Monday, February 15, 2010
Profit doesnt say much
Of course it is important for insurance companies to make money in order to pay out when those who are insured have health care bills that need to be covered. However, profitability is not a direct measure of how much money insurance companies will shell out for medical bills. One may assume that profitability is bad because that means more money is taken and less bills are covered, but insurance companies could have high profit margins due to a lot of customers, or a lot of healthy customers. If an insurance companies has a high profit due to covering a large amount of individuals it may be believable that they offer a good product since many people have decided to purchase it. However, individual needs may not always match the majority and the majority may be misled into what they believe is a good deal. Individuals who are looking to invest in the stock market for certain insurance companies may benefit from looking at profit margins, but when it comes to purchasing health insurance there are far more important things to look at. Individuals should be concerned with premium costs, deductibles, what exactly is being covered under the insurance plan and whether or not it fits your specific needs.
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For investors I think it is important that they look into how much the insurance companies are profiting. Investors help keeps the companies in the job market. Their money is funding to keep the company alive. As for customers, it is more important to look at how much are their premiums, deductibles, co-payment, what the insurance company will cover or not cover. We shop around to see what is the best deal for our money.
ReplyDeleteI think judging the quality of insurance coverage based on profitability is a difficult task due to the complex nature of the health care industry and the variability in sharing risk. While profitability may reflect a healthier pool of patients or higher cost plans, it may also reflect a high number of service denials by the insurance company. Then again, spending on health care services is considered a loss by insurance companies. Based on the idea that the delivery of care as viewed as a loss, I would be concerned if an insurance company did have significantly high profit margins.
ReplyDeleteTo decide whether or not a company's profitability is good or bad, perhaps a consumer should first investigate the number of health service refusals/denials made by an insurer. However, I somehow doubt that this information on health care denials is publicly available. I also agree with Tami that everyone should closely examine the deductible costs and any hidden costs or limitations in access to health services.
Unfortunately, most people shopping for insurance are often looking for a deal and even if they do want more in depth information about what the insurer is truly offering, straightforward information may be hard to find. The link below is a pretty interesting testimonial by Wendell Potter, a former health insurance executive who worked for Cigna. I found this posted on Ezra Klein's blog, and it hits at many of the issues raised by this blog question:
http://voices.washingtonpost.com/ezra-klein/Potter%20Commerce%20Committee%20written%20testimony%20-%2020090624-%20FINAL.pdf
Agreeing with Tami and Marisa profit is not a good indicator of how we should pick our health care. The best way is by shopping around to get the best deal for what we are willing to pay. I think profit is probably the worst way to pick your health care, unless you feel it is profiting you.
ReplyDeleteI also agree with Julia, Tami, and Marisa. An insurance company's profit should not indicate the quality or types of services it provides. People should chose their health coverage based on price, the total benefits that are provided, and by the types of physicians and other health care professionals they are allowed to see. I feel like an insurance company's profit should be determined by the amount of people that are buying into the company based on the quality services that the company provides, but I am sure that is not always the case.
ReplyDeleteThe other day I heard Bill Handel say that in California 70% of health care premiums must be put toward health care and not administration fees and profit. So there are some limits, but that definitely differs by state. Being a wild west cowgirl, I choose my insurance based on the best deal for me considering price and coverage and not the least profitable company. Why should I care if they are making the most profit as long as I am maximizing my dollar?
ReplyDeleteI would assume the average American doesn't even realize/consider the large percentage that goes toward administrative fees. It wasn't until recently that I learned charitable organizations do the same!
I agree with Emily and the fact that she chooses her insurance based on the best deal, taking into consideration price and coverage over which company is least profitable. Ultimately, if purchasing from the wild west, consumers are going to be looking for plans that cater to their needs, plans that will provide the most benefits in exchange for the fees consumers are paying.
ReplyDeleteOf course businesses all want to make a profit. It would be naive to think that corporations have no desire to become bigger and make more money. I think that that opinions made towards the profit margins of insurance companies depends on where an individual stands with their health insurance. For instance, an employee who is covered by their work may feel indifferent since their prices have been negotiated on their behalf by their company. However, someone who shops on the wild west and doesn't receive many benefits may feel that the profit insurance companies make should be cut in order for those consumers to receive better quality of care and hopefully a better quality of life. To many, it seems wrong to hear that insurance companies are covering less people but making more money at the same time. Statements like this conjures up many unanswered questions from the public.
A company's profit has also never entered into the decision for me -- I look at what a policy covers first and foremost, and then the price (I've never bought an individual policy for myself since I've always had school or employer policies, but I did almost all of the shopping for my boyfriend's individual policy).
ReplyDeleteHonestly, the only thing that a company's profit says to me is that they maybe deny more claims -- completely unproven I know, but I suppose if I was deciding between two absolutely identical policies (with equally good customer service!), then after all that it would matter.
I also only look at what a policy is covering and don't really care how much profit the company has made. If it covers my needs and isn't too expensive, then that is what I will base my decision on.
ReplyDeleteHealthcare in this country is not run by the government and has the right to make a profit. These profits pay for salaries of many individuals, including those of us who want to enter this field. These profits are also generated because these are publicly traded companies. It is unrealistic for people to complain about these issues as long as there are no health insurance reforms created in congress.
I agree with all that has been said. Profits should not equal good care and in my opinion it does NOT! What does it mean anyways when a health insurance company show profits for their quarter? They were able to bill for services rendered or not? Services such as services not used is also a form of gaining profits because the cost remains the same.
ReplyDeleteIn my opinion, there are only two ways health insurance companies can yield profits: 1) They have enrolled more patients in their plans 2) They are paying out less than what is actually owed.
Janani said it best, "profits pay for salaries". Without these companies making a profit, hundreds of employees (healthcare professionals) would not get paid. Profits only benefit the employees and worker but not the patients.
Although it is easy to look at an increased profit and think that equates to increased health care quality, it is important to note that these two things are not always the same. First of all, I think it’s important to asses healthcare quality in relation to price. We have read numerous articles in class that state that although US has one of the most expensive health cares systems in the world, we measure poorly compared to other countries. For example, people are spending more money on health care, as costs of health care are rising, yet people do not live as long in the US than other countries. Furthermore certain developed countries which have lower health care costs have shown better health outcomes such as a higher life expectancy.
ReplyDeleteI think it’s important to step back from the situation and really see where the profit is going. Take a look at how much each aspect of the healthcare system gets. Does increased costs of technology, higher paid specialists, higher premiums in insurance companies, and numerous administrative costs really improve the quality of health care one receives? Or has such a breakdown created such a complex system that health care quality gets blurred?
I completely agree with Tami. Profitability is not a direct measure of health care quality. We normally choose health policy according to the coverage, price and our needs. However, as insurance companies, it is their best interests to make profit and grow bigger. Once the companies grow bigger and draw more people in the pool, they have better chance to deal with physicians and hospitals to provide better quality care with less money. However, how much profit margin is adequate for a company to grow steady and for us consumers not to feel being robbed of? Maybe government should step in and provide a balancing procedure or regulations to these companies to avoid huge profit or mark ups.
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ReplyDeleteA cap on profits for insurance companies could be a good option for regulating the insurance companies, especially if any "excess" profit was required to be reinvested in research/patient care/etc. However, given some health insurance practices, would it surprise you if they looked for (and found) a loophole or redefine "profit"? Besides, capping profits wouldn't assess how the profits were acquired.
ReplyDeleteAmerica was built on capitalism and free enterprise, but if we allow health insurance to be a for-profit industry it shouldn't be with no strings attached. If there was an oversight committee (unaffiliated with insurance company) that reviewed random claim approvals and denials it could discourage and prevent erroneous, life-threatening denials of claims.
Also, it would encourage the insurance companies to start "playing by the rules" and getting ahead of the competition the right way: by offering better services at a low price. After all, there are really many ways insurance companies could improve the health of their enrollees with non-medical services, like informational mailers about preventive screening or immunizations, or even making it easier to submit claims.
As a consumer, I've never let the profitability of a company determine whether I should purchase an item or service. I go based on the quality of what I'm purchasing and in purchasing health insurance, I don't see why it should be any different. How much an insurance company has made in profits would not be the deciding factor for me,but rather how many services are covered by the plan that I purchase. I would think that most consumers pay for quality, especially when it concerns their health.
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