2mo ago

Why can't someone create a public alternative to health insurance in the USA?

Health insurance at its core is very simple. You put money in, you go to doctor, insurance pay doctor. But in the USA, the insurance denies everything they possibly can. Money put in doesn't ever see a doctor or your health costs, it goes right to the stockholders....

So why doesn't someone just make a non-profit health insurance company where there's no stock, no executives, just public servants and aggressive price negotiation where your medical bills are actually paid with the money put in?

39 comments

Healthcare co-ops exist. But a good number of people get health insurance through their jobs, and those jobs usually contract with one of the big corporations.
- Yep, and it's not like it's just cheaper, benefits packages are tied into compensation.
  Say you pay $400, insurance says the real price is $800, and your employer only pays another $200 as a "discount" but the real cost is actually $600. But turn down coverage, you don't get that $200 in extra pay.
  Without an employer, you have to pay the whole $800.
  With a co-op you'd pay the actual real cost of $600.
  It needs a critical mass of people.
  And OP doesn't understand a non profit still has a CEO that can be paid millions. The organization can't make a profit, but lots of corrupt people make a lot of money running non profits.
  
  It is over $1000 per moth for me that I'm turning away. there is just no way anyone can compete with that. much as I don't like my insurance my costs must go up by a lot if I skip my companies insurance.
  
  And the more you dig into it, the worse it gets. That price discrepancy exists at the provider level too.
  You have a health issue and need treatment.
  The treatment cost the Dr $200 to perform.
  The list price for the treatment is $500.
  The big insurer uses the weight of their customer base to negotiate with the Dr and the agree to pay $300 for the treatment. If the doctor doesn't accept, then they're out of network and can't get patients.
  The plucky startup co-op doesn't have the same negotiating leverage, so they have to pay $400 for the treatment.
  The co-op is going to cost more to operate, and now the real monthly cost you have to pay with the co-op is $700 instead of $600.
  And it gets worse.
  This video is a nice little primer about how the insurer might not even pay that $300 they agreed to, how that let's them profit further on the treatment while creating financial pressure on healthcare providers, and how your Dr may end up being owned by the insurer, further reducing the ability of a new co-op to compete.
- According to this, there are only three co-ops left —down from 23 when the ACA became law.
  https://www.healthinsurance.org/obamacare/co-op-health-plans-put-patients-interests-first/
- Blue Shield of California is a “big corporation” that employers here often contract with for health insurance, and it is a non-profit. Somehow this doesn’t really result in a dramatically different experience.

Obama tried and the entire Republican party started talking about gulags
- And their scare tactics worked so well that now people voted for the Republicans to remove "Obamacare" even if they need it to live...
  So ignorance is also part of the answer sadly
- In all fairness, where Republicans are concerned gulags are warranted
  
  They got their wish last time around. MVM and CoreCivic are salivating at the new opportunities.
- And now they say Obamacare didn’t go far enough and is kinda weak. I could strangle them.

No one gets rich from public healthcare.
That's why.
- Not exactly. In theory corporations need workers so they should benefit from a healthy public.
  In reality, they don’t need everybody healthy - just enough to meet their needs. And their needs for workers are met. They’ve been exporting and automating jobs for decades. So even with the system leaving lots of folks behind, enough are left over to occupy the jobs that are needed. If anything, we have more healthy people than corporations need - what is lacking are skills.
  And so in a very American sense of “business first,” the current system is operating just fine. People and their health have no intrinsic value here.

It's technically possible but it would take a truly massive sum of money to get off the ground, and nobody is going to put up the capital knowing they're not going to get a return on that investment. People don't get the kind of money required to do this by making decisions like that.
- Where's Mark Cuban when we need him

It's important to recognize that the system in the US is more convoluted than you believe. It's not like we have totally separate drug manufacturers versus distributors versus hospitals versus insurers. There's a fair amount of overlap, and a lot of it is relatively secretive, so you don't know where the kickbacks are. You don't know who's jacking up prices in general knowing that they're going to lower prices for the company that they are partners with. All of which is to say, this is not a fair market, this is not a market where you can reasonably compete if you play by the rules, but even if they actually bothered to follow the rules, you're already screwed because they have market dominance.
The only path forward is through government run single payer healthcare. You can call it NHS, you can call it whatever you want, but it has to be run by the government. You need the government to set price ranges for drugs and treatments so that the drug companies and the hospitals don't f*** over everyone.
But I don't think Americans are ready for that yet. Obviously Trump winning the election makes it incredibly unlikely, but I think even large numbers of Democrat voters are still trapped in American exceptionalism. They know they're getting fleeced, but they aren't yet willing to say that they should probably copy what's happening north of the border or across either ocean. They have good stories, things about super long wait times or lack of doctor choice, pretending that those things don't happen in the US, and then pretending that those things do happen in every other country that has universal health care, which is laughable. But it's hard, because so many people are desperate to believe that the US is the greatest country in the world, and they are desperate to avoid recognizing that they've been getting f***** right in the ear for the last few decades.
- And it’s not just insurance companies that need to be disrupted. There’s that whole convoluted ecosystem of profit-takers that should not even exist

Health insurance at its core is very simple. ... But in the USA...
I wrote this lengthy post a few months ago about why the American health insurance system is not efficient in comparison to the auto insurance system:
So to answer your question directly, the costs for healthcare in the USA continue to spiral so far out of control that it causes distortions in the health insurance market, to everyone’s detriment. Specific issues such as open-enrollment periods, employer subsidies, and incomprehensible coverage levels all stem from – and are attempts to reduce – costs.
The auto industry has examples of "mutual insurance" companies, where the company at-large is partly or wholly owned by the policyholders (eg State Farm, Amica, Liberty Mutual USA). And that mostly achieves the objectives you've described for a non-profit automobile insurance pool. Sadly, this just doesn't work in the USA for health insurance, for the aforementioned bottom-line reason.
Hospitals and doctors go through intense negotiations with insurers to come to an agreement on reimbursement rates, but the reality is that neither has sufficient actuarial data to price based on what can be borne by the market. So they just pass their costs on, whatever those may be, and insurers either accept it into their calculations, or drop the provider.
When prices for service are opaque, how can any insurance company -- even the most benevolent -- properly price their policies? To stay in business would require always overestimating than underestimating. The extra revenue becomes either profit or float. But this float can't even be beneficially used or paid out, in case the next quarter has more expensive claims to pay. Which brings us full circle to opaque pricing.
In this environment, the only remaining prudent thing for a benevolent health insurance company to do is to hold huge reserves. But that is not competitive against profit-seeking insurance companies that can undercut the benevolent company, who had tied one hand behind their back. Benevolent companies rarely survive.
- Amica is mutual insurance company for auto, home, and life. But, they don't obstruct and deny legitimate claims like State Farm. Also, real humans answer the phone. The catch is that they're fairly risk averse.
  I state this example because I don't want people to equate mutual with shitty products and service.
  
  Thanks for pointing this out. I offered State Farm as an example because they're the largest auto insurer in the USA, but with just that example, I can see why someone might get the impression that mutual == bad. I happen to be a happy State Farm customer, but I'm aware this isn't universal.
  I've added Amica and Liberty Mutual USA as additional examples to address this.
- Blue Cross Blue Shield of Massachusetts is a not-for-profit health insurance company. I am not sure that it is a full mutual company, but they have no profit incentive. Consequently, they are the best health insurance we have ever had by a wide margin.

Insurance companies make money by indirectly extorting customers, be they individuals or businesses, through pricing schemes with healthcare providers. The American healthcare system is designed and priced around people having insurance, as you've noticed. This leads to insanely high bills for what should be simple things. An ambulance ride often costs over $1,000 without insurance, for example. In a nutshell, they've created a system where they are both the problem and the solution. Why don't they start behaving more ethically? Well, from a money standpoint, why would you become less corrupt when you can collect more money by being corrupt?
Changing insurance providers, or even just certain coverage choices, isn't easy. We have what are called "enrollment periods" in the US when you can do this, and the only other times are under major life changes such as marriage or having a child. As another user noted, most people get insurance through their employer. The company (usually) pays the lion's share of the premiums; otherwise, the plans would be completely out of reach to employees. My plan would be four times as expensive to me if I was paying for it out of pocket.
As a result, starting something like what you want on a national level would be extraordinarily expensive, hard to compete with established players, and likely legally troublesome. Don't get me wrong, we need reform pretty badly, but those reasons are why it hasn't really taken off.
- The company (usually) pays the lion’s share of the premiums; otherwise, the plans would be completely out of reach to employees.
  Which is just smoke and mirrors because the insurance the company pays is part of the cost to employ, aka they are paying with money that would have gone on the paycheck. The company insurance scheme limits choice.
  
  Very true. There's some benefit where the business can get a "package deal" of sorts which makes it cheaper than buying individual policies, but it's still a shell game.
- I feel like you in many others blame the insurance companies for basically everything which is fair, but what you are excluding conveniently is the fact that it's not just the insurance companies that are doing this extortion, it's also the leaders and people in charge. Hospital administration, pharmacy managers, and so many others. If everyone started saying no and stopped allowing this, it would never happen. If they cut out the insurance companies entirely and started making their own decisions on treatments and if the insurance doesn't cover it, so be it, we'll eat the cost, That's kind of the way the world worked before insurance became so big and massive. We take care of people in our hospitals and health care system and figure out the payment and insurance later. Would that be costly, probably. But it's not as bad as the fear mongers want people to think it would be, that's what I feel. They want us to think that healthcare is so expensive without insurance that no one would ever possibly be able to afford it in a thousand years so we have to have insurance, when that's not really the case, there were times when people simply did not have health insurance widely, and they still went to the doctor or went to the hospital. I mean hell look at other countries?
  
  I'd love to see insurance companies get taken down a notch, but what you're saying isn't nearly as simple as you think. People regularly get tens of thousands of dollars into debt for lifesaving care, even with insurance. Those without it can go hundreds of thousands or even millions in the hole - I've personally known people in that situation. I certainly agree that hospitals are partly to blame, but the whole healthcare system is built around insurance paying most of the cost. This never would have happened if insurance didn't exist. It's a captive market. The only way doctors, hospitals, and pharmacists would unite in not accepting insurance was if all insurance companies disappeared. There's just too much money on the table otherwise.

Because it's not a fair market. Health insurance is a cartel market.
Let's say you break your ankle - maybe a reasonable cost for resetting the bone would be 240$ - the hospital will set a list price somewhere like 1300$ for the operation and then Anthem/UHC/whatever will send a rep out to be like "Hey, what if, when it's one of our people, you only charged 300$" suddenly the rep gets a bonus for getting a "good deal" the insured patient is happy to pay well below "market" price and the hospital might get a small kick back for being so generous.
In this scenario most people only ever feel the 300$ price - but uninsured people or people out of network get absolutely fucked.
Since the current system entrenches all the existing players none of the participants (except the patients who usually don't even get to choose their insurer) want to change anything.

It's incredibly simple. Complacency. Greed takes root, nobody cares enough, and greed takes further and further root. The US has constructed its society into one where it is entirely normalised for someone to see a homeless person, and say "they earned it".
Healthcare--and, by extension, everything else--will only change, when the people work to make that change. Simple as. As of now, corporations make change instead. Perhaps, what's transpiring proves a turning point, but I'm not willing to believe that yet.

American capitalists are really, really good at cracking down on any civil attempt at unionising and/or improving society at the cost of the ultra rich.
You could recite the extensive history of violence, but honestly the greatest achievement is in the propaganda. Solidarity seems to be commonly understood - by all classes - as having to take the bill for somebody even poorer than yourself, and nobody seems to be comfortable with the idea that they might themselves one day benefit.
Americans can't have good things before they start fighting back. Read up on union history. Organize. Educate. Teach people what solidarity is and what the Battle of Blair Mountain was. Learn what was taken away from you, and help others understand as well. Begin locally.
Either that, or keep watching the fascists take over day by day, as they have been doing for decades.

They have co-ops and there are 'less greedy' insurers out there but at the end of the day it's slathering this idea on top of the existing framework when the framework itself is probably the real issue. Doctors/facilities need to defray costs of potential malpractice for example, and that adds to cost as opposed to a more efficient universal fund if they were all employed by a single entity (like a governmental department), small stuff like that, economies of scale for operational expense, having to compete to buy real estate for facilities, all adds up

There are some alternatives that are usually affiliated with a religion. CHM is one such organization. Members all pay a recurring fee like they do with insurance, and all have access to the pool for their healthcare.
I have never used one so I cant speak to the efficacy, but it seems to answer your question.

Feel free to crosspost to !AskUSA@discuss.online

A public system specifically would mean it's run by the government. So that would need to be created by the government. Which means you'd need all relevant voting systems to vote in favour of it, which isn't likely... especially given the last presidential election.
I imagine the biggest challenge of creating a non-profit health insurance thing is one of two things.
Firstly, anyone who has that much money would probably rather open a charity.
Secondly, people actually DO commit fraudulent claims, or try to claim things that they don't need or that the health insurance company decided that they won't cover. If the company doesn't try to filter these out, it'd be losing more money than it expected to...and it'd go out of business.
Another factor is that being in the insurance business is already a losing model if you want to do good in the world. Hospitals will charge jacked up rates because they don't have to worry about what a person can pay. They try to extract as much as they can out of the big insurance corporation, since the patient doesn't care what the insurance company has to pay. So this non-profit insurance company would be paying as much as any other insurance company, more than any patient would be paying, and so it'd be losing money even just paying out all of its valid and covered claims, let alone the fake and unnecessary ones.
So, maybe you want to partner with the hospitals because, why should you pay as much as the evil companies, right?
Well, that sounds great from a consumer sense. But from a business perspective, that'd be suicide for the hospital -- why would any other insurance company do business with that hospital if they're giving one company discounts unfairly?
Or...maybe they do give discounts. But then they make less money and can't pay the doctors as much (who can leave for work elsewhere), or buy the newest equipment, etc.
But if they do want to give discounts and just charge the company what things actually cost...at that point, you might as well be a charity.
And even then, you still need to budget for validating the claims that come in, because how do you choose who gets covered, and within that group, who gets priority?

As soon as a politician attempts to do so in a serious fashion, they will have to fight the entire lobbying (see bribery) might of the insurance indistry.
Thats why im amazed Mitt Romney (IIRC he was governer at the time) was able to do what he did in Massachusettes (state mandated healthcare with a state run insurer, along with private entities not wanting him out of office). That system threaded the political needle, the dems got their state run healthcare marketplace, and the repubs got their "this is good for business" from their handlers, and once the paint dried, he still had the clout to move to up to congress and make a run for the white house. Later, the ACA/ObamaCare was based off that system, yah kids, ObamaCare is technically a Republican invention (say that at thanksgiving and see which relatives squirm).
Thats about the most "for the public good" model we could make at the time to make most everyone happy, and its not great. Some of the regulations like "no pre-existing condition denials" are pretty damn important now, to the point that .95 cant throw the baby out with the bathwater without pissing a lot of people off.

Insurance company profits are already capped by law. I don't think your ideal insurance company can possibly be that much better for the customer than the already-available options are.
The companies must spend at least 80 cents of every dollar they collect in premiums from small businesses and individuals on health care, and 85 cents per dollar for large employers. The remaining 15 to 20 percent is all they are allowed under the Affordable Care Act to spend on administrative costs like overhead and marketing and to keep as profit. Any additional revenues are to be returned to consumers in the form of rebates.
Note that the remaining 15 to 20 percent has to cover all the costs of actually running the company. It isn't just profit.
Furthermore, insurance companies do have to compete with each other on price. Denying a lot of claims helps them offer cheaper policies. Employers who provide insurance want the cheapest policy that their employees will tolerate and healthy people want the cheapest policy that they expect to protect them from sudden, catastrophic expenses. (I'm relatively young and healthy and I have never even seriously considered picking a policy other than the cheapest one whenever I had a choice.)
In this context, if your business plan is to spend more money per customer than the existing insurance companies do, and your target market is people unhappy with their current insurance companies (these people probably have expensive problems) then you're not going to do too well...

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