If the company is denying so much claims (32%), and they have quarterly profit around $6B on $100B revenue (and they had less profit in earlier quarters, even a loss in Q1), I think they would need to raise prices to stop denying most claims that they deny. And what then? Someone would kill the CEO because they can't afford the insurance?
When I shop for insurance my #1 priority is seeing if the company will pay a claim. Either because they have the reserves, or because of corporate policy. Premium cost is #2.
What I have observed is that starting about 8-9 years ago any retail insurer that uses a mascot in their advertising, is difficult/slow to pay a claim. Both to other insurance companies who are being forced to subrogate to make their own customers whole, but also to their own policyholders. The sarcastic part of me is saying: "If they spent less on marketing, they'd have deeper reserves"
You can look at sites like A.M.Best for ratings, but mostly it's been listening to what people say. Try using prompts like "does xxx pay claims fairly" to see what you get. There are only a few which get positive responses: Amica, American Family, The Hartford, and a few more.
Of course, much of what you hear is {dramatic}"I can't believe it's taking this long to fix my car" - which is natural. But then you hear stories about a company using a customer's photos from the accident scene to build up a repair estimate, and not sending an adjuster to look at the car once it is at the shop and on a lift. There is always going to be additional damage, commonly from the tow. But there may be damage that shows up once a bumper skin or other cover is removed.
The insurance companies are also low-balling the repair shops. An hourly rate on repairing a Mercedes is (perhaps) $200/hr. If the insurance company is only willing to pay $50/hr ("That's our standard rate") the shop is either going to turn down the work, or take shortcuts like using low-quality parts or junior technicians to make up the difference.
Denying claims generally doesn't improve health insurance company profits. It's not like auto or homeowner's insurance. Due to the minimum medical loss ratio rule, insurers can generally increase their profits by approving more claims. Their most important customers are self-funded employers.
When insurers tighten their claim approval policies it's usually due to pressure from those self-funded employers to control costs. If employers wanted it, insurers would be happy to sell custom health plans that would pay every claim with zero denials; this would be enormously profitable for insurers because they wouldn't have to do any work.
Claim approval or denial rates don't have much direct impact on consumers being able to afford insurance. Most of the cost is borne by employers, and low-income consumers who buy individual policies through the exchanges receive government subsidies. But of course that indirectly impacts all of us through lower wages and higher taxes.
> Denying claims generally doesn't improve health insurance company profits.
If this is true, why do several of the larger companies deny so many claims? I can't imagine they would do this if what you were saying were true; the board would have leadership's heads.
As I wrote above, health insurers ultimately have to answer to their customers. Those are mainly employers, especially large companies with self-funded health plans. Those employers are constantly pressing insurers to cut medical expenses, and so sometimes insurers tighten coverage rules on their standard health plans in order to close more sales.
Payers do make errors in claims processing and improperly deny some claims, but the majority of denials are due to errors on the provider side. They often fail to code claims correctly or don't obtain required prior authorization or don't follow step therapy or fail to attach enough clinical documentation to establish medical necessity. Many of those initial denials are later approved once the provider corrects the errors and resubmits the claim. But in fairness to the providers, it's hard to get everything right the first time because every payer has different rules and they're sometimes ambiguous.
That’s profit, not basic functionality. If they denied claims at the level KP does, the CEO would still be a millionaire but they’d be spending tens of billions of dollars of the money their customers are paying for healthcare on healthcare instead of diverting it to shareholders. This should be like a regulated utility, not a private equity fund: comfortable living but nobody should be getting wildly rich because they’re taking money away from medical care.
The other thing to remember is that people don’t get healthcare for recreational purposes. The American healthcare system delivers quite poor outcomes because so much money is being pulled away by various levels of middlemen. Each layer of people second guessing your doctor, processing claims, negotiating rates, etc. is a lot of professional jobs taking money away from actual medical treatment. If people actually need care, that’s a negative savings they’re simply shifting to society.
Quality of outcomes depends on what metric you look at. In some ways the US healthcare system is excellent, in other ways terrible. For example, the US is at or near the top for 5-year survival rates for most types of cancer.
The major factors driving increased morbidity and mortality for Americans are mostly outside the healthcare system. Overeating, trauma, substance abuse, sedentary lifestyles, etc.
The U.S. does well but at what cost? For example, if we’re paying considerably more than Brazil but barely edging them out on outcomes it’s not as much of an accomplishment as it sounds:
That’s also a hard comparison because incidence rates are not equal, with age and environmental factors playing a significant role. For example, is a 1% savings worth spending 2-3 times more money versus, say, reducing our fossil fuel usage which will significantly reduce our cancer incidence rates as well as saving billions of dollars?
How did we enter a world in which the only given fact that must be held true is that "the business profit will grow unceasingly for all time, no matter the consequence"
Instead of, "the human beings that we serve matter, and our duty to them comes before all else. We will profit by being the best in the market"
I think monopoly and MBAification of every leadership position at every company in at least America. Some of the curriculum is disgusting, anti human propaganda. It's absolutely not a given that shareholder profits come above everything else no matter what. The buck does not stop with fiduciary duty, the buck stops with the actual human beings you're company "serves", as we've just seen. Shareholder profits didn't order that person dead. Humans did.
It's insane that you can let your company perform so terribly, so catastrophicly evil for the public that it becomes impossible to know which of the millions of people who've has their lives damaged or destroyed would've actually decided to order your ceo dead rather than just gleefully commiserate about it at their mothers funeral. I think we get there by destroying the real market. I don't get to choose which insurance my job provides me! I don't know how that would work but all they have to do is pay more large companies to choose them and bam, locked in audience, disgusting parody of a free market, death for thousands of sick people and one CEO. Antitrust needs to block every merger for the next 10 years and obliterate any company that's powerful enough to capture over 20,000,000 customers while the vast majority of them _actively despise you_.
> How did we enter a world in which the only given fact that must be held true is that "the business profit will grow unceasingly for all time, no matter the consequence"
What do you mean enter? This was always the model of capitalistic acquisition. Early industrial revolution was not known for it's blue skies, labor friendly laws and preventing children from working in the mines.
The moment you have inflation, which you need to suppress wages of people living from wages (i.e. labor), is the moment you entered the magical roundabout of infinite growth.
The only time capitalism had to placate labor was when communism was a credible rival.
>This was always the model of capitalistic acquisition. Early industrial revolution was not known for it's blue skies, labor friendly laws and preventing children from working in the mines.
Except for "blue skies", the other things you've listed are the default state of nature. Children worked the moment they were able. Even without a capitalist boss, people worked their asses off during the planting/harvest season under the threat of starvation. The other rest of the year might be more lax, but you're still desperately praying that drought or disease won't wipe away your hard work and leave you starving regardless.
> Except for "blue skies", the other things you've listed are the default state of nature. Children worked the moment they were able.
Not sure if bait or that uneducated. But during early days of industrial revolution was well known for exploitative practices like: children dying in mine collapses, children dying of black lungs, losing their limbs in various machinery.
If you can find these all-natural looms, mines, and labor laws in nature, I'd love to see it.
> Even without a capitalist boss, people worked their asses off during the planting/harvest season
So because it was worse before, we shouldn't strive to improve the system?
>the other things you've listed are the default state of nature
That depends on what you consider to be the default. If you're talking about pre-agricultural man, the difficulty of life varied based on population density. A band of human beings that found an isolated island wouldn't have practiced child labor. They'd do a little bit of work to maintain comfortable living standards and spend most of their time on leisure activities. An area with many competing tribes, on the other hand, would see harsh and sometimes brutal social practices. Again, in a pre-industrial agricultural society, the difficulty of life also varied based on population density. Shortly after the invention of some new agricultural technique or tool, there would be abundance, peace, and easy living. Once that technique had caused a population boom, there would be scarcity, war, and hard living.
>Even without a capitalist boss, people worked their asses off during the planting/harvest season under the threat of starvation.
> How did we enter a world in which the only given fact that must be held true is that "the business profit will grow unceasingly for all time, no matter the consequence”
The Federal Reserve (or central banks in general) has a dual mandate to stabilize prices and maximize employment. The Fed uses monetary policy to manage inflation and attempt to keep a slight amount of inflation without having too much inflation or any deflation. If your profit growth is lower than the rate of inflation, you’re be making less money every year this is the case. Shareholders generally want to achieve a return that is higher than the rate of inflation, aka a ‘real return’.
Tl;dr - Central banks using monetary policy to achieve a constant low rate of inflation is why profit must keep growing forever to remain in business.
Not necessarily. You could improve efficiencies or cut other costs.
But even if it did mean prices went up... so what? That's the point of insurance. You pay in an average amount and the insurance covers you if you are on the wrong side of the cost distribution. If I am buying insurance then I want insurance. I don't want to get lower premiums by having a fun game of "maybe actually you'll not be able to get that cancer treatment" based on somebody other than my doctor deciding that I don't really need it.
I see stats like these: https://i.redd.it/7aa6zytdox4e1.jpeg
If the company is denying so much claims (32%), and they have quarterly profit around $6B on $100B revenue (and they had less profit in earlier quarters, even a loss in Q1), I think they would need to raise prices to stop denying most claims that they deny. And what then? Someone would kill the CEO because they can't afford the insurance?