Profit margins for insurers are pretty low on a percentage basis. The Affordable Care Act (Obamacare) imposed a minimum medical loss ratio on commercial payers. You can read the financial statements for those that are publicly traded. Some of the largest insurers such as Blue Cross Blue Shield Association members are non-profit.
The NHS isn't really a "single-payer system" in any meaningful sense. In the UK, most healthcare providers are employed directly by the government and their wages are fixed below the market rate to control costs. There are internal financial transfers but there aren't really arms-length negotiations and payments between separate payer and provider organizations.
If the USA was to adopt a single-payer system like the various "Medicare for All" proposals that politicians have floated that wouldn't do much to reduce costs. Any meaningful cost reduction for the system as a whole would require driving down provider wages, rationing care, and ending the way that we subsidize drug development costs for the rest of the world. Those measures might be good things to do on balance, but they aren't politically popular.
This is so misleading. What you are saying it technically true, but also why our system is broken.
If I can only make 10% profit (or whatever the law is), what is my incentive to keep healthcare costs down? The ONLY way I can grow my income if it healthcare costs go up. 10% profit on a $100 medication is way less than 10% profit on a $1,000,000 medication. The road to hell is paved with good intentions.
Another disingenuous argument on non-profits. Is all of Blue Cross Blue Shield non-profit or only the certain parts you want us to look at? A 'Pay no attention to the man behind the curtain' argument.
Final disingenuous argument is you just asserting 'meaningful cost reduction'. There is no way ambulance rides went from $200 to $10,000 because of EMT pay.
I'm not asking you to look at anything. Many US healthcare payers are private non-profit corporations. That includes some (but not all) Blue Cross Blue Shield Association licensees. The BCBSA isn't a payer itself and merely provides some shared services to their independent licensees. Outside of the Blues system there are other large non-profit payers such as Kaiser Permanente, HCSC, Geisinger, EmblemHealth, etc. This isn't secret information, you can just go look it up instead of arguing.
Commercial health plans have conflicting financial incentives. Most of them no longer provide much insurance (in terms of bearing financial risk) but rather primarily act as administrators for self-insured employers. So while payers can potentially boost short-term profits by paying out higher claims, employers comparison shop between competing health plans every year. Your HR department would happily switch from Aetna to Cigna (or whatever) next year if their analytics forecast shows that would save a few dollars on expected claims.
Ambulance fees are a mess but those represent a tiny fraction of overall US healthcare spending. Some reform there would be a good idea but that wouldn't do much to reduce costs.
Significant systemic cost reductions will require some mix of lower provider wages, care rationing, and reduced spending on new drug and device development. Countries with more socialized healthcare systems are more financially efficient in some ways but they also just do less stuff: less drug development, longer queues for advanced treatments, underpaid doctors (relative to market wages), care restrictions based on QALYs (or similar metrics). Complaints about payer profits, while perhaps somewhat legitimate in certain cases, are largely a distraction from more fundamental problems. That's just basic math dictated by the cashflows. There are no simple solutions and we're eventually going to have to make hard choices. No one wants to face this reality.
I wrote hospital medical software for 20 years passing on way better pay because I wanted to make a difference. And I gave up because the system WANTS to be how it is today. Everyone in medical is CHOOSING to make it this way, then claiming 'ah it's too big, it's too complicated, we can't change it'. Americans being to scared to call an ambulance means emergency care has completely failed them, not a small little thing to be brushed off. Americans are making hard choices about medical care every day already.
We're all frustrated. No one is happy with their available choices. Join the club.
The system can't want anything. It isn't even really a "system" in any meaningful way, in the sense of being a unified entity working towards a common goal. US healthcare is just a bunch of disconnected people and organizations pursuing their own interests, often in conflict with each other. Any major improvements will require changes at the federal policy level to better align incentives with desired outcomes. This is hard because we collectively can't even agree on the desired outcomes or how to measure them. I mean at a high level most people think that everyone should have convenient, affordable access to high-quality care but once you get into specifics everything gets complicated and making trade-offs which disadvantage some voters is unpopular. Like should we spend $100K to give a terminal cancer patient another month of life? Should surgeons make $700K per year?
It's easy to complain and cast blame. And we should certainly cut out waste and abuse where we find it. But that won't significantly move the needle on overall system costs. The problems are much more fundamental.
Thank you for taking the time to lay out some of these issue in a clear way. It's an issue I'm somewhat new to but have taken in interest in. Where does your branch of the club meet? What are we doing?
> If I can only make 10% profit (or whatever the law is), what is my incentive to keep healthcare costs down? The ONLY way I can grow my income if it healthcare costs go up.
You're missing the step where you also have to increase premiums, i.e. price. And what normally keeps any seller from increasing their prices whenever they want is competition--some other insurer will get your business.
That begs the question of how competitive the insurance market is. Let's assume it's woefully uncompetitive. But in that case I don't see how the ACA 80/20 rule on administrative overhead changes incentives and the evolution of price inflation one way or another. At best it temporarily disrupted existing inflationary schemes, at worst it does nothing.
$749 million is revenue. Revenue less expenses (i.e. profit) was $57 million, which admittedly is a decent 7.5%. But as a nonprofit there are no shareholders or partners to siphon off that profit. The common argument is that management siphons off that money through salaries, and I can't say they don't, but if you look at their assets & liabilities it seems like some significant amount of their profit is going into savings.
Anyhow, the Blue Cross/Blue Shield system has a very complex structure so if you're looking to find where the real money is being siphoned off it's unlikely to be at the top. BC/BS affiliates are independent, that's why the org at the top for a system insuring over a hundred million people pulls in less than a billion dollars in revenue.
"Nonprofit", at least in the US, is usually shorthand for having received a 501c3 (or similar) designation from the IRS. It has little bearing on your ability to make money as an organization (with caveats like the public support calculations)
Source: Ran a nonprofit for a few years that made money doing software consulting
This is nonsense. Health care costs about twice as much in US as everywhere else and only the rich can afford it. Health insurance companies fight against doctors and patients to subvert health and profit as much as possible.
92% of Americans have health plan coverage, so we're not talking only about the rich here. There are certainly problems that we should fix but spreading misinformation about basic facts doesn't help anything.
It's easy for populists to demonize health insurance companies. But even if we somehow magically cut all payer profits to zero that would only marginally reduce total system costs. Much of what they do in fighting against doctors by negotiating lower reimbursement rates and denying claims that don't meet coverage rules actually helps to control costs for their main customers, the large self-insured employers that purchase health plans for their employees. At the national policy level, one change that would probably help would be breaking the linkage between employment and health plan coverage in order to better align incentives.
Other countries that spend less on healthcare also have lower provider wages, longer queues for advanced treatments, rationed care based on QALYs (or similar metrics), and less innovation in drugs and medical devices. Maybe that would be better overall but let's not pretend that there aren't severe trade-offs. You can't have your cake and eat it too.
Americans always toss this out like it means something. If you're not in queue because you can't afford it, then you are in the queue it's just infinitely long but you're not counted.
Your entire culture here is so broken you are fundamentally incapable of even beginning to understand how other countries discuss these metrics: when they discuss wait times it's for everyone who needs it - no one is unable to afford it or being denied it by their health insurance. "The queue" is triaged against available resources - i.e. patients needing urgent care will get it earlier then those who are stable.
Could it be shorter? Of course it could, but it also includes everyone who needs it. And if you don't like the queue the gasp you can still pay to be treated privately and receive prompter service under most systems.
Your system is so broken you literally can't comprehend the wording of complaints about other systems because you contextualize it through your own. Built into the entire model is that "the queue is long and also we already kicked a bunch of people out of it, which is not what anyone is talking about in regards to the NHS, or Australian Medicare or any other system.
I am quite familiar with the systems in other countries. Every country rations care. Some do it by condition severity, others by ability to pay. The vast majority of US consumers have health plan coverage and the co-insurance or co-payment amounts are fairly low. I won't attempt to defend the vagaries of the US healthcare system but let's not pretend that everyone who needs treatment in other developed countries actually gets it in a timely matter. Why are 5-year cancer survival rates higher in the USA than the UK?
It's pretty common to see affluent Canadians come to the US as medical tourists and pay out of pocket for procedures like MRI scans or joint replacement surgery. This is a real thing that happens all the time. Depending on your perspective that might be acceptable in the name of fairness and cost control but there are always trade-offs.
So what if they have health plan coverage if they can't afford to use it? Insurance is wildly out of control and needs to be reformed out of it's current form of existence. Health insurance companies act in bad faith against patients and doctors and many people with insurance go bankrupt anyway. What percentage of bankruptcies are from medical bills? It's impossible to objectively defend unless the goal is to make money at the cost of human health.
That study (full text[1]) is extremely selective: namely, the only factor they looked at was hospitalizations causing bankruptcies, and ignored emergency care expenses, chronic conditions and other long term treatment. In fact from their introduction you can very much see the problem:
the fraction of people filing for bankruptcy who happen to have substantial medical expenses.
Like...that is a weird factor to just try and wash away with sample selection.
The only factor they considered was the proportion of people who filed for bankruptcy by years before/after hospitalization, which they found was about 4% of total bankruptcies - for non-elderly adults.
we estimate that hospitalizations cause only 4% of personal bankruptcies among nonelderly U.S. adults, which is an order of magnitude smaller than the previous estimates described above.
Now let's put that in perspective: one of the most common routine surgeries for a healthy person would be having your appendix out. That's a hospitalization, you stay overnight. It's also fairly cheap and immensely routine.
It is also notable that the study was focused on patients at a single Californian hospital -
we therefore selected a sample of people who were admitted to the hospital in California
Our study was based on a random stratified sample of adults 25 to 64 years of age who, between 2003 and 2007, were admitted to the hospital (for a non–pregnancy-related stay) for the first time in at least 3 years
In short, the way this study is being thrown around to assert how medical bankruptcy works is invalid. And I'm calling completely bullshit on this methodology. Even their conclusions more or less paint the picture:
We have found that hospitalizations cause: *increased out-of-pocket spending on medical care*, *increased medical debt*, and decreased employment and income
I suggest you try purchasing insurance through a state market place for you and your family for next year and then report back on your experience if you're still alive in 2026.
The NHS isn't really a "single-payer system" in any meaningful sense. In the UK, most healthcare providers are employed directly by the government and their wages are fixed below the market rate to control costs. There are internal financial transfers but there aren't really arms-length negotiations and payments between separate payer and provider organizations.
If the USA was to adopt a single-payer system like the various "Medicare for All" proposals that politicians have floated that wouldn't do much to reduce costs. Any meaningful cost reduction for the system as a whole would require driving down provider wages, rationing care, and ending the way that we subsidize drug development costs for the rest of the world. Those measures might be good things to do on balance, but they aren't politically popular.