Originally Posted by FD
No, raising premiums wouldnt solve their problem in your example, it would only exacerbate it, since it means more premiums not spent on health costs. Only cutting administrative costs (as a share of total costs) can solve the problem. I dont think you understand the 80% rule.
No. If you are paying out more in claims then you are taking in, in premiums that you raise premiums. There really isn't much room to manuever in OH cost for these companies. Insurance companies employee a shit load of people in hope of breaking even and then invest that money into things like strip malls or whatever that also employee a shit load of people. Anyone that thinks the general principle of insurance is the debil just doesn't get it. In fact some companies actually lose more money in claims then they take it, but that's not so horrible in a good economy so the eat the loss there in hope of recouping the investement income.