^this. There is no way the OP’s outpatient procedure cost the insurance company $30K. I recently had a hip revision surgery, definitely not outpatient. with several days in the hospital, etc. I am pretty sure it cost the insurance company about $35K.
That’s not true. The insurance company I work for has a lot of people on both Medicare and commercial insurance. Commerical retiree policies are dissappearing but at the same time more and more people are actively working after age 65 and remain eligible for regular insurance, which is primary if the company has over 100 employees.
That’s only true for provider that don’t have a contract with a particular insurance company. In that case the insurance company does determine a “Usual and Customary Amount”, pays it, and any excess is up to the member and the provider to sort out.
If the provider does have a contract with the insurance company, then the insurance company pays the contracted amount (or assigns part of it to deducatable / coinsurance / copays) and the provider writes off anything above it. Some people that have a policy with the company I work for have wound up owing tens of thousands of dollars because they chose nonpar providers for elective care. (If it’s emergency care and going to a par provider isn’t feasable we’ll pay whatever the provider charges).
You’re right. Medicare Supplement and Replacement plans have a seperate risk pool. I’ve noted above people do sometimes carry regular commerical insurance after age 65 if they’re working, but the number of such people is rather small in relative terms.
The most expensive 1% of people use about 20-25% of all health care spending in the US. The most expensive 5% (which obviously includes the 1%) uses 50-60% of all health spending. So about 3 million people are using 600 billion in health spending which is about 200k a year each. But the vast majority of people spend a couple grand a year at most on health care.
I believe in the US insurance companies cover about 20% of all medical costs that occur in the country. Another 20% are covered by individuals, and the rest is covered by the public sector in various forms.
People who are too sick or too old to work aren’t going to have employer provided health insurance. They will all be on medicare, medicaid or state high risk pools. So private insurance tied to employers, by its very nature, is already cherry picking the cream of the crop. Only people healthy and young enough to be employed long term, and who are employed at relatively decent jobs because a lot don’t offer insurance anymore, get covered at work. Granted you also have the spouses and children of the gainfully employed to consider.
So that plays a role. If you are paying $80/month, your employer is probably paying another $300+ a month. My premiums (employer and employee) come to about 4-5k a year for an individual policy, and I still have a relatively high deductible. So your plan probably comes to 6k a year or more. You can recoup 80k with 13 years of 6k a year premiums. And like others have said, most people only need a small amount of medical care each year.
You can get supplemental Medicare now. But since this is subsidized by the government I didn’t think your question would apply to it.
There are retirement medical plans that continue on until after 65, but they are paid for in a sense from money earned before, and are more like a pension. My father-in-law, who was a teacher, was on one. He is 96 and just this year he got kicked off the group plan since he was the only one in the group still alive. Continuing it was very expensive, so he switched to Medicare Plan B.
My parents are in a group plan that comes along with my father’s pension- but once he became Medicare-eligible, he had to sign up for Medicare ( I think the retirement system reimburses the premium) and Medicare became the primary coverage. My retirement coverage works the same way.
I’ve paid over 150,000 in health insurance premiums over the past 30 years and I have never gotten close to my deductible. That's 150,000 for them to pay you.
You’re welcome.
Ive had knee surgery and my wife had cancer and weve still only cost about $60000. Weve probably paid over $10k a year for insurance in the last 14 years Ive had this job. So my wife had cancer and the insurance company is still ahead on premiums for us. Insurance is much more expensive than you think. My company pays most of it, we pay about $5000 a year.
My girlfriend recently had lung surgery and with complications spent nearly a month in ICU. So far the bills have totaled $300,000 and I know we haven’t gotten them all in yet. I pay $750.00 per month for my insurance and she has none so was forced to go to county hospital. I would imagine over a lifetime we probably average at least $200,000 each.
It costs more money for people not paying through employment, for people with preexisting conditions or age, there are maximum payouts, and people could be dropped. Being in a large group pool smooths out some of the costs, and employers contribute to the cost as part of your benefits. Insurance doesn’t actually pay doctors or hospitals the official amount that is in your bill.
Some of these factors will change with the health care reform bill of course, but that’s how it was.
I’ve had continous health insurance coverage since 1993 and my employers and I have paid all the premiums you can imagine that go along with that.
I’ve made 1 doctor’s office visit for a blocked salivary gland and 2 for check-ups.
Basically it’s been answered but to sum it up:
- The monthly premium paid to the insurance company is far higher than what you’re paying yourself. I don’t know if your employers has the numbers for you, but some places you can lookup what your “COBRA payment” would be if you wanted to continue keeping your coverage after separation from employment. A law got passed awhile back which required employers to let employees stay in the employer health plan, but the employee has to pay the full share (instead of getting a subsidy from their employer.) I know my final year working for the Commonwealth I looked at the COBRA charts and for a single person it was like $650/month, vastly more for family coverage. If you can find out what your COBRA payment would be for your current health insurance you’ll know how much your insurance company actually gets for your policy each month.
Your math changes a lot when you’re talking $600/mo to pay for a $30k procedure versus $80/month. At $600/mo you could cost them $30k every 5 years and they’d come out ahead.
-
I think family plans are potentially a big benefit for smaller risk, especially when you’re talking about covering children. I think most employer plans there is a rate of X for single persons, X + Y for employee + spouse, and X + Y + Z for “family plans” that cover spouse and children. Single people will be shocked, but even heavily subsidized-by-employer family plans can cost $500 a month or more, and the truth is with such good pediatric medicine these days most kids never need serious medical treatment. Even covering people up to age 26 on a parental plan, you’re talking about healthy people you get into your risk pool and get to jack the parent’s premiums up for who probably will never dip into the benefits significantly.
-
As has been mentioned, many of the older people who don’t work just go for Medicare and the ones who maintain private insurance are part of different risk pools.
-
As has also been mentioned, the difference between collected premiums and paid out benefits is typically invested. Warren Buffet controls GEICO through his Berkshire company and he’s said many times that where he really makes money in the insurance business is by smartly investing the “float.”
Indeed. In California, when an initiative went on the ballot to reduce and regulate insurance premiums, my brother heard an auto insurance exec exclaim that if it passed, they’d be forced to pay claims out of premiums! My brother’s sympathy was unavailable for comment.
Also, that $30,000 isn’t likely to be the amount the insurance company pays, but the amount billed to an individual patient without insurance. The insurance company probably has rates that they have agreed to pay, and the hospital/doctor agreed to accept (reasonable and customary fees), for each line item on the bill.
Bob
This is allegedly true. Reported corporate profits in health care insurance are not very high. Executive salaries are a whole different matter. If the CEOs are doing this well, you can bet the other C-level execs aren’t doing too bad either.
That article is slightly dated, but it does make me wonder about the legitimacy of the books. Is the gross margin on 3% so high in this industry that turning 3% margin is respectible? Is this why the execs are so highly compensated?
ACA allows 20% margin “for profit and administrative costs.” The health insurance industry is lobbying Washington to deduct fraud prevention costs from profit margins. On its own, it seems like a reasonable request. Companies of the magnitude of national health care insurers that supposedly exist on under 3% net, but they can’t exist on 20% gross? While their CEOs, and presumably other executives are raking in the dough?
I don’t know. Something smells rotten.
The company I work for is a nonprofit and is under 10%, so even if you add a few percentage points in for profit for the for-profit companies it’s certainly doable to be under 20%. You don’t have a lot of control over the light bill but if needed you can cut salaries, outsource employees (UHC just oustourced they’re entire customer service department), reduce advertising and fraud prevention efforts. Obamacare will reduce a fair amount of overhead since companies won’t need pre-exist and lifetime max employees any more.
By the time you do get seriously sick you will be on medicare and the government will foot the bill.
That’s a good point, some plans will go [Employee][Employee +1][Employee + everyone], rather than [Employee][Employee + Spouse][Employee + Spouse & Kids], but the fact remains it’s expensive to add people to your policy, and your deductable & oop max will likely increase too. Sometimes there’s no individual deductable under a family plan either. If that’s the case assume John as a $1000 deductable, he adds his daughter Jane onto the policy and the deductable goes up to $2000 and his OOP max goes from $2000 to $4000. Jane just needs a a checkup for school due to the American fascination with those which the insurance pays 100% as preventive. Then John has a stroke and is hospitalized for several days. He now owes $4000 because he had a family policy as oppposed to the $2000 if he had left Jane off, in addition to all the extra cost of his premiums. Is this a good reason to leave kids off your policy? Certainly not, everyone should be insured, but it does illustrate the OP’s point that such policies are good for the risk pool.
Especially if your insurer is AIG.