The company says it is protecting nursing home residents by curbing unnecessary hospital transfers. Whistleblowers allege cost-cutting tactics have endangered the elderly
The first step is that the insurance company bets on how much someone will cost them on average. So they have estimated that x number of people being insured will cost the company y dollars. Then they collect those premiums and being able to keep 20% of that AFTER paying for the medical care AND the costs to process the medical care. If an individual costs more to provide medical care to the company loses money on that person and the costs are averaged out with others that cost less than the average amount.
So if they can get the majority of people to cost less then they come out ahead and can keep some of it as the 20%. If they guessed low on the premiums they might lose money. They do NOT automatically get the 20% portion and that portion has all their operating costs and what is left over is profit. The incentive to lower hospitalizations and deny care is that it increases the proportion they can possibly turn into profit.
Okay, but this law is over 15 years old. We can assume they’ve long since min-maxxed to get that 20% as close to bang on as possible. This is established as the general reason a for-profit healthcare system is bad (and that worse care also costs more than a single-payer solution). And why the ACA was put in place in the first place. To cap it there.
How to hit that 20% on the nose every fiscal year isn’t what I was asking. It was about the generally accepted claim that the more insurers DDD, the more money they make from premiums, thereby increasing their profit margin.
That they have maxed the profit portion of it for one. That they don’t more reliably increase the portion they get to keep that ends up as profits for another.
Do you understand that they can lose money if the medical costs are too high?
I absolutely have not. Not once has anyone given me an answer that shows the simple math I outlined is wrong.
Just hostility from what I can only presume is a desperation to save face after you said so many blatantly incorrect things (which, unlike you, I’m happy to quote for you of you don’t believe me).
You should really reflect on why it pains you so much to just admit you didn’t know how the ACA worked.
Overall, the unweighted average loss ratio was 1.6% higher in Q2 2024 at 85.8% compared to Q2 2023 at 84.2%, as all carriers except Elevance increased year-over-year. The increases are: CVS Health (Aetna) (86.2% to 89.6%), UnitedHealthcare (83.2% to 85.1%), and Cigna (81.2% to 82.3%).
So looks right in line with the 80-85% requirement.
That they don’t more reliably increase the portion they get to keep that ends up as profits for another.
Increase the portion of premiums they get to keep? How…
Do you understand that they can lose money if the medical costs are too high?
Of course. But that doesn’t change the fact that they can’t keep a larger portion of the premiums after medical costs and rebates if the medical costs get lower.
So let’s see. The first input in both equations is “Premiums paid to the insurer by the customer”. If that’s wrong, what happens instead?
The first step is that the insurance company bets on how much someone will cost them on average. So they have estimated that x number of people being insured will cost the company y dollars. Then they collect those premiums and being able to keep 20% of that AFTER paying for the medical care AND the costs to process the medical care. If an individual costs more to provide medical care to the company loses money on that person and the costs are averaged out with others that cost less than the average amount.
So if they can get the majority of people to cost less then they come out ahead and can keep some of it as the 20%. If they guessed low on the premiums they might lose money. They do NOT automatically get the 20% portion and that portion has all their operating costs and what is left over is profit. The incentive to lower hospitalizations and deny care is that it increases the proportion they can possibly turn into profit.
Okay, but this law is over 15 years old. We can assume they’ve long since min-maxxed to get that 20% as close to bang on as possible. This is established as the general reason a for-profit healthcare system is bad (and that worse care also costs more than a single-payer solution). And why the ACA was put in place in the first place. To cap it there.
How to hit that 20% on the nose every fiscal year isn’t what I was asking. It was about the generally accepted claim that the more insurers DDD, the more money they make from premiums, thereby increasing their profit margin.
I see two other people who have also clearly explained this to you but apparently you can’t let your incorrect assumptions about the 20% go.
What incorrect assumptions about the 20%?
That they have maxed the profit portion of it for one. That they don’t more reliably increase the portion they get to keep that ends up as profits for another.
Do you understand that they can lose money if the medical costs are too high?
Another downvote, but still no answer. Why?
It’s wild that you can’t just admit you were wrong after being so hostile to me for so long.
No answer…
Removed by mod
I absolutely have not. Not once has anyone given me an answer that shows the simple math I outlined is wrong.
Just hostility from what I can only presume is a desperation to save face after you said so many blatantly incorrect things (which, unlike you, I’m happy to quote for you of you don’t believe me).
You should really reflect on why it pains you so much to just admit you didn’t know how the ACA worked.
Really? What’s the average Medical Loss Ratio of major insurers then?
Edit: https://www.oliverwyman.com/our-expertise/insights/2024/sep/health-insurer-financial-insights-q2-2024.html
So looks right in line with the 80-85% requirement.
Increase the portion of premiums they get to keep? How…
Of course. But that doesn’t change the fact that they can’t keep a larger portion of the premiums after medical costs and rebates if the medical costs get lower.