If insurance companies operated as non-profs, do you think the cost of insurance would go up, or down?

[Anonymous]

I'm not sure on the accuracy of the claim, but someone on GAG said that average profit margins of insurance companies are 2-5%. If they lost that profit margin, ideally, the rates would decrease by that same amount. However, if they covered all requests as a result, the insurance rates would increase to cover the increased costs of providing payment for that treatment.

So the real question is, would the additional coverage outweigh the eliminated profit margins? I'm not an expert in this field, so your guess is as good as mine.

Updates

1 y

Let's also say the CEO makes $0 per year as well. This would add millions of dollars to a multi billion dollar budget.

[lightbulb27]

it might, lowing salary of top guys of course. keeping them off wall street help, that way those in charge could manage costs better and put profit back into lower fees.

What really drive down costs is

A) penalties for crimes

B) defering starting age of driving

its a good business to get into, I wish I was more skilled in this domain to start a social insurance co.

[Anonymous]

I can only guess, myself, but I'd assume the extra treatments being paid for would far outweigh the profit margins that were erased. Especially when doctors realize they can't get denied anymore, and even further ramp up their requests for treatment to be paid. That's a doctor's business, after all.

[Asker]

Just wanted to thank you for actually answering and not getting on a soapbox or saying something unrelated

[Opinion Owner]

Yep 👍🏽

[Gwendoline]

It's not just health insurance costs that need to come down but hospital bills and medication as well. For instance in the UK giving birth costs $2700 but in the US it costs $10,000

[Asker]

Why do you think hospitals in the US charge so much more than hospitals in the UK? Do you think healthcare worker wages are a component? For instance, the nurses where I live make more than doctors in the UK. Could this have an impact on high healthcare costs?

[Gwendoline]

The charge more because they can

[Asker]

So you're saying the costs are equal to both countries, despite the differences in wages, but the US hospitals are quadrupling the price for pure profit? The hospitald must have really huge profit margins then. Like 75% to account for these types of price differences.

[Gwendoline]

Can't say for certain but between private health insurance companies, hospitals and drug companies charging what they want it certainly drives prices up, it all adds up.

[Anonymous]

More expensive. Without a doubt. Profit motive drives efficiency, which lead to more care and/or lower costs. The only downside is you have to deal with wealthy people being created as a result. I'll take the bad with the good.

[Asker]

I appreciate the effort of your response

[seeyounexttuesday]

They don't need to be run as nonprofits. They need to be able to freely compete across state lines. Health insurance should be decoupled from employee benefits and replaced with increase in salary.

[Asker]

I probably agree with this, but the idea here is to address the outcomes if this were to actually happen. Many people are calling for it, so it can eventually become a reality. And if it does, what would happen to our insurance costs?

[exitseven]

non profits means that they do not pay taxes. The CEOs still make exorbitant salaries.

[Asker]

A CEOs salary is much, much less than the profit margins though. Like a fraction of a percent of them. And if you erased the CEO's salary entirely, it would be completely negligible to the finances of those companies.

For the sake of the purpose of the question, let's say the CEO gets paid $0 as well.

[Surely]

I believe that Blue Shield is a nonprofit insurance company.

[Anonymous]

I’m afraid to say

[Asker]

What do you mean?

[RedInnocent69]

Yes, it does.