# What to do about massive health insurance profits? **URL:** \ **Category:** Great Debates\ **Created:** [October 4, 2009, 6:53pm UTC](https://boards.straightdope.com/t/what-to-do-about-massive-health-insurance-profits/512572 "2009-10-04T18:53:19Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![Markxxx](https://avatars.discourse-cdn.com/v4/letter/m/5daacb/32.png) [@Markxxx](https://boards.straightdope.com/u/Markxxx)\ **Post date:** [October 6, 2009, 4:20am UTC](https://boards.straightdope.com/t/what-to-do-about-massive-health-insurance-profits/512572/21 "2009-10-06T04:20:39Z")
Insurance is different because it’s basically legalized gambling. You’re betting something will happen against a company betting it won’t. Statistics can be very accurate but too often we forget they are only as accurate as the people forecasting them. And since all statistics can do is project, they aren’t firm so if someone says “X” it’s just as easy to find someone to say, “No it’s ‘Y’.” Whatever profit the insurance industry makes is not relevant to anything. Whether this income is gouging is. And not all insurance is equal for instance, you have to have auto insurance to drive. Now one can make the argument, “You don’t have to drive,” and while that is true, basically we live in a society that ouside of NYC, Chicago, Philly, DC, Boston and San Fran (and just the inner cities not the burbs) you need a car to function. ---
**Author:** ![Grumman](https://avatars.discourse-cdn.com/v4/letter/g/43a26b/32.png) [@Grumman](https://boards.straightdope.com/u/Grumman)\ **Post date:** [October 6, 2009, 5:30am UTC](https://boards.straightdope.com/t/what-to-do-about-massive-health-insurance-profits/512572/22 "2009-10-06T05:30:18Z")
> [@Sage\_Rat](#): > > Okay, you said before that they’re taking 18 million a year average. Let’s assume that they’re secretly taking three times that amount via embezzlement and creative accounting, and not only that but their board of directors and top executives–say 20 people in all–are all taking an even amount… > > Slightly less. But let’s say that in truth they’re taking 8%, the average for most things you see in a store, rather than the 3.8% that they are lying about: If you’re done propping up your beliefs with a single number you pulled out of your ass, has it occurred to you that an entire _industry_ routinely funnelling 4% of revenue to a handful of easily identified people would be anything but covert, and a massive “Audit me!” sign for anyone with a functioning brain? I’d think that after the 5th or 6th time the IRS found someone under-reporting their income by 75%, even they might get suspicious. ---
**Author:** ![elucidator](https://avatars.discourse-cdn.com/v4/letter/e/8edcca/32.png) [@elucidator](https://boards.straightdope.com/u/elucidator)\ **Post date:** [October 6, 2009, 5:34am UTC](https://boards.straightdope.com/t/what-to-do-about-massive-health-insurance-profits/512572/23 "2009-10-06T05:34:16Z")
> [@Muffin](#): > > ..As most of you realize, a lot of investments tanked when the recession hit. Health insurance companies investements tanked along with everyone else’s… I think we all realize it, but maybe don’t give it enough thought. I know that insurance companies are required to keep a certain amount of funds reserved for possible payout. But how is that regulated, what form may that reserve take? Can it take the form of, say, rock solid triple A rated securities, for instance? The same sort of rock solid, triple-A rated securities that took a swan dive from the high board into a blazing river of shit? Might that explain why the insurance companies are fighting this like the 300 Spartans at the Alamo? Because they are desperate to suck up some more money before anybody catches on? Because they cannot survive even the slightest downward tick in their revenue stream? ---
**Author:** ![Stratocaster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/stratocaster/32/16393_2.png) [@Stratocaster](https://boards.straightdope.com/u/Stratocaster)\ **Post date:** [October 6, 2009, 10:03am UTC](https://boards.straightdope.com/t/what-to-do-about-massive-health-insurance-profits/512572/24 "2009-10-06T10:03:31Z")
> [@Euphonious\_Polemic](#): > > It’s not about profit. Profit is a very minor component of the cost of health insurance. Let them have their profit - good for them. It’s also not just executive compensation that raises the cost of health care in the US, although it is a component. - it’s also massive inefficiencies in the system. (imagine if we had “competing” electric companies, each of whom had to maintain separate power systems and lines to every house) It’s a doctor’s practice having to hire people just to get paid by myriad plans. It’s the vast numbers of people hired by the insurance companies (not just executives), who are well paid to push paper around. It’s having “competing” hospitals and health plans spending money on advertising their services. > > Add all of these components together: Profit, High exec salaries, lots of employees pushing paper, extra costs to doctors to deal with companies, inefficiencies with multiple competing plans > > It adds up to higher costs for medical care… For EVERYONE in the country. It certainly is about profit, to hear certain politicians speak. We need to keep the profit-mongering health care corporate villains honest. Add some real competition, and all the rest of that bullshit. Bravo to the OP. I have been saying the same thing, on this board and elsewhere, and the notion is rejected out of hand. Nope, they’re corporations. They must be making excessive, dishonest profits. You can see it in this very thread. But to your points, then why not eliminate the barriers that the companies are forced to wrestle with? Why isn’t allowing competition the solution? And why will the Federal government writing the check suddenly make these conditions disappear? ---
**Author:** ![yorick73](https://avatars.discourse-cdn.com/v4/letter/y/b5a626/32.png) [@yorick73](https://boards.straightdope.com/u/yorick73)\ **Post date:** [October 6, 2009, 4:26pm UTC](https://boards.straightdope.com/t/what-to-do-about-massive-health-insurance-profits/512572/25 "2009-10-06T16:26:00Z")
I wonder how waste, fraud and abuse in medicare measures up compared to evil profits by evil insurance companies. Here is a list of some of the waste going on [http://www.foxnews.com/politics/2009/10/05/tracking-taxes-medicare-waste/](http://www.foxnews.com/politics/2009/10/05/tracking-taxes-medicare-waste/) Oh, and it turns out medicare denies more claims as a percentage than the evil insurance companies. See page 5 of this document [http://www.ama-assn.org/ama1/pub/upload/mm/368/reportcard.pdf](http://www.ama-assn.org/ama1/pub/upload/mm/368/reportcard.pdf) The fact is doctors bill insurance companies higher rates for services in order to subsidize their medicare and medicaid patients. If the evil insurance companies went out of business, and the government becomes the single payer, you can expect the cost of the government plan to skyrocket. ---
**Author:** ![Sage\_Rat](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/sage_rat/32/399_2.png) [@Sage\_Rat](https://boards.straightdope.com/u/Sage_Rat)\ **Post date:** [October 6, 2009, 4:53pm UTC](https://boards.straightdope.com/t/what-to-do-about-massive-health-insurance-profits/512572/26 "2009-10-06T16:53:12Z")
> [@Grumman](#): > > If you’re done propping up your beliefs with a single number you pulled out of your ass, has it occurred to you that an entire _industry_ routinely funnelling 4% of revenue to a handful of easily identified people would be anything but covert, and a massive “Audit me!” sign for anyone with a functioning brain? I’d think that after the 5th or 6th time the IRS found someone under-reporting their income by 75%, even they might get suspicious. Yes, it did occur to me. That’s why I ended my post with, “I think not.” Pointing out how laughable the idea was, was the point of the post. ---
**Author:** ![Grumman](https://avatars.discourse-cdn.com/v4/letter/g/43a26b/32.png) [@Grumman](https://boards.straightdope.com/u/Grumman)\ **Post date:** [October 6, 2009, 4:56pm UTC](https://boards.straightdope.com/t/what-to-do-about-massive-health-insurance-profits/512572/27 "2009-10-06T16:56:55Z")
> [@Sage\_Rat](#): > > Yes, it did occur to me. That’s why I ended my post with, “I think not.” Pointing out how laughable the idea was, was the point of the post. Oh. I’m sorry, I should have seen that coming, in this thread of all things. :smack: ---
**Author:** ![bri1600bv](https://avatars.discourse-cdn.com/v4/letter/b/9fc29f/32.png) [@bri1600bv](https://boards.straightdope.com/u/bri1600bv)\ **Post date:** [October 6, 2009, 5:03pm UTC](https://boards.straightdope.com/t/what-to-do-about-massive-health-insurance-profits/512572/28 "2009-10-06T17:03:10Z")
> [@elucidator](#): > > I think we all realize it, but maybe don’t give it enough thought. > > I know that insurance companies are required to keep a certain amount of funds reserved for possible payout. But how is that regulated, what form may that reserve take? Can it take the form of, say, rock solid triple A rated securities, for instance? The same sort of rock solid, triple-A rated securities that took a swan dive from the high board into a blazing river of shit? > > Might that explain why the insurance companies are fighting this like the 300 Spartans at the Alamo? Because they are desperate to suck up some more money before anybody catches on? Because they cannot survive even the slightest downward tick in their revenue stream? They have to hold more capital depending on how risky the assets are. Most insurance companies invest their policyholder reserves and surplus in bonds. Depending on how they’re classified (available for sale, held to maturity) the decrease in value may be apparent in their GAAP balance sheet. I would think almost all of their assets are in high grade bonds. ---
**Author:** ![elucidator](https://avatars.discourse-cdn.com/v4/letter/e/8edcca/32.png) [@elucidator](https://boards.straightdope.com/u/elucidator)\ **Post date:** [October 6, 2009, 5:06pm UTC](https://boards.straightdope.com/t/what-to-do-about-massive-health-insurance-profits/512572/29 "2009-10-06T17:06:54Z")
> [@bri1600bv](#): > > …I would think almost all of their assets are in high grade bonds. I would _think_ so too, it being the most prudent, cautious and sensible approach. Would that be the aforementioned rock solid, triple A rated securities, then? ---
**Author:** ![spazattak](https://avatars.discourse-cdn.com/v4/letter/s/8e8cbc/32.png) [@spazattak](https://boards.straightdope.com/u/spazattak)\ **Post date:** [October 6, 2009, 5:15pm UTC](https://boards.straightdope.com/t/what-to-do-about-massive-health-insurance-profits/512572/30 "2009-10-06T17:15:18Z")
> [@Sage\_Rat](#): > > It’s the same recommendation as Liberals are making: Move to fewer sources of money. Having a hundred different companies managing health insurance just bloats administration costs and makes everything confusing. If you make it so that there are a smaller number of companies, an official way for a person to transfer their policy from one carrier to another, and the carriers aren’t allowed to refuse insurance to anyone, you’ve got UHC without turning the entire world upside down. The recommendation that liberals are making is to make the payment process more efficient - not reduce the number of payers. Reducing the number of payers might be one way to increase efficiency. You could also stream-line the payment process with open standards that all insurance companies would have to comply with and liberals would still be happy. The goal is efficiency and competition - not reducing payers. Industry consolidation doesn’t promote efficiency or competition. It promotes monopolistic behavior and bloat. > [@](#): > > Sure it might mess with local state regulations, but telling them that they have five years to get rid of those laws is a lot friendlier than shutting down an entire industry and laying off millions of people. So you want the federal government to nullify state law? Since when are conservatives OK with trampling on state’s rights? This completely flies in the face of conservatism. And your second point about shutting down an industry doesn’t make a bit of sense. ---
**Author:** ![yorick73](https://avatars.discourse-cdn.com/v4/letter/y/b5a626/32.png) [@yorick73](https://boards.straightdope.com/u/yorick73)\ **Post date:** [October 6, 2009, 5:30pm UTC](https://boards.straightdope.com/t/what-to-do-about-massive-health-insurance-profits/512572/31 "2009-10-06T17:30:28Z")
> [@spazattak](#): > > The recommendation that liberals are making is to make the payment process more efficient - not reduce the number of payers. Reducing the number of payers might be one way to increase efficiency. You could also stream-line the payment process with open standards that all insurance companies would have to comply with and liberals would still be happy. The goal is efficiency and competition - not reducing payers. Industry consolidation doesn’t promote efficiency or competition. It promotes monopolistic behavior and bloat. You’re kidding, right? Liberals want _only_ to streamline the system? No, they want a single payer system and elimination of evil insurance companies. > [@spazattak](#): > > So you want the federal government to nullify state law? Since when are conservatives OK with trampling on state’s rights? This completely flies in the face of conservatism. And your second point about shutting down an industry doesn’t make a bit of sense. This is always the standard argument against increasing competition. How’s about the left tell us why it is a bad idea to standardize some minimum of coverage across state lines instead of complaining about the right being okay with trampling on state’s rights. ---
**Author:** ![DanBlather](https://avatars.discourse-cdn.com/v4/letter/d/f4b2a3/32.png) [@DanBlather](https://boards.straightdope.com/u/DanBlather)\ **Post date:** [October 6, 2009, 7:37pm UTC](https://boards.straightdope.com/t/what-to-do-about-massive-health-insurance-profits/512572/32 "2009-10-06T19:37:27Z")
> [@yorick73](#): > > How’s about the left tell us why it is a bad idea to standardize some minimum of coverage across state lines instead of complaining about the right being okay with trampling on state’s rights. Because the right would scream that the Federal govt is exceeding it’s powers. I don’t know many liberals who would object to national standards if they included things like the right to sue insurance companies in your home state. The problem now is that there would be a “race to the bottom” with insurance companies setting up shop in some of our 3rd-world states that have lax regulations. ---
**Author:** ![cdsilv](https://avatars.discourse-cdn.com/v4/letter/c/a9adbd/32.png) [@cdsilv](https://boards.straightdope.com/u/cdsilv)\ **Post date:** [October 6, 2009, 7:42pm UTC](https://boards.straightdope.com/t/what-to-do-about-massive-health-insurance-profits/512572/33 "2009-10-06T19:42:27Z")
I want the elimination of someone who overrules my doctor based upon their goal being to reduce costs - by denying MY paid for benefits. If my doctor says I need a treatment or medication or test or procedure, then f’in pay for it. I pay my premiums, deliver my coverage. ---
**Author:** ![Shodan](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Shodan](https://boards.straightdope.com/u/Shodan)\ **Post date:** [October 6, 2009, 8:49pm UTC](https://boards.straightdope.com/t/what-to-do-about-massive-health-insurance-profits/512572/34 "2009-10-06T20:49:08Z")
> [@cdsilv](#): > > I want the elimination of someone who overrules my doctor based upon their goal being to reduce costs - by denying MY paid for benefits. > > If my doctor says I need a treatment or medication or test or procedure, then f’in pay for it. > > I pay my premiums, deliver my coverage. This is why health care costs will continue to rise, no matter who pays the bill. Regards, Shodan ---
**Author:** ![yorick73](https://avatars.discourse-cdn.com/v4/letter/y/b5a626/32.png) [@yorick73](https://boards.straightdope.com/u/yorick73)\ **Post date:** [October 6, 2009, 10:26pm UTC](https://boards.straightdope.com/t/what-to-do-about-massive-health-insurance-profits/512572/35 "2009-10-06T22:26:39Z")
> [@cdsilv](#): > > I want the elimination of someone who overrules my doctor based upon their goal being to reduce costs - by denying MY paid for benefits. > > If my doctor says I need a treatment or medication or test or procedure, then f’in pay for it. > > I pay my premiums, deliver my coverage. See my medicare link in post #25. Soon you may be wondering why the federal government won’t f’in pay for it. Then who will you complain to? ---
**Author:** ![elucidator](https://avatars.discourse-cdn.com/v4/letter/e/8edcca/32.png) [@elucidator](https://boards.straightdope.com/u/elucidator)\ **Post date:** [October 6, 2009, 10:29pm UTC](https://boards.straightdope.com/t/what-to-do-about-massive-health-insurance-profits/512572/36 "2009-10-06T22:29:16Z")
Yeah, you just wait till the Federal gov’t gets its hands on Medicare! ---
**Author:** ![yorick73](https://avatars.discourse-cdn.com/v4/letter/y/b5a626/32.png) [@yorick73](https://boards.straightdope.com/u/yorick73)\ **Post date:** [October 6, 2009, 10:30pm UTC](https://boards.straightdope.com/t/what-to-do-about-massive-health-insurance-profits/512572/37 "2009-10-06T22:30:38Z")
> [@DanBlather](#): > > Because the right would scream that the Federal govt is exceeding it’s powers. I don’t know many liberals who would object to national standards if they included things like the right to sue insurance companies in your home state. The problem now is that there would be a “race to the bottom” with insurance companies setting up shop in some of our 3rd-world states that have lax regulations. Yet somehow a public option or single payer would not be exceeding it’s powers? This would not trample on states’ rights? There SHOULD be barebone minimum coverage that is mandated and let insurance companies offer paid upgrades. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [October 7, 2009, 2:48pm UTC](https://boards.straightdope.com/t/what-to-do-about-massive-health-insurance-profits/512572/38 "2009-10-07T14:48:44Z")
> [@yorick73](#): > > You’re kidding, right? Liberals want _only_ to streamline the system? No, they want a single payer system and elimination of evil insurance companies. > > This is always the standard argument against increasing competition. How’s about the left tell us why it is a bad idea to standardize some minimum of coverage across state lines instead of complaining about the right being okay with trampling on state’s rights. I missed when the dreaded liberals advocated elimination of insurance companies. Obama has never advocated it. It is the proper fix, but this is America and we don’t harm business. They horribly complicate the process and waste a ton of money that could be spent on health care. But apparently some people like it that way. A couple states made laws that allowed banks and financial companies to have their way with consumers. That effects consumers across the land. Our credit card companies have based themselves where they have freedom to do what they want to their customers. It crosses state borders. If you want states rights, then keep the liberal financial laws in the state that allows them. ---
**Author:** ![DanBlather](https://avatars.discourse-cdn.com/v4/letter/d/f4b2a3/32.png) [@DanBlather](https://boards.straightdope.com/u/DanBlather)\ **Post date:** [October 7, 2009, 3:24pm UTC](https://boards.straightdope.com/t/what-to-do-about-massive-health-insurance-profits/512572/39 "2009-10-07T15:24:08Z")
Something struck me the other day. The states are test labs for ideas. The conservative, bible belt states lag behind the more liberal northeast and northwest in almost every criteria. The health of citizens in conservative states is worse than average. If conservative ideology worked, wouldn’t you expect the reverse? The same is true of other countries. If our system of private health is better than why are we behind every other industrialized country in the world in life expectancy, yet pay far more for healthcare? ---
**Author:** ![spazattak](https://avatars.discourse-cdn.com/v4/letter/s/8e8cbc/32.png) [@spazattak](https://boards.straightdope.com/u/spazattak)\ **Post date:** [October 7, 2009, 4:03pm UTC](https://boards.straightdope.com/t/what-to-do-about-massive-health-insurance-profits/512572/40 "2009-10-07T16:03:32Z")
> [@yorick73](#): > > You’re kidding, right? Liberals want _only_ to streamline the system? No, they want a single payer system and elimination of evil insurance companies. Have you read the existing legislation or followed the national debate so far? Single-payer isn’t even being discussed as a possibility. It is not in the discussion whatsoever. I am not kidding. Liberals really do want to streamline the system and make it more efficient - reducing what we spend on health-care as a measure of GDP and making our whole country more competitive in the world market-place. We’re talking about what’s good for our economy here as a whole. > [@](#): > > This is always the standard argument against increasing competition. How’s about the left tell us why it is a bad idea to standardize some minimum of coverage across state lines instead of complaining about the right being okay with trampling on state’s rights. It’s not exactly an argument against increasing competition. It’s trying to wrap my head around conservatives’ (not all conservatives’) situational policy positions. I am totally for federal standardized minimum coverage requirements. I think it’d be a very good thing. The reason that particular question comes up is because the argument for a strong federal standard doesn’t jive with other conservative policy positions. And every time I bring that little fact up, no conservative has stepped up to answer why that is. [Previous page](https://boards.straightdope.com/t/what-to-do-about-massive-health-insurance-profits/512572.md?page=1) [Next page](https://boards.straightdope.com/t/what-to-do-about-massive-health-insurance-profits/512572.md?page=3)