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Maybe health insurers not the bad guys after all....
Old 10-27-2009, 07:06 AM   #1
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Maybe health insurers not the bad guys after all....

My Way News - FACT CHECK: Health insurer profits not so fat

According to this article there are a large number of other businesses that do much better than a health insurance company.

But who'd have thunk Tupperware is much more profitable?
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Old 10-27-2009, 08:34 AM   #2
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I think we should nationalize Tupperware, to rein in those outsized profits!
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Old 10-27-2009, 10:45 AM   #3
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Saw this construction equipment (5% profit margin) the other day, beautiful colors and patterns. Tupperware (7.5%) is also well-designed and AKAIK has kept up with the times. When I moved some years ago, I went online and found some Tupperware on eBay, bought some more directly from the seller until my kitchen was stocked; it is all still functional and beautiful 16 years later.

Iím inclined to believe my HMO health insurance (2.2%) is also an expensive deal with excellent value for the comsumer, long term.

Ah, the romance of the rails (12.6%) and profits for the investor, too. Gotta get some current photos.
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Old 10-27-2009, 05:15 PM   #4
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The real question is, can the government provide health insruance with only an 8% mark up? Doubtful.
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Old 10-27-2009, 05:31 PM   #5
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The real question is, can the government provide health insruance with only an 8% mark up? Doubtful.

You mean like how well the post office does? They were only asking for a little bailout awhile ago..While ups was not Next up military spending!
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Old 10-27-2009, 06:53 PM   #6
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The real question is, can the government provide health insruance with only an 8% mark up? Doubtful.
Actually, since the 8% is profit, not overhead (i.e. -- the "mark up" is substantially greater than 8%), the proper question is whether a government run system could provide the same care at the same overhead plus 8%. I have read that a very large portion of overhead for private health insurance companies are all those people whose job is finding a way to disallow your claim, so it might well be possible. (Real data always appreciated if you have it)
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Old 10-27-2009, 07:01 PM   #7
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I have read that a very large portion of overhead for private health insurance companies are all those people whose job is finding a way to disallow your claim, so it might well be possible. (Real data always appreciated if you have it)
I suspect you're right. I also suspect that the flip side to NOT having tighter oversight on claims processing is increased potential for losses due to fraud, but I could be wrong. I don't know if we really *know* what the losses due to fraud are. There are some folks in Washington (with an agenda against the prominent reform plans, no doubt) that have claimed as much as 20% of Medicare claims are fraudulent, but I take that with a *huge* grain of salt. Nevertheless, I suspect that it's possible that the increased fraud in Medicare would mostly or completely eliminate the advantages of not having the 8% profit margin to account for. (I'd like to be wrong.)

Another fundamental question is whether or not a government insurance entity such as Medicare has the same employment cost structure (or ability to trim the dead wood) as the private sector. In any event, there are so many variables and moving parts that it's pretty hard to determine which really would be more cost-efficient in the real world.
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Old 10-27-2009, 07:01 PM   #8
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And one more thing. There is a substantial difference between an underwriting profit and a real profit. An underwriting profit is when premiums exceed losses (payouts on claims). But since there is usually a time delay between when you pay premiums and when they end up paying claims, the insurer generally makes money on investing the float. An insurer could have an underwriting loss and still make a profit. The article is not clear on whether they are talking about total profit or just underwriting margin. If it is the latter, they may be substantially understating the insurers' overall profitability.
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Old 10-27-2009, 07:46 PM   #9
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Actually, since the 8% is profit, not overhead (i.e. -- the "mark up" is substantially greater than 8%), the proper question is whether a government run system could provide the same care at the same overhead plus 8%.
We had a recent discussion that morphed into this area. It turns out that it is very hard to find unbiased data on the admin/profit costs for Medicare and private insurance that covers a similar population. By some measures, Medicare has lower overhead costs, by other measures they are much higher. The answer you get appears to depend on:
-- Whether you express overhead as "per patient" or "per dollar expended for treatment."
-- What is included as "overhead." The stats that give Medicare glowing reports for low overhead generally do not include in that percentage all the back-office billing costs--but these costs are still being incurred and included in the "benefits provided" figure.

By some accounts, private insurance has considerably lower overhead costs than Medicare, even including the profits.

It's strange that the proponents of government-run health care talk so little about Medicare. There it is in all it's glory, the largest example of the "public option" that we have. It should serve as a great example of what the whole system can become.
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Old 10-27-2009, 09:25 PM   #10
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I for one do not see how it would be possible for Uncle Fed to do this cheaper than the private sector. Lot's of insurance companies do the majority of the paperwork in the Mid-West Tier II and Tier III cities. The wages are reasonable. Fast forward to all the new agencies located in MAJOR Cities with high unemployment and uneducated work force, add in government bennies and wages. Just more redistribution and screwing with the Flyover States.

All this ado for a very small percentage of the citizens. Oh that's right, next we need to do amnesty for people who have marginal skills, education or literacy. Financially enslave our children and turn over control to Europe.
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Old 10-28-2009, 05:50 AM   #11
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It's strange that the proponents of government-run health care talk so little about Medicare. There it is in all it's glory, the largest example of the "public option" that we have. It should serve as a great example of what the whole system can become.
A good point. Medicare is what a government single payer system on the French model could look like. (Although we could certainly improve a few things). And the VA system serves as a model of the British system of government owned and operated care. Unfortunately, we don't have a clear analog for the Swiss system of standardized and highly regulated private insurers.
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Old 10-28-2009, 05:59 PM   #12
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Another fundamental question is whether or not a government insurance entity such as Medicare has the same employment cost structure (or ability to trim the dead wood) as the private sector. In any event, there are so many variables and moving parts that it's pretty hard to determine which really would be more cost-efficient in the real world.
The answer to this one is easy. Yes they do.

Why? Because except for promulgating administrative rulings about Medicare, and managing the medicare payors, the people in Medicare don't administer the Medicare program, private industry does.

So, they have the same employment cost structure as the private sector, because they are the private sector under contract to the federal government.

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Old 10-28-2009, 08:12 PM   #13
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You mean like how well the post office does? They were only asking for a little bailout awhile ago..While ups was not Next up military spending!
I feel sorry for the USPS, they get beaten up so often as an effigy for inefficiency. I'm not a huge fan, but I'm not sure they are a good comparison to companies like UPS and FedEx. The post office is not allowed to make a profit. If they do somehow, the money is taken and flushed down the federal toilet along with most of the rest of our tax money. I suspect if they were allowed to make money, use it for improvements and development, or at least save it for harder times they would be much more competitive. Again, I'm not defending them, but I just don't see it as a good comparison.
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Old 11-03-2009, 06:18 PM   #14
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Hmmm, maybe healthcare IS expensive, after all...
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Old 11-03-2009, 07:13 PM   #15
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But remember in part it is expensive because it can be. A MRI in Japan is $100 because that is what the government says it will be. MRI machines are still made and used and used frequently in Japan, despite this price control.
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Old 11-03-2009, 08:04 PM   #16
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I suspect you're right. I also suspect that the flip side to NOT having tighter oversight on claims processing is increased potential for losses due to fraud, but I could be wrong. I don't know if we really *know* what the losses due to fraud are. There are some folks in Washington (with an agenda against the prominent reform plans, no doubt) that have claimed as much as 20% of Medicare claims are fraudulent, but I take that with a *huge* grain of salt. Nevertheless, I suspect that it's possible that the increased fraud in Medicare would mostly or completely eliminate the advantages of not having the 8% profit margin to account for. (I'd like to be wrong.)

Another fundamental question is whether or not a government insurance entity such as Medicare has the same employment cost structure (or ability to trim the dead wood) as the private sector. In any event, there are so many variables and moving parts that it's pretty hard to determine which really would be more cost-efficient in the real world.
Here is one guy's take on the issue of precisely how much Medicare fraud may exist.

Columnists - newsjournalonline.com
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Old 11-03-2009, 08:44 PM   #17
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Oh that's right, next we need to do amnesty for people who have marginal skills, education or literacy. Financially enslave our children and turn over control to Europe.
What is Europe doing to us? Most Eurpeans who wind up here are better educated, more skilled and more literate than the natives. As are most Indians and Chinese.

As Lee Kwan Yew said one night in a US TV interview, "Sure, you need immigrants, but not fruit pickers."

Ha
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Old 11-03-2009, 08:47 PM   #18
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I feel sorry for the USPS, they get beaten up so often as an effigy for inefficiency. I'm not a huge fan, but I'm not sure they are a good comparison to companies like UPS and FedEx. The post office is not allowed to make a profit. If they do somehow, the money is taken and flushed down the federal toilet along with most of the rest of our tax money. I suspect if they were allowed to make money, use it for improvements and development, or at least save it for harder times they would be much more competitive. Again, I'm not defending them, but I just don't see it as a good comparison.
Also, try to send a letter to Nome Alaska via Fedex for 44 cents.

ha
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Old 11-03-2009, 09:27 PM   #19
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What is Europe doing to us? Most Eurpeans who wind up here are better educated, more skilled and more literate than the natives. As are most Indians and Chinese.

As Lee Kwan Yew said one night in a US TV interview, "Sure, you need immigrants, but not fruit pickers."

Ha
I was refering to the Global Government that European Leaders want the USA to submit to. That really makes no sense to me.
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Old 11-03-2009, 10:09 PM   #20
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Hmmm, maybe healthcare IS expensive, after all...
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But remember in part it is expensive because it can be. A MRI in Japan is $100 because that is what the government says it will be. MRI machines are still made and used and used frequently in Japan, despite this price control.
Hey, don't expect me to justify every wisea$$ post I make...

I'm no expert on this issue, but let me make some observations:

I get a bill from the doctor, or dentist, or proctologist. The bill shows that their usual charge is $1000, but the "negotiated rate" is $350.

The other morning, the folks on Squawk Box were discussing a drug for the treatment of lung cancer. I believe the cost mentioned was $300k/yr.

My mom was treated for eight years or so for cancer. I bet that was expensive as all heck for Medicare, but she got good, affordable - for a couple on small pensions and SS - care.

On the other hand, my dad has been turned away by at least two docs that I'm aware of, because they quit taking new Medicare patients.

No particular point to be made, other than it's a complex issue, and I'm not sure what is being proposed will fix what needs to be fixed. Guess we'll find out.
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