Quote:
Originally posted by bilmore
So much confusion, so little time.
Corporations generally behave rationally. You seem to be describing a business model that would be profitable. But, if you look over the various states' insurance ennvironments, you'll see that, in many cases, insurers have completely pulled out of various state markets.
This would make no sense in your model. It does make sense if you consider that a legal environment can mean the difference between the possibility of profit, or not. If an insurer can manipulate the doctors, and gouge higher premiums than what is called for, why would they walk away from that business?
Answer is, they don't. They walk away from guaranteed losers.
As to "breaching the contract" - consider that a state's legal environment is one factor in the risk picture.
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I don't see insurers leaving certain markets entirely at all. They just stop offering good coverage and begin offering substandard coverage through their lesser quality-line offering subsidiaries. Or they form new coverage programs with each other and reinsurers. They don't walk away from easy money; they just make it more lucrative, by offering less under other brand names. This gives them the ability to say "We had to leave because of the lawsuit crisis" while at the same time making even more money in the market they profess to have left.
There are no guaranteed losers. They drop a doc knowing full well there's a 70% chance they can pick him at the same premium offering less thru a related entity.
Its all the same players in the industry. There aren't any "brand new" insurers coming on scene. They're just playing one massive shell game.
