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Originally Posted by ASU2003
But why would United Health - Texas offer a lower premium than United Health - Georgia?
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Perhaps, the costs to conduct business could be lower. On one hand you have insurance companies competing, on the other (depending on how they do it) you would have state insurance departments competing. For example it is less expensive to incorporate in Nevada compared to California. A corporation doing business in California still pays California taxes on the business they do in California but the overall costs of a business incorporated in Nevada operating nationally would be lower than a California corporation operating nationally.
Perhaps the premiums would be lower based on underwriting or the pools of people insured by one company compared to another. Perhaps a pool that includes too many people on a "southern diet" is a bad thing.
Perhaps a carrier would specialize in certain types of risks and based on that specialization they add special value to covering the people who fit that category. For example power weightlifters won't fit the traditional height and weight charts - but they may be more healthy than the general population. And perhaps in one state there is not enough of them for one insurance to bother with in that state, but pooled nationally you could have several carriers who target that market and underwrite and rate accordingly.
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Why would a large national insurance comapny compete against themselves?
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To gain market share. Think KFC, Pizza Hut and Taco Bell, all YUM brands. They compete, but they cater to specific market segments. It gives the consumer choice. think of Coke, what do they have about 3,000 different types of soft drinks world wide? Many compete with each other, but for Coke it is about market share and profits.
the irony is that corporations like restrictions to competition, they don't want you to have choice. They know if they get control of the market they can control the market. Anti-big corporation types should favor more competition, not less.
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And then what would happen if nobody bought from United Health - New York because salaries are higher there and doctors charge more, meaning higher premiums?
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They go out of business. Or they could lower their overhead costs to get competitive. the cost of the docotrs would be the same for everyone entering into the NY market, unless they negotiate better deals - that is a business practice issue. Better businesses thrive, the weak wither and die.