The insurance companies are pulling out of ACA as they are losing lots of money. Don't blame them

[haele]

40. My FIL was a VP at several insuance companies...

At each company except for USAA, he was informed by the boards and the CEOs that as an executive strategist and decision maker, he had to keep in mind his most important customer was - the shareholder. Not the customers who bought policies, as their money just went into the investment side of the house to attract more money. He was told point blank at Blue Cross that the policy owners are a loss-leader to attract investors - especially fund investing. If they had too many claims on the "costs" side of the ledger, they were far less attractive. The strategy to keep money coming in was that the company had to maintain a dis-incentive for policy owners to make claims.

The most important thing that any for-profit insurance company had to do was maintain fiduciary responsibilities.
Because they had to make an attractive enough profit to keep paying the shareholders so they would maintain the company on their investment portfolios.

He worked for Blue Cross/Blue Shield for six months and at Traveler's for a year, until he parlayed that experience plus his military rank into a position at USAA, where he stayed for 25 years, because of the construct of USAA which considered the cost of doing business part of the fiduciary responsibilities to the policy holders. They built their company with the understanding that they were going to have to pay out on claims, so maybe they wouldn't be as profitable as a "prove you weren't at fault before we pay you" insurance company.

When it comes to a "for profit" insurance plan, it doesn't matter what the CEO makes or actual claim costs are, it matters what the ROI is to the shareholders.

Haele