if making a profit were not a requirement, a lot of costs, including sales, weeding out undesirable clients, etc., would fall by the way side
You're right about the cost of sales and weeding, but there are other administrative costs that wouldn't go away. You still have to set rates and standards and investigate errors and abuse, for example. And you'd have a big additional cost of customer service that you don't have now. Currently employers have staff to answer employee questions, handle transactions, such as adding a new baby to a policy, or picking plans. If the employers are no longer doing that, it will fall to the government. That latter function could easily eat up the amount of a 15% administrative profit. I'm not at all sure there would be a net savings there. There might be, but maybe not all that much. Administrative costs pale in comparison with the cost of hip replacements, on which the insurance company makes no profit. Any saving is helpful, but I wouldn't plan on much, if any, there. |
