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A comment on Employees Start to Feel the Squeeze of High-Deductible Health Plans. Parent comment

Re:Employees Start to Feel the Squeeze of High-Deductible He... by throwaway34241 on Friday May 03, 2019 @05:41PM (#19822542)
Presumably they could pass along the savings and increase revenue by expanding their market share, or lose revenue to a company that controls costs. I see your point though, and in a given year it might be easier to increase medical expenses by 5% than to grow market share by the same amount.

One thing I wonder though, is that even without the 20% rule, if the company can get away with raising rates by 5%, wouldn't it make sense for them to do so? If they started with a 20% margin that would increase their profits by a whole 25%, instead of a measly 5% with the cap, so you'd think the incentives would be even stronger. It seems like adequate competition is the most important thing in a for-profit insurance model rather than having a 20% margin rule or not.

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Re:Employees Start to Feel the Squeeze of High-Deductible He... by secabeen on Friday May 03, 2019 @10:20PM (#19823923)
In a healthy, actually competitive market, I think that would work, but there are so few insurance operators in each market, it's really easy for them to quietly collude with each other rather than compete. Additionally, everyone else in the industry wants higher prices and more profit. They are not limited to a 20% cost margin. The insurance companies are supposed to be the downward drivers on price. However, here, it's just easier to not fight the price increases, take your 20% of the increase, and move on, rather than fight hard to push prices down, and gain market share.
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