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
Two things:
1. I think you are underestimating how much it costs to have insurance in the US. Paying over $300 a month in premiums AND having a deductible over $5,000 (which basically means you need to spend 5k a year before insurance will ever pay for anything) is not uncommon. If someone is paying less than this/has better insurance. It’s because their employer is paying for it, not because the insurance company isnt getting paid.
2. insurance companies regularly negotiation for lower prices. Like if you didn’t have insurance the hospital might charge you $10,000 for an operation. But they will only charge insurance $1,000.
Oh, and of course insurance companies deny claims *all the time*. A coworker of mine has a son with severe allergies. Like kid’s doctor says its the worst case he has ever seen in 30 years of working as a specialist. Insurance denied his meds.
Edit: Most people also have something called a copay. Which means you always have to pay some amount out of pocket. *Even if you have hit your deductible already.*
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