Hi, I’m from the UK, the healthcare industry in the US has always confused me but one thing I can’t seem to get my head around is how the insurance companies don’t go bankrupt.
I understand how insurance companies work in the fact that they accurately calculate premiums and invest the money whilst not receiving more claims than premiums.
However, in the healthcare industry wouldn’t they receive many claims on a regular basis? Especially from people who require medication on a regular basis e.g Insulin
Furthermore, with hospitals bills and medication being so expensive will they not payout more in bills than they receive in premiums from people?
In: Economics
Alright, a few things to cover here.
1. You’re right, they’re gonna charge more than they have to spend so they make a profit. That’s their ultimate goal, after all! For things like health insurance benefits provided through work, the employee may pay some sum but the employer commonly pays a lot more. This helps with the whole profits thing. So if you see someone saying they get X benefits for $Y per paycheck through their employer, the employer is paying a lot more than just $Y behind the scenes as well.
2. Insurance companies negotiate. We have terms like “in network” and “out of network” when it comes to deductibles and fees. Things that are in network are cheaper because they’ve already negotiated and made deals with those providers. Funny enough this actually drives up costs, because providers then jack their prices more so insurance companies can feel like they got a deal while they haven’t as much as believed. It’s sorta like how when we had JC Penney stores here selling $300 suits that claimed to be $900 but the price was slashed to just $300, what a deal!
2a. Deductibles and copays etc. They front the bill but only after you front some money first. Get a couple stitches and it cost $1200? With $500 deductible, they’re only paying $700 of it.
3. They can and do argue and refuse to pay allllllll the fucking time. This is probably one of the most aggravating parts of our system. Idiots who hardly know shit about healthcare, or are using hearsay rather than having been there directly doing triage and tests and all that, call shots that shouldn’t be called to save a buck. Oh that $60,000 helicopter ride to a better hospital because the doctors at the place you went knew they couldn’t patch you up and knew it was vitally important to get you treated NOW? No we won’t pay that, they should have done the $5,000 ambulance ride that would have taken 3x as long and could have cost you your life. They’ll argue over insulin and everything else. It’s ridiculous.
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