Is the world becoming uninsurable?

How about profit caps? I feel like government stepping in and being the insurer with a sufficiently large pool of risk to spread around lets them set a fair rate without the need to make a return or answer to shareholders.

To some extent this has helped with health insurance. Each year I get a check back from my insurer saying they didn't spend enough on my care vs my premiums.

Insurance companies have pretty thing profit margins regardless, even in areas where profits are not capped. It's a competitive marketplace!

I'm not sure I believe your factoid. Can you cite? UHC is one of the wealthiest companies in the world.

> To some extent this has helped with health insurance. Each year I get a check back from my insurer saying they didn't spend enough on my care vs my premiums.

This has baffled me ever since Obamacare was first passed - it seems that each year the insurance companies have an incentive to drive up the cost of healthcare, since that’s how they earn more money in absolute terms. Is it not so?

their september 2024 earnings put them at 6% margin. that’s not very good. for reference apple is 15%, mcdonalds is 32% and costco is about 3%. that being said compared to a competitor, elevance at 2.5%, they’re doing well. a little worse than allstate (car and home insurance), which is about 7%.

> How about profit caps?

What period do you put it over for property insurance? Profit caps work for health insurance because claims are typically not correlated. The percentage of your customers with cancer won’t 5x one year and go back to baseline the next. New drugs or treatments (or a drug going off patent) can cause correlated swings, but generally costs to health insurers don’t change a lot year to year.

For property insurance, you need to bring in profits most years to fund the year when there are multiple category V hurricanes or large fires.

That is so, to an extent. But it's balanced against employer demands to hold down medical costs because they pay most of the bills. If your HR department can save 5% on employee medical costs by switching from Blue Cross to Cigna next year they'll absolutely do it.

Sure. Because the response of a failure in governance is more government? What you are proposing is "unfair". You are essentially suggesting that the rest of the country subsidize a subset who wants to live near high-risk areas. Me too want to live in a dense forest and also have my house by the edge of the river.

You could make the argument for this for healthcare, since no one can choose which illness he is born with. But choosing your housing location is a "choice". And you can/should move somewhere else where it is less risky.

Most regulated insurance markets do have profit caps. California certainly does, but there was still a price cap added.

People choose to smoke, overeat, engage in risky activities that can cause injury near and long term (Rock climbing, riding motorcycles, football, MMA). Why should society pay for these choices?

Health insurance does have profit caps, so like the sibling commenter said their margins are small (6%) but also decently under the cap (20%) in the first place.

> Why should society pay for these choices?

Because it's the only way to get universal coverage, which if you don't have, means a portion of the population gets really sick, jams the ER, can't afford to pay the resulting bill (maybe declaring bankrupcy), and someone then has to eat/cover the cost. Often by hiking prices for those that do have coverage.

Do a search for "ACA three legged stool":

> It starts by requiring that insurers offer the same plans, at the same prices, to everyone, regardless of medical history. This deals with the problem of pre-existing conditions. On its own, however, this would lead to a “death spiral”: healthy people would wait until they got sick to sign up, so those who did sign up would be relatively unhealthy, driving up premiums, which would in turn drive out more healthy people, and so on.

> So insurance regulation has to be accompanied by the individual mandate, a requirement that people sign up for insurance, even if they’re currently healthy. And the insurance must meet minimum standards: Buying a cheap policy that barely covers anything is functionally the same as not buying insurance at all.

> But what if people can’t afford insurance? The third leg of the stool is subsidies that limit the cost for those with lower incomes. For those with the lowest incomes, the subsidy is 100 percent, and takes the form of an expansion of Medicaid.

* https://archive.is/https://www.nytimes.com/2017/07/10/opinio...

This 'architecture' was developed by Jonathan Gruber:

* https://cdn.americanprogress.org/wp-content/uploads/issues/2...

* https://en.wikipedia.org/wiki/Jonathan_Gruber_(economist)

It is a form of social safety net.

To be fair, they play a shell game by steering people towards their subsidiary owned medical providers (avoiding loss ratio limits of 15% to 20% by putting the money into providers, which have no profit cap).[0]

[0] https://pnhp.org/news/insurers-avoid-loss-ratio-limits-by-sh...

The insurance subsidiary will have a cap, but provider subsidiaries have no such cap.[0]

[0] https://pnhp.org/news/insurers-avoid-loss-ratio-limits-by-sh...

Profit caps presumably create perverse consequences. If the profit I'm allowed to make is proportional to X, then I'm incentivized to maximize X. If X is my costs, then... Maybe that's where these unbelievably high line items on medical bills come from.

> How about profit caps?

Transfers wealth from shareholders, patients and taxpayers to management, bankers and intermediaries.

Broadly speaking, caps are stupid—akin to treating liver enzymes directly when they spike versus seeing them as the sign of deeper problems.

Or maybe C-suite pay/benefits caps, ha ha.

I think that's a great metaphor for the situation, when you get a patient running a 105 fever you put them in an ice bath and then consider what underlying problem is ailing them.

You do the first part so they don't die before the long-term treatment kicks in.

Yea, and after all that they still only eked out a 4% net profit after tax for 2024.

The 6.0% margin (for UnitedHealthGroup as a whole) already includes that. UnitedHealthcare (the subsidiary health insurer) had a slightly lower operating margin of 5.6% in Q3. https://www.unitedhealthgroup.com/content/dam/UHG/PDF/invest...

Correct. Caps are fine as a short-term measure.

In the long term, they’re putting a patient running a fever on immunosuppressants. The fever will go. But the patient will die.

After a society brings in universal healthcare coverage, more rules discouraging smoking, overeating, and engaging in risky activities often follow. Which is either a nice way to get the people of the country caring about each other's health, or an awful government overreach depending on your political bent.

> Because it's the only way to get universal coverage, which if you don't have, means a portion of the population gets really sick, jams the ER, can't afford to pay the resulting bill (maybe declaring bankrupcy), and someone then has to eat/cover the cost. Often by hiking prices for those that do have coverage.

The alternative that is always there is to repeal EMTALA.

> It starts by requiring that insurers offer the same plans, at the same prices, to everyone, regardless of medical history. This deals with the problem of pre-existing conditions. On its own, however, this would lead to a “death spiral”: healthy people would wait until they got sick to sign up, so those who did sign up would be relatively unhealthy, driving up premiums, which would in turn drive out more healthy people, and so on.

This misses the problem: [the ACA causes a moral hazard for lower classes likely to use it.](https://pmc.ncbi.nlm.nih.gov/articles/PMC8567089/)

The issue is a policy designed for a highly uniform, high social class, high status state (Massachusetts) was applied to the USA as a whole.

Any idea why Obamacare didn't follow the European model? Other than the freedom argument

People on HN always talk about European health insurance seems like an easier route than to murder people lol

> Because the response of a failure in governance is more government?

Are you this incredulous when the response to a failure in "the market" is more "market" ? Or when companies fail, and the response is "more companies", do you question that in the same way?

I'm not taking a position on the meat of your point, but this particular angle strikes me as very strange.

> People choose to smoke

Cigarettes can be taxed with proceeds going to care with those with lung cancer. Dangerous activities can have a separate insurance. For a popular sport, it means most people are engaging in this activity. Houses on the top of a mountain are for a very tiny minority (and a very rich one too). They should finance their lifestyles themselves.

> The alternative that is always there is to repeal EMTALA.

I suspect you think it's not great having homeless people on the street.

Wait till you see what it looks like when they actually start dying in the street because emergency health care is no longer available to them, nor to many of their housed neighbors, family and friends.

> I feel like government stepping in and being the insurer with a sufficiently large pool of risk to spread around lets them set a fair rate without the need to make a return or answer to shareholders.

Youre about 20-30 years late to the game, but arrive in time to see the conclusion does not match your assumption. See california for fire, florida for fstorm damage, and everywhere in the us for federal flood coverage. It doesnt work. CA FAIR has higher rates to account for increasing the coverage pool, but it doesnt look like premiums will cover the current or future loses. Which is the universal story when your policy attracts all the high risk/payout buyers. And FAIR, roughly, is setup to go recoup losses from all the _other_ insurance providers in the state. Even ones not insuring those policy holders _or that type of insurance_. Its just a layer of indirection to subsidize fire risk against all poly holders.

I don't see what EMTALA has to deal with homelessness in this context. It largely comes down to uninsured, even post-ACA. If we can't afford the current system, it's not a matter of if, but when, either hospitals or providers leave medicare. To put it in perspective, the AMA reports (https://www.ama-assn.org/practice-management/medicare-medica...) that physician medicare compensation has declined 29% since 2001. At a certain point, it will simply be financially unsustainable. Whataboutism to distract from the fact that medicare alone is 3.7% of gdp and is forecast to grow to 5.1% by 2033 (https://www.cato.org/blog/fast-facts-about-medicare-social-s...) doesn't fix anything.

And FWIW, US Medicare spending alone is shaping up to grow to almost as much as some EU nations on a % of GDP basis (https://ec.europa.eu/eurostat/statistics-explained/index.php...).). Medicare isn't the solution. It's the problem.

In all of those examples you have the for profit private insurance leaving the market because it's not profitable enough. When you take away excessive profits and allow the governmental pool to compete with for profit insurance, risk is leveled across the pool and consumers pay less. If the big private insurance companies can't be more efficient or have better risk models than the government, well they should stop trying to sell policies.

First of all there isn’t one “European model”, every country in Europe has its own system.

To answer the substantive point, it’s extremely difficult to pass substantial laws in the US due to the structure of its political system. The mandatory coalition of the president + 60% of the senate + 50% of the House of Representatives is a much higher bar than any other democracy. So laws aren’t written to be optimal policy, they are written to satisfy this extremely high coalition requirement — Obamacare in particular was very fundamentally weakened from some of the more expansive initial proposals to address the concerns of one or two senators and get them on board.

I'm not saying everyone pays the same, I'm saying you take away the for excessive profit nature of insurance. If you live in a tinderbox you are going to have more risk and more costs. Yeah somebody has to model the risk and set a price, but I'm saying it shouldn't be someone who has an incentive to make as much profit as possible.

The book of business has to be large and the pockets deep. Which describes our current insurance market and the government. The way we handle this now is with reinsurance.

but people always talk about how insurance is guaranteed in europe something must be working if gunning down a CEO is pro the people wouldn't copying one of the European countries be even more pro the people?

what makes senators hate something that is pro the people? wouldn't that give them better ratings? I come from a dictatorship so sorry if this is a dumb question

The people are risk pay less, all of the other people forced to participate in your general insurance pay more.

If I live in the middle of a city in an apartment block should I pay the same rates to insure against wildfire as someone in the middle of a dry forest? Probably not, but govenrment-mandated insurance programs force me to.

Your seem to be under the misapprehension the problem is insurers charging usurious prices. The reality is Paul in the forest got used to paying whatever 5kpa to insure against a 100 year fire, not 50kpa to insure against a 10 year fire.

It sounds like a lot, but if the risk is actually that high then the prices will be too. Houses aren't cheap. Insurance is a very competitive market, it's easy to comparison shop. The root problem is the high risk, not "unfair" private profit.

(Numbers picked out of thin air to make a point)

Because from a moral standpoint most people agree that we shouldn't allow people to go without treatment, regardless of their poor choices. From a national standpoint it also doesn't make sense to allow people to become cripples for lack of money, reducing their economic value.

Injuries also hurt, so it's not like people don't have other disincentives to avoid injury aside from the price. This isn't the case in other areas, where it's purely a monetary penalty and thus removing that penalty results in way more of that thing taking place.

Premiums should be based on risk, not flat. I don't know where you are drawing that line of reasoning from. Just because the government is providing coverage doesn't mean it's all the same rate. Every insurance product has a risk model to set prices. I was just advocating that we have a non profit minded entity with deep pockets do it vs private companies motivated by maximizing profit.

Public benefit corps fit this model as do regulated utilities.

  And FWIW, US Medicare spending alone is shaping up to grow to almost
  as much as some EU nations on a % of GDP basis

Your source puts Austria, France, and Germany at the top, or roughly 11–13% of GDP.

https://www.bea.gov/news/2023/gross-domestic-product-fourth-...

https://crsreports.congress.gov/product/pdf/IF/IF10830

The U.S. Bureau of Economic Analysis puts the 2022 GDP at $25.46 trillion ($25,460 billion). Congress puts 2022 spending on private health insurance at $1,290 billion (5%) and Medicare at $944 billion (3.7% of GDP).

Yes, we are tracking to grow to as much as some not all or most. Emphasis on tracking to grow which you should see the source for 2033 forecast.

The fact that one program (Medicare) is growing to be as large as the NHE should be cause for pause.

Yes, I'm advocating people pay appropriately for risk. The issue is with high risk, insurers pad profits to compensate for excessive risk or leave the market with no option other than some last resort insurers. Having government step in with regulation around profits over time keeps the rates in check. You can have a Lloyd's of London, but they need to have open audited books. Otherwise you can have a not for profit, ie government entity run the book.

Edit: i think were talking past each other until agreeing that risk/cost/rates are being intentionally suppressed by or on behalf of the public. Kind if like this other housing related mortgage thing Ive heard if that may be mispriced/misstructured in favor of many at the expense of all.

I dont get it. Your argument is that if everything was priced accurately and aggregated "fairly" insurance would work. Ok, totally true statement. Very much the case that's not what is happening now for any of the example markets or gov programs.

You appear to believe "profit" is the problem, which is true in that negative profit is known as "loss" which is what has and will be occurring even with the public "last resort" rates. The private insurers are not withdrawing because their "fantastic" 6-15% margin on disaster insurance isnt enough. Using CA as an example they withdrew because 1) the state required they dont use risk based modeling for individual rates and 2) they dont include reinsurance costs as a rate signal. Shockingly their CA insurance pool turned upside down on costs/losses in a decade or two and they bailed.

FAIR is exactly the sort of or youre talking about; non profit government mandated insurance pool, open to all residents, with proportional policy/loss assignment, rates set based on regulated-interpretation-of-risk-exposure + costs, regulated by the CA Dept of Insurance. And yes, their policies are risk adjusted, but theyre not _accurate_. And yes, insurance should accurate according to risk and (payout) costs but basically none of the public last resort issuers can!

See again florida, national flood, etc. In every case 1) risk & cost modeling (accurate pricing) is suppressed on behalf of the public 2) risk prices/costs soon exceed private risk markets 3) private insurers withdraw 4) public "last resort" insurers emerge 5) risks/costs continue to grow, private insurers withdraw, the "last resort" insurer becomes the risk aggregating insurer 6) last resort insurer shockingly cant meet its commitments 7) public funds and/or backdoor insurance taxes socialize losses due to unprices disk.

So your argument is that Medicare spending might potentially approach the same proportion of the GDP as a European country that doesn't spend a lot on its healthcare?

Senators have to spend $$$ to get elected

> If we can't afford the current system,

What we can and cannot afford is a choice, not some immutable fact of nature.

A cynical, if realist, version of this would be: if we choose to not spend any more ...

But that's still better since it acknowledges that we, as a nation, have agency in this.

There is an unlimited amount of potential financial gain from American politics, both in lobbying and campaign financing. It is also widely true that the candidate with the most money spent in a campaign is heavily favored to win the election, with the exception of the presidency which is more contested. Now consider that in the 2020s the richest people now have more money than God.

The short of it is that you can get anyone you want in office, to do anything you want even if it directly opposes their constituency, as long as you spend enough money on them to get them in office, buy their vote, and keep their PR afloat.

Gilens and Page (2014) found that "average citizens and mass-based interest groups have little or no independent influence" on American government policy: https://www.scienceopen.com/document?vid=e4797592-9d73-4f2b-...

Worth noting that this paper saw pushback for many years after the fact but measurably, its conclusion has been true since its release.

I'm all for this, lol.

Murdering people is not pro anything.

The answer was already given: it was politically infeasible to pass a single payer variant in the US. And it’s not clear it would have been good even if it had been feasible.

Pretty much. And that's just one program that services a small portion of the population. The issue is we can't make this level of spending work, why should we believe spending more money will be successful?

Sentiments on Luigi seem to put him on the same level as Rosa Parks or Jesus Christ if not higher both on HN and Reddit but that is ancedotal

Could you say a bit more about the politics? this is very fascinating idk much about insurance or politics

This may be super simplistic but Europe, if you look at it at a high level, is as diverse as US states if not more because a lot of places have multi party systems instead of a two party system with comparable diverse interest groups and comparable GDP etc

What did they figure out to have insurance that the US can't? Or doesn't want to?