This is a perverse incentive. If I'm running an insurance company and my goal is to maximize absolute profit, how do I do that when my profit margin is capped by law in this manner?
Well, I certainly don't have an incentive to reduce healthcare costs; quite the opposite. 20% of a larger cost leaves me with more profit, and most of my customers won't drop my service. It's required by law and subsidized in a lot of cases.
This is why there are marketplaces where you have to compete against other insurers. And companies in particular will evaluate their group plans critically.
Well, I certainly don't have an incentive to reduce healthcare costs; quite the opposite. 20% of a larger cost leaves me with more profit, and most of my customers won't drop my service. It's required by law and subsidized in a lot of cases.