If you’re a health insurer, and you’re running out of cash to cover your costs, you may want to consider offering more generous insurance plans.
You might be able to negotiate with your insurers to offer plans with lower costs, but if you do, the insurer could be able increase your profit.
A recent study found that if you can increase the number of patients insured with a policy, your insurer could earn an additional $10 to $20 a year, depending on the number you insure.
But even with those extra dollars, if your insurer’s profits go down, you might be left with less money to pay for other costs.
If you’re wondering what the difference is between a profitable insurance company and one that’s not profitable, you’re in luck: the difference between a profit maximizing and a profit-marginally-effective insurer is a matter of whether you’re paying for the insurance itself or your costs.
This infographic by the New York Times breaks down profit-margin concepts and their related terms.