By the ACA law health insurance companies have to pay out at least 80% of premiums on claims. The cost of running the company and any profit has to come out of the other 20%. 5% of billions of dollars is huge in absolute figures but as a percentage falls in line with other industries.
Only if the insurance companies form a cartel (in the economic sense). People will switch carriers to ones with lower premiums so the market forces direct costs down to parity.
Most costs are outside of insurer's control anyway, regulations prevent insurance companies from telling providers how to offer care as long as the care is medically necessary and the standard of care.
While it's true that a cartel would be the fastest way to raise prices, I don't think that not having one removes all incentive to try.
I think you're also ignoring healthcare networks. This is important for two reasons.
1. The kind of supply and demand works very well for modeling commodities, but the difference in networks means it's very hard to have two completely equivalent insurance products.
2. Insurance companies can incentivize hospitals to behave in certain ways by regularly pruning those who do not behave that way.
Also, most people get their healthcare from their employer. There's not as much ability to actually switch, unless you're so fed up that you're willing to switch jobs.
If both the insurance and the hospital earns money by raising the price we will get what we have today where insurance covered procedures are more expensive than none covered procedures.
Not if the supply of healthcare was increased (more doctors). Then they would be willing to sell their services for a lower price, and the insurance companies would be able to offer lower premiums, winning business from other insurance companies offering higher premiums.
To fix medical service affordability we need to bring down the cost of the services instead of expecting significantly more efficient insurance plans. We can’t insure away high costs. They just pass through the costs via premium and deductible increases. Even if health insurers were nonprofits that would only directly save us 5%. High deductibles encouraging shopping around but price discovery is very limited as even doctors don’t know how much a service costs. Focusing on price alone is an issue as people don’t know medicine and are unable to evaluate quality so they end up giving five stars for having a private room or suck up staff. What ends up happening is the not well off or frugal avoid care until there’s an undeniable problem. Others consider consuming medical services a dignity not a price and will never give up their low co-pay plans.
The only way to control costs is to increase supply or decrease demand. If they want to lower health care costs, then increase the number of residency spots so there are more doctors...or reduce the requirements to becoming a doctor. Or make it so you don't need to see who went to school until 30 years old to get a simple antibiotic for routine conjunctivitis.
Assuming no competitor exist, which they do for many health insurance situations. There would be plenty of competitors to choose from if everyone was required to choose from healthcare.gov.
incompatible with 'already low margin' - this suggests that there isn't much more any competitor could do to offer lower prices.
besides, i think the issue is the cost of the underlying procedures - doctors charge maximum what the insurance company will pay instead of what the patient would pay. there are plenty of stories where a patient is billed $100 but if they say they don't want it out of insurance the price drops to $40 or whatever.
another elephant in the room is that you can't pick your healthcare provider if you're unconscious. this part of the US system is little more than a scam.
