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Do American insurance companies have any incentives to minimize their spending?



As in not paying out money yes. As in keeping costs low no...


Thats not correct. It is actually the exact opposite.

The ACA places profit controls on for insurance companies how much they can make as a percent of what they pay out (aka the 80/20 rule).

They must pay out 80% in coverage with profit and operation expenses coming from the other 20%.

Therefore, the best way to increase profit is to ensure the total price of healthcare they cover goes as high as possible. It is better to make 20% of a $1,000 drug than a $10 one.


A $ is a $.


20% of 2 dollars is better than 20% of 1 dollar.




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