an incentive to inflate costs

It really doesn't matter the percentage the insuirance company has to pay. the Doctors and hospitals know they are going to get paid no matter what so costs are automatically inflated.....

[Capitalocracy]

31. Collusion between the insurance industry and the hospital industry

is why we have the most overinflated health care prices in the world.

The answer is, of course, yes.

[Hoyt]

34. And the fact that we demand the latest in technology/treatment, even if the benefit is very small.

But, you broach that subject and out comes the "death panel" accusations.

[Capitalocracy]

35. I like thoroughness and due diligence

Obviously it can be exaggerated. But the individual tests, regardless of whether you do them for a good reason or not, are far more expensive in the U.S. Everything is. Bandages are more expensive. Everything.

[Cleita]

32. I worked for a doctor who did inflate his prices

for the insured. Once his patients' deductibles were met he accepted the 80% and didn't ask for the co-pay. It was written off with a bookkeeping trick that also lowered his taxes. If a patient didn't have insurance then he gave them a discount. So basically, the insurance company paid 100% of the fee without knowing it.

[TheKentuckian]

33. Of course, why did y'all wonder why a few of us are hot as a pistol that the cartel's

Anti-trust exemption was left in place?