It would be nice to know how Nigerian health insurers are doing. The U.S. insurers are having unbelievable quarters as most Americans freeze elective medical procedures over the fear of contracting coronavirus. Since health insurance premiums continue to roll, notwithstanding, the insurance firms just keep the money. This is counter intuitive: how can health insurance companies be declaring record profits during a period of health paralysis? It comes down to capturing value in market systems.
The nation’s leading health insurers are experiencing an embarrassment of profits.
Some of the largest companies, including Anthem, Humana and UnitedHealth Group, are reporting second-quarter earnings that are double what they were a year ago. And while insurance profits are capped under the Affordable Care Act, with the requirement that consumers should benefit from such excesses in the form of rebates, no one should expect an immediate windfall.
But the amounts that insurers are retaining have caught the attention of the Trump administration. The Health and Human Services Department advised companies to consider speeding up rebates, and on Tuesday suggested that they reduce premiums to help consumers through the economic downturn caused by the pandemic.
It goes beyond what is actually happening in markets to positioning to capture value from markets. Yes, where you play on the smiling curve. If you are at the center, you do all the work and capture minimal value while those at the edges capture most of the values you have created.
Markets are inherently imperfect and companies work to improve the demand-supply relationship, pushing markets towards better equilibrium points, in a positive continuum towards perfection.You can fix big market frictions for DEMAND, and yet fail to capture any value. Today, hospitals are doing great things but health insurers are capturing most of the values, just as Amazon AWS and Microsoft Azure are using their cloud infrastructures to capture most values in the age of remote everything!
Where are you playing in markets?