Even when it's not the insurer, it's at least a hospital. Many a doctor around me that used to have a private practice sold to one of the hospital chains, as they promised more money than by owning, solely due to superior collective action advantages. A large insurer can bully a private practice into cutting costs, but a hospital network that handles 40% of ERs in the metro area? The insurance company can lose. So everyone makes more money but the people paying insurance.
To be fair, this is because there's long-standing [but disputed] evidence that healthcare providers drive up costs/utilization when they can refer to hospitals they have equity stakes in.
Not quite true. If you own the providers, getting people to pay deductibles and copays (i.e. getting treated) will yield way more money than just having them pay premiums.
Correct, which is another reason why they are buying the healthcare providers. It allows the insurers (“pay-viders”) to strong arm independent doctors and smaller insurers out of the market.
The insurers are legally obligated to pay out 80-95% of their premiums for treatment. So the only way to grow profits is to spend 2x and much and charge 2x as much. Sure you only make the same 5-20% margin, but it's on 2x the revenue so it's 2x the gross profits.
Uh, no… they want to deny claims. The best situation for insurers is that you are healthy for a while, then abruptly die of something that cannot be treated.
Uh no, they don't. Not if they're also the ones who provide healthcare. Simply denying claims isn't even remotely close to the financially (and obviously not the politically) optimal strategy.
The optimal strategy if you own both the insurer and the provider is a combination of premiums, copays, deductibles, and maybe even some totally unnecessary care to drive up volume.
Lower margin on dramatically higher volume is still dramatically more money. Lower margin actually provides political cover for your $400 billion revenue years.
You first have to agree on a definition of free in this context. When Adam Smith was writing the Wealth of Nations most of the transactions in the market were between entities with more or less comparable power. Local people bought stuff from local suppliers. This is very much not the case any more when it comes to transactions involving private individuals on one side and corporations on the other.
This is true but beside the point. I don't care either way what you count as a "free" market or whether such a thing exists, you can just say that health insurance is less free than almost any other market.
It makes a ton of sense in theory. In a fair market, you would want to prevent the insurer from charging super high premiums that let them make a large profit relative to the cost of care provided.
The problem is that it doesn't stop there. There is a second order effect.
