Their margins are limited by law and the people paying (employers) are mostly price inelastic.
This puts them in a position where they're incentivized for costs to go up, because 15% of $2000 is more than 15% of $1000. In other industries, you'd see insurance companies push back because ultimately consumers will push back and either drop insurance or switch to another provider.
Switching insurance at an employer, though, is a colossal undertaking that is bound to frustrate employees, so often it isn't done. And until recently, individuals would be fined for not having insurance, so dropping insurance wasn't really an option.
If consumers were the ones paying for it, switching weren't a pain to do, and insurance companies weren't incentivized to maximize costs, that'd go a long way toward fixing this.
This puts them in a position where they're incentivized for costs to go up, because 15% of $2000 is more than 15% of $1000. In other industries, you'd see insurance companies push back because ultimately consumers will push back and either drop insurance or switch to another provider.
Switching insurance at an employer, though, is a colossal undertaking that is bound to frustrate employees, so often it isn't done. And until recently, individuals would be fined for not having insurance, so dropping insurance wasn't really an option.
If consumers were the ones paying for it, switching weren't a pain to do, and insurance companies weren't incentivized to maximize costs, that'd go a long way toward fixing this.