Health Insurance Companies and Profits

Health care is a big consumer concern and health care costs an even bigger one. As is already known, the US spends more per person on health care and gets less than other developed nations. And then there’s the fact that one in 5 of every person currently being pursued by collection agencies is for medical debt. The issue of rising costs is proverbially complex, and in part why ProPublica, the investigative reporting site in conjunction with NPR conducted an examination which puts a finger on how health insurers operate.  According to their reporting, insurance companies pay the high costs of hospital bills without flinching or arguments.  Hospital bills are not easy for consumers to decipher, and yet the price may be set or known to both the hospitals and the insurers. Many who undergo surgeries have co-pays which are often percentages of a given bill, say 10% which means that only 2 out of the 3 parties involved know the costs involved. The article compares it to not knowing what an airline ticket would cost until after you’ve flown. The absolutely striking part of the article is that for health insurers profits do not lie in saving money but in the percentage left once they have paid the medical bills and covered their administrative costs. What they do is try to accurately predict how much the people they insure will cost them and set premiums accordingly. If they’re right they reap a profit. If they’re wrong, they cover their losses by raising the premiums in the following year. The amount of a bill is not a factor for them, and their profit is not predicated on their decreasing spending.

The stark facts of this investigation not only highlight the role that insurers—like drug companies—have to play in making health care affordable, but also that solutions to making health care affordable cannot be done without a change in the formula of how all these companies derive their profits. Most of all since all this may end up very difficult to accomplish, our awareness and insistence things must change ought to hopefully inch us towards a single payer system.

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