Here’s industry wide stats for hospitals: https://www.chartis.com/insights/hospital-margins-trend-high.... Median hospital operating margin is 1.5% in 2024. Even among the top 50 systems, the median is 2.3%. https://hospitalogy.com/articles/2025-05-29/top-50-health-sy...

Well not quite. Health insurance is still a competitive business. Customers — both individuals and group buyers — are very price sensitive and while switching plans is a hassle they will change from Aetna to Humana or whatever if the difference is large enough. And many of the largest carriers are non-profit corporations so there's literally no "profit", although some of the employees are very well compensated.

You're giving doctors a little too much credit. While most of them have good intentions and try to act in the best interests of their patients, something like a third of the care they deliver is considered "low value" in that it's not evidence based and isn't likely to benefit patients. While some of the friction caused by health plans is just pointless waste, the utilization management processes can actually nudge doctors towards practicing better medicine.

https://www.bloomsbury.com/us/price-we-pay-9781635574128/

The insurance companies are not stopping the government from paying for everyone's healthcare. It's the other way around, governments are using insurance companies (better referred to as managed care organizations since they don't really sell insurance) to add the friction so that some people get more healthcare and some people get less.

Who gets more and who gets less depends on who has political power (that's why the old and non working get subsidized by the young and working), and in a democracy, this question ultimately comes back to the voters.

Bottom line is due to demographics and restrictions in the credentialing process (including for medicine itself, one of the costliest components of healthcare), there is nowhere near enough supply of healthcare relative to demand, AND due to the enormous damages awarded in lawsuits in the US, the cost of liability protection is sky-high and increases prices for every step of the healthcare chain.

We need way more healthcare providers, and tort reform, and publicly funded medicinal trials, and without that we will continue to limp on with this bureaucratic maze to essentially reduce demand to manageable levels.

No, the system puts in too much friction. Insurance companies are part of the problem, but so are doctors. Everyone in the chain has an incentive to delivery unnecessary services, and everyone in the chain has little incentive to be efficient.

You can deduce that cannot be true using the medical loss ratios, which is money flowing out to healthcare providers. At roughly 85% or so, that means 15% is left for the entirety of the rest of the business, including adjudication.

https://www.kff.org/private-insurance/medical-loss-ratio-reb...

https://www.oliverwyman.com/our-expertise/insights/2023/mar/...

That is not to say the adjudication process is done well. In fact, it is hugely wasteful, either intentionally or unintentionally, and the problem is that the government does not audit the insurance companies often enough, nor does it levy penalties sufficient to incentivize proper and efficient adjudication.

The government should be doing constant random checks on claims to see if they were processed and adjudicated in a timely and efficient manner with a sufficiently low error rate on behalf of the adjudicators, and the government is basically doing none of that.

shimman claimed

>hundreds of billions in profit that health insurance companies extract

yet no request for evidence?

Here's data for medical loss ratios:

https://www.kff.org/private-insurance/medical-loss-ratio-reb...

https://www.oliverwyman.com/our-expertise/insights/2023/mar/...

Here are the sub 5% profit margins for the publicly listed insurers. On the same website, clicking on the "Revenue & Profit" tab will show you that all of the health insurers, combined, earn less than $50B of profit per year, and most of that is probably not even insurance related since a large portion comes from UNH's enormous healthcare provider business.

https://www.macrotrends.net/stocks/charts/UNH/unitedhealth-g...

https://www.macrotrends.net/stocks/charts/CVS/cvs-health/pro...

https://www.macrotrends.net/stocks/charts/CI/cigna-group/pro...

https://www.macrotrends.net/stocks/charts/ELV/elevance-healt...

https://www.macrotrends.net/stocks/charts/HUM/humana/profit-...

https://www.macrotrends.net/stocks/charts/CNC/centene/profit...

https://www.macrotrends.net/stocks/charts/MOH/molina-healthc...

The above obviously does not include the many millions of Americans covered by non profit insurers, such as Kaiser Permanence, Providence, Cambia, and the various Blue Cross plans.

Here are the 5 year returns for the above businesses compared to SP500:

https://i.imgur.com/S8bNSM2.png

Suffice to say, you would not want to be a shareholder of a health insurer.