Categories
Models Things Explained

How healthcare insurance works

For those in a rush: Skip to the pictures to learn how healthcare insurance works

A while back, I heard a story about someone in the US that ended up in a car crash and had to spend some time in the hospital – let’s call her Jane. To add insult to injury, Jane did not have healthcare insurance. When she got the bill, she quickly realized she could not afford it. Jane talked to the hospital administrators about her lack of coverage, which resulted in a far lower bill. The bill still was not cheap, but it was at least feasible for Jane to pay for it. Relieved, she left the hospital. She didn’t start contemplating how easily the hospital administrators had lowered the bill until later.

At first, she thought they had just felt bad for her and made an exception. But it had been so easy for them. Would it not have been more complicated to get the authority to lower the bill if it was a rare exception?

When Jane asked around, she found out that other people in her position (no healthcare insurance) had had the same experience. Maybe they were all just very lucky? Or maybe it was standard for hospitals to reduce the bills of people with no healthcare insurance?

The first seems unlikely; there are too many people who have had the same experience. The second begs the question: If prices can be lower, why would insurance companies – who notorious for avoiding payouts at almost any cost – pay more? And so much more too.

That is the question that I could not get out of my head: Why do healthcare insurance companies get far higher bills for the same treatments? And perhaps more importantly: Why should you care?

Why do healthcare insurance companies pay more?

The answer to this question is baked into the very regulations that govern how healthcare insurance companies can make money. These regulations limit the annual profit a healthcare insurance company can make to 20% of the payouts made during the year. The idea is to avoid a scenario where healthcare insurers hike the premiums to increase their profits. Super high premiums would be bad for the people who need insurance, so this seems like a good measure.

However, insurance companies are profit-seeking enterprises and as the adage goes: Where there’s a will, there’s a way.

It requires some creative thinking, but it is not hard to increase profits under these conditions. All you have to do is increase payouts:

Healthcare insurance companies benefit from increased payouts, since profits are limited to a percentage of payouts.
By doubling the payouts, profits double too. Thus, payouts are good for the healthcare insurance provider.

Typically, companies want to limit their expenses in order to increase profits. But this is not a typical scenario. Since the profits are dependent on expenses, increasing payouts (expenses) is, in fact, the only way healthcare insurers can increase their profits.

Thus, insurance companies are happy to pay more than necessary for medical treatment. Hospitals and other medical facilities are, of course, more than happy to oblige, as it puts more money in their pockets too.

Why should you care that healthcare providers pay more?

So we have established that more expenses mean more profit for the healthcare insurance providers and the medical facilities, but why should you care?

Well, at the end of the day, the insurance companies need to bring in more money to afford the increased payouts while still having revenues that are higher than expenses. Where do they get the money from? You, the insured.

Though the goal of limiting the profits to 20% of payouts was supposed to ensure lower premiums, it has not. As often is the case, there are unforeseen consequences to new regulations. In this case, healthcare insurance premiums are simply increased to accommodate higher expenses (and profits). At the end of the day, you are still paying more than you should for medical care. It is just hard to tell, as it is paid indirectly through insurers.

That is why Jane and others like her were able to get cheaper medical care from the hospitals: The price paid by healthcare insurance companies – the default price for treatment – is artificially high.

Summed up in a couple of pictures:

Costs of medical treatment without healthcare insurance vs. without.
Why higher profits for healthcare insurers are dependent on higher payouts and higher premiums: Map of logic.

NOTE: If you found this topic interesting, I recommend listening to Peter Attia’s podcast with Marty Makary on how the healthcare system works and how it might get fixed.

Categories
Recipes

Overnight Oats

Super simple; super delicious. These overnight oats are perfect for bringing to work or for a relaxing weekend breakfast.

Note: The optional ingredients are the ones I use, but it is very easy to substitute these for whatever flavors you enjoy the most.

Overnight Oats

These overnight oats are really easy to make and taste amazing. The single recipe results in one decent sized serving for one person.
Prep Time 10 mins
Cook Time 0 mins
Total Time 10 mins
Course Breakfast
Cuisine Non-Specific
Servings 1 – 2 people
Calories 452 kcal

Equipment

  • Container with lid

Ingredients
  

  • cup Plain Greek yogurt
  • ½ (heaping) cup Steel-cut or rolled oats
  • cup Milk
  • ½ tsp Vanilla extract
  • 1 pinch Salt
  • 1 tbsp Chia or flax seeds *(optional)
  • 2 tbsp Shredded coconut *(optional)

Instructions
 

  • Mix all the ingredients in a container with a lid.
  • Put in the fridge overnight. (They are also good made the same day, but the steel-cut oats tend to be on the firm side).
  • Enjoy!

Notes

*The optional ingredients are what I use in mine, but once the plain recipe has been followed you can add whatever you think tastes good.
You can also add sugar, syrup, honey, or other sweeteners if you want it to be a bit sweeter.
Keyword Easy, Overnight Oats, Quick
Categories
Recipes

Pizza Crust

Homemade pizza crus, Kai Hesthammer.

Pizza Crust

This simple pizza crust recipe makes enough for one large, delicious pizza.
Prep Time 15 mins
Cook Time 17 mins
Total Time 32 mins
Course Main Course
Cuisine Italian
Servings 1 large pizza
Calories 970 kcal

Ingredients
  

  • 2 cups Flour
  • 1 tbsp Quick rising yeast
  • ½ tbsp Oregano
  • ½ tbsp Garlic powder
  • ½ cup Milk
  • ½ cup Water lukewarm

Instructions
 

  • Mix all the dry ingredients in a large bowl, then add the milk. Add water until the dough is just slightly sticky.
  • Add pizza sauce and whatever toppings your heart desires.
  • Top it off with some cheese.
  • Bake at 450 °F for 15-17 minutes.
  • Enjoy!
Keyword Pizza