Health insurance at its core is very simple. You put money in, you go to doctor, insurance pay doctor. But in the USA, the insurance denies everything they possibly can. Money put in doesn’t ever see a doctor or your health costs, it goes right to the stockholders…
So why doesn’t someone just make a non-profit health insurance company where there’s no stock, no executives, just public servants and aggressive price negotiation where your medical bills are actually paid with the money put in?
A public system specifically would mean it’s run by the government. So that would need to be created by the government. Which means you’d need all relevant voting systems to vote in favour of it, which isn’t likely… especially given the last presidential election.
I imagine the biggest challenge of creating a non-profit health insurance thing is one of two things.
Firstly, anyone who has that much money would probably rather open a charity.
Secondly, people actually DO commit fraudulent claims, or try to claim things that they don’t need or that the health insurance company decided that they won’t cover. If the company doesn’t try to filter these out, it’d be losing more money than it expected to…and it’d go out of business.
Another factor is that being in the insurance business is already a losing model if you want to do good in the world. Hospitals will charge jacked up rates because they don’t have to worry about what a person can pay. They try to extract as much as they can out of the big insurance corporation, since the patient doesn’t care what the insurance company has to pay. So this non-profit insurance company would be paying as much as any other insurance company, more than any patient would be paying, and so it’d be losing money even just paying out all of its valid and covered claims, let alone the fake and unnecessary ones.
So, maybe you want to partner with the hospitals because, why should you pay as much as the evil companies, right?
Well, that sounds great from a consumer sense. But from a business perspective, that’d be suicide for the hospital – why would any other insurance company do business with that hospital if they’re giving one company discounts unfairly?
Or…maybe they do give discounts. But then they make less money and can’t pay the doctors as much (who can leave for work elsewhere), or buy the newest equipment, etc.
But if they do want to give discounts and just charge the company what things actually cost…at that point, you might as well be a charity.
And even then, you still need to budget for validating the claims that come in, because how do you choose who gets covered, and within that group, who gets priority?