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Thread: FACT CHECK: Health insurer profits not so fat

  1. #91
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    Re: FACT CHECK: Health insurer profits not so fat

    Quote Originally Posted by apdst View Post
    What I'm saying, is that by expanding competition, you're spreading the risk over many companies and not just a few. With moe insurance companies operating in the industry, each company could see a higher profit margin, with lower risk.
    Not necessarily. As market share decreases, competition will necessarily bring economic profits to zero, in the long run. Therefore competition is beneficial more so for the consumer than the producer.

    Say there are ten health insurance companies operating in a state. There are 1,000 insurees that will obviously cost those companies money, because their health is so bad, or they have a pre-existing condition, etc. That means that each company would have to take on 100 new clients that are guaranteed to be a loss.

    Now, if there were 100 companies operating in a state, that would mean their would be only 10 guaranteed loss claims for each company. Two things would happen: 1) the profit margins would go up, and the loss would be easier to weather and 2) The insurance companies would be more likeley to sign a client knowing that that client is going to b a guaranteed loss.
    I see no reason why an insurance company would or should insure someone with pre-existing conditions.

    it's simple loss vs. profit business strategy. When running a business and you take a risk, you have to ask yourself, "how is the loss going to affect the company? Will it be a minor dip in profits? Will we survive the loss? I don't care what kind of business you're in, you have to ask yourself these questions, at some point.
    I agree.

    I'll give a personal example. yesterday, I got a call from a customer that needed two trucks to go to Alberta, Canada. The loads paid $19,000, together. A $19,000 week is a helluva week, especially in this economy. It's snowing in that part of the country right now. None of my drivers have experience driving in the snow. I had to ask myself if it was worth the risk of losing two trucks and two trailers to gross $19,000. replacement cost for each truck is about $30,000 and each trailer is around $15,000. I'll net about $10,000 dollars after expenses. Is it worth it to put my drivers and $90,000 worth of equipment at a heightened risk to make $10,000, when I can keep them here, conduting normal operations and clear $5,000? I decided to go for the $5,000 and not put my men and equipment into undue risk, because I can't survive the loss of $90,000 worth of equipment.
    You obviously pay insurance on those trucks and trailers. Of course, you would have to factor in the deductible, as well as the down time until an adequate replacement can be had. If your deductible + time lost was less than your net differential (10k minus the 5k alternative) $5k, i would have seriously considered the other option.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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    Re: FACT CHECK: Health insurer profits not so fat

    Quote Originally Posted by Goldenboy219 View Post
    Not necessarily. As market share decreases, competition will necessarily bring economic profits to zero, in the long run.
    You're wrong. Some companies are going to compete better than others, therefore will have more market share. How many different brands of beer are their in the country? What market share do the three main brands have?

    Therefore competition is beneficial more so for the consumer than the producer.
    It's beneficial to both.



    I see no reason why an insurance company would or should insure someone with pre-existing conditions.
    I don't disagree with that, but if the insurance industry were de-regulated, it would be possible for more pre-existing conditions to be insured.


    You obviously pay insurance on those trucks and trailers. Of course, you would have to factor in the deductible, as well as the down time until an adequate replacement can be had. If your deductible + time lost was less than your net differential (10k minus the 5k alternative) $5k, i would have seriously considered the other option.
    my down time alone would run up to around $30,000, per truck. If I started looking, today, it would take me a month+ to find a truck and trailer, at a reasonable price, finance it and get it permitted to go to work.

    The down side of equipment insurance, is that they never pay you what it will cost to payoff the note and purchase replacement equipment.
    Quote Originally Posted by Top Cat View Post
    At least Bill saved his transgressions for grown women. Not suggesting what he did was OK. But he didn't chase 14 year olds.

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    Re: FACT CHECK: Health insurer profits not so fat

    Quote Originally Posted by apdst View Post
    You're wrong. Some companies are going to compete better than others, therefore will have more market share.
    This does not negate my comment on profit. If there was only one beer company, would it profits exceed the scenario where there were 10 beer companies?

    How many different brands of beer are their in the country? What market share do the three main brands have?
    The competition between Molson and Anheuser causes a price war between them. Since either firm has to be wary of relative price, the consumer benefits from their competition. Each firm will put out new products in attempts to pull customers away from the competition, although the pricing mechanism still has to be of great concern to each.

    It's beneficial to both.
    Nope. Otherwise, explain the how a monopoly does not possess the ability to set price.

    I don't disagree with that, but if the insurance industry were de-regulated, it would be possible for more pre-existing conditions to be insured.
    How so? Insuring someone with pre-existing conditions is the same as insuring a home that is already on fire.

    The down side of equipment insurance, is that they never pay you what it will cost to payoff the note and purchase replacement equipment.
    Yeah, unless you sign on for ultra high deductibles, they tend to get you with depreciation.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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    Re: FACT CHECK: Health insurer profits not so fat

    Quote Originally Posted by Goldenboy219 View Post
    This does not negate my comment on profit. If there was only one beer company, would it profits exceed the scenario where there were 10 beer companies?



    The competition between Molson and Anheuser causes a price war between them. Since either firm has to be wary of relative price, the consumer benefits from their competition. Each firm will put out new products in attempts to pull customers away from the competition, although the pricing mechanism still has to be of great concern to each.
    The point being, that competition forces the companies to keep their pricing below what the market can handle.



    Nope. Otherwise, explain the how a monopoly does not possess the ability to set price.
    If there are many companies, selling the same product, the market will set the price, not the companies.



    How so? Insuring someone with pre-existing conditions is the same as insuring a home that is already on fire.
    More insurance companies means each has to lose money on fewer high risk insurees. An insurance company can handle insuring "X" amount of burning houses. If they can keep that amount of burning houses below a certain amount, then the loss can be absorbed by the houses that don't burn.

    Again, myself as an example. I'm going to blowout/wear out tires, but I can only financially handle losing so many tires. If tires are blown out/worn out at an excessive rate, then something has to change.



    Yeah, unless you sign on for ultra high deductibles, they tend to get you with depreciation.
    They always hammer your ass with depreciation. That's why I re-adjust my coverage very year.
    Quote Originally Posted by Top Cat View Post
    At least Bill saved his transgressions for grown women. Not suggesting what he did was OK. But he didn't chase 14 year olds.

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    Re: FACT CHECK: Health insurer profits not so fat

    Quote Originally Posted by apdst View Post
    The point being, that competition forces the companies to keep their pricing below what the market can handle.
    Still off a bit. Competition allows for consumers to be swayed by changes in price. Holding costs at a constant and eqaul between two firms, and assuming transitivity (consumer decisiveness), the firm with the lower price will have the most revenue. But, the revenue will be lower than if there were only one.

    If there are many companies, selling the same product, the market will set the price, not the companies.
    Ok, this is correct. But, it does not address the question in regards to market concentration. The only way for price to fall to an efficient level is for the consumer to have choice. As more and more firms enter the market, price will necessarily decrease (unless they form a cartel) until equilibrium is reached. At that point, marginal profit will be significantly reduced until the market is perfectly competitive.

    In a perfectly competitive market, profit falls to zero.

    More insurance companies means each has to lose money on fewer high risk insurees. An insurance company can handle insuring "X" amount of burning houses.
    Of course they can "handle" it, but it is not ensuring profit maximization. The firm that has the least amount of burnt houses will have the lowest cost.

    If they can keep that amount of burning houses below a certain amount, then the loss can be absorbed by the houses that don't burn.
    But... The firm with the least amount of houses burnt will reap the most profit, ceteris paribus. As competitors witness this, within their goal to maximize profit, they will all stop insuring burning houses, to the point where insuring burning houses is no longer a business practice.

    They always hammer your ass with depreciation. That's why I re-adjust my coverage very year.
    That's why i tend to lease most of my equipment. In the trucking industry though, leasing trailers instead of trucks is much easier.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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    Re: FACT CHECK: Health insurer profits not so fat

    In the insurance industry, more so than most others, size matters. The greater the size, the greater the ability to keep premiums lower than your competitors.

    In risk aversionthe general rule is: the larger the risk pool, the less potential risk to the individual within that specific risk pool.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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    Re: FACT CHECK: Health insurer profits not so fat

    Quote Originally Posted by Goldenboy219 View Post
    Still off a bit. Competition allows for consumers to be swayed by changes in price. Holding costs at a constant and eqaul between two firms, and assuming transitivity (consumer decisiveness), the firm with the lower price will have the most revenue. But, the revenue will be lower than if there were only one.
    Depends on the volume of sales. If that company were the only one, they might look more at profit margin and less at volume, possibly making less money, because they're selling less product. You understand the difference between profit and profit margin, right?



    Ok, this is correct. But, it does not address the question in regards to market concentration. The only way for price to fall to an efficient level is for the consumer to have choice. As more and more firms enter the market, price will necessarily decrease (unless they form a cartel) until equilibrium is reached. At that point, marginal profit will be significantly reduced until the market is perfectly competitive.

    In a perfectly competitive market, profit falls to zero.
    No, it doesn't. It can't, or we'll have a depression. NO company can operate with a zero profit, unless, as I stated before, that company is designed not to make a profit, to begin with.


    Of course they can "handle" it, but it is not ensuring profit maximization. The firm that has the least amount of burnt houses will have the lowest cost.
    Covering the safe amount of burning houses is maximizing profit margins. Point: if all companies have a safe amount of burning houses, all companies can offer lower prices.



    But... The firm with the least amount of houses burnt will reap the most profit, ceteris paribus. As competitors witness this, within their goal to maximize profit, they will all stop insuring burning houses, to the point where insuring burning houses is no longer a business practice.
    That's why they call business a, "risk"...LOL!!!! The government can set regulations, so that every company has to insure "X" amount of burning houses, based on the number of burning houses from the previous year, so the market remains stable. If the amount of burning houses goes up, the rates will go up, just like when prices go up as the price of gas goes up. The market is a bitch, ain't it??



    That's why i tend to lease most of my equipment. In the trucking industry though, leasing trailers instead of trucks is much easier.
    I can't lease equipment, then lease equipment as an owner operator. My name, or my corporate name has to be on the registration, otherwise, it would be illegal. I can't act as a third party, for the owner of the equipment, without power of attorney and an equipment rental company isn't going to give me power of attroney...LOL!!!! Now, in my situation, trailers are different. I can rent trailers, however, it isn't cost effective, unless I knowingly have thework coming up to justify the rentals. I've done it in the past, but I did because I had inside information of a sure thing. I still took a risk, but it turned out to be worth it in all those instances.
    Quote Originally Posted by Top Cat View Post
    At least Bill saved his transgressions for grown women. Not suggesting what he did was OK. But he didn't chase 14 year olds.

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    Re: FACT CHECK: Health insurer profits not so fat

    Quote Originally Posted by Goldenboy219 View Post
    In the insurance industry, more so than most others, size matters. The greater the size, the greater the ability to keep premiums lower than your competitors.
    That's any business. JB Hunt can haul freight for 75% less than I can.
    Quote Originally Posted by Top Cat View Post
    At least Bill saved his transgressions for grown women. Not suggesting what he did was OK. But he didn't chase 14 year olds.

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    Re: FACT CHECK: Health insurer profits not so fat

    Quote Originally Posted by apdst View Post
    That's any business. JB Hunt can haul freight for 75% less than I can.
    So how do you compete with JB Hunt?

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    Re: FACT CHECK: Health insurer profits not so fat

    Quote Originally Posted by winston53660 View Post
    So how do you compete with JB Hunt?
    I haul a different kind of freight, so I don't actually compete with JB Hunt. In my segment of the industry, I can offer specialized equipment and services that JB Hunt can't/won't offer. Ryder Truck Lines has branched off into my world and after 8 months, are looking for a way out.
    Quote Originally Posted by Top Cat View Post
    At least Bill saved his transgressions for grown women. Not suggesting what he did was OK. But he didn't chase 14 year olds.

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