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Here's the problem: you are thinking that the health insurance industry is currently governed by free market forces. They are not. In fact, they are propped up by a myriad of laws and regulations without which nobody would buy the product they are offering. The market would completely collapse if taxpayer subsidies did not support employer-provided insurance. Health insurance companies have had it so easy for so long. They are exempt from anti-trust laws, so they have what is essentially a monopoly in most markets. No true competition exists, and they are free to collude to set prices. Although another poster thinks that health insurance companies do not make money from premiums, he failed to propose an alternate way that he feels they are making money. Here's the equation: Premiums paid - benefits paid out - overhead = profit Health insurance companies call benefits paid out "losses". When they deny claims, they are avoiding losses and increasing their profitability. They make their profits appear lower by increasing the overhead, ie, by paying hundreds of millions of dollars in salary and bonuses to their executives. The only responsibility of health insurance companies is to their stockholders, to make higher profits in the short term. So they deny insurance to anyone who they think might get sick and charge the healthy such high prices that soon no one will be able to afford insurance. Thus the drive for short-term profits has caused management practices that will mean the end of the industry within 15-20 years anyway. As far as change goes, options are pretty limited. You do accept that the industry must be regulated, don't you? Most people would support elimination of abuses and a return to insurance companies actually insuring people and paying benefits that policies say they will. Do you support Medicare, or do you see it as an abuse of Government power that should be eliminated? Because basically that's what the Public Option is, a source of insurance for those who cannot get private insurance now. And Republicans who are screaming about not wanting reform would just love to eliminate Medicare. There is basically no "bidding" involved. There is no private company that will serve as a go-between. The government will collect premiums in the form of taxes on those who are getting the benefit, and they will pay the premiums directly to providers. Medicare charges no more than 3% administration costs. Private health insurance charges 35% and up. What are we as Americans getting for that money? What value do they add? ∠°)

by Angela Q

1 month ago

Asker's Rating: 

To put it simply - there are currently 1300 health insurance companies. Adding one more will not do a thing for competition other than the public option will operate in the red; pulling in needed capital from taxes and fines, not from the premiums as the insurance companies must do. To answer your question - all except a handful of the biggest companies will go out of business. Those few companies left will have to raise their premium to cover the extra mandated coverage that the health insurance Deform bill will require. Insurance companies pay out .99 cents of every dollar they receive in premium. They do show an average 4% profit but 3% of that profit comes from return on their investments (the $billions the government requires that they hold in reserve to pay future claims). Since the insurance companies pay out 99% of premium cutting health insurance premiums will not do a thing toward cutting health care costs. Massachusetts has had a "universal" type insurance system in place since 2006, with the goal of covering all and reducing costs. The health care costs have risen 42% in that state in the three years since; while the system has been in the red the whole time, steadily increasing taxes and fines for those without insurance but still not breaking even. Insurance companies show a 1% profit while hospitals average a 6% profit; however, I don't see anyone complaining about "those greedy Hospitals". **** To respond to Angela Q -- It is true that Medicare administrative costs are 3% but that is based on fuzzy math. Medicare patients are by definition elderly, disabled, or have end-stage renal disease, and as such they have a higher average patient care cost. The administrative costs are based as a percentage of total costs so this gives a misleading picture of efficiency. Based on a per person costs, in 2005 Medicare's administrative costs were $509 per person while private insurance costs were $453. Medicare costs are higher per person despite the fact that private companies' cost include state health insurance taxes of up to 4%, expenses that Medicare is exempt.

by Zarnev- 1 month ago

Here is all you need to know: when the government "competes" the government always wins. This means that eventually the govt would drive out all other private options and we would all be stuck with a crappy government plan.

by James- 1 month ago

No, I don't think it will. People are under the sadly mistaken impression, that health insurance companies are making their profits, off the INSURANCE PREMIUMS they charge. They don't. What's going to happen, is a widescale lesson in the concept of "adverse selection" - the smaller health insurers will go out of business. The less healthy people will buy cheaper insurance from the government, or flat out go uninsured until the month they want treatment, because the government plan won't exclude coverage for preexisting conditions. The healthiest people will get cheaper overall coverage, more comprehensive care, from the private insurers remaining. And we'll have two distinct levels of care - the lower level government healthcare, for the people who need it most, and the upper level private care funded by private health insurance, for the people who can afford it. Just like how it works in Europe. If you like living in government housing, you'll love government healthcare. and you're wrong - the guy who gets the bid, isn't always the lowest and most responsive - frequently, bids are assigned by committees to friends, relatives, and large donors, as "payoffs" by the politicians. That's why we, the taxpayer, buy $800 toilet seats through government contracts. **Health insurers - and most insurers, for that matter - make their profits off of income from their invested "reserves" - the money the government requirest them to put aside, to pay claims. Even 3% interest on hundreds of BILLIONS of dollars, is a lot. THAT is where they make their profits - not off of premium dollars.**

by mbrcatz- 1 month ago