Discussion

What’s Driving Rising Business Costs?

stanleykm: Our economy is an oroborous of middlemen all using tariffs and inflation as excuses to raise their prices

cc-d: That's us actually. It's pretty much all busy work at this point.

burmask: Insurance

bobthepanda: It's worth noting that at least a lot of the (non-health) insurance rises are driven by the reinsurance market responding to ever higher dollar amounts of claims annually due to disasters.

alephnerd: From TFA (becuase apparently HNers can't read): "Sharp Increases in the Cost of Insurance and Utilities"

anotherhue: State sponsored monopolies is my vote. It's a failure of government to have fewer than ten players (non-Trusting) in any industry.

kurthr: No accident. No move. No new vehicle.My car insurance went up 30%. Tried pricing around and it's not much better. Took an online "safety class" and got an 8% discount.

alephnerd: Yep! Both private and public insurance funds are nickel and diming wherever possible to make up for losses during the COVID pandemic which went on for 3 years.

alephnerd: This underestimates the SUI premium hikes following the COVID layoffs. Most states charge businesses a risk premium when employees are terminated, and given that most states UI and Workers Compensation funds are now insolvent [0] they fight tooth and nail to increase premiums.[0] - https://oui.doleta.gov/unemploy/docs/trustFundSolvReport2025...

epistasis: We really need to switch to a National Health Service style of administration of health costs. Right now we have Medicare which makes unilateral cost determinations, and doctors and hospitals end up accepting below-cost reimbursement that because how could they turn away all the retired people, but they end up subsidizing these unilateral decisions with money from private insurance payors (namely everybody who's working).Medicare is not technically be a monopsony, but it acts like one, and all the rest of us working folks end up paying the gap that rounds out the rest of the costs.We have a few generations that have had easy lives, where they had easy access to homes, to higher education, to wealth building, and decided to cut off access to the same as soon as they got it, while still living off the labor of current working people that are not even allowed to build new apartments next to these wealthy people while they pay for all their health care.The economy is a massive multiple player rpg with a point system economy that's fixed by federal and state laws, and it's been rigged both at the health care level and at every level to extract wealth for those that had it easy in the past.

kurthr: The ammount of shrinkflation in the last year is just stunning. Sometimes they bother to make the bottle/box/can incrementally imperceptibly smaller. Sometimes they just put less in. I track macros so I'm always looking at weights, and they're generically down 20%, while prices are up.

stego-tech: It’s a vicious cycle, but something needs to pump the brakes before the metaphorical engine explodes.* Stop tying healthcare to private insurers and employers. State-level single-payer models by default via fixed payroll deductions per employee, and let the government dictate or negotiate costs.* Re-work incentives for efficient utility usage. Incentivize self-generation for power through lower electric rates if a certain percentage of your consumption is generated on-site, for instance. Also, stop subsidizing huge consumers (like data centers) by raising customer rates, and keep expanding renewables and battery storage to depress costs in the long haul* Those insurance rates keep going up because healthcare continues rising and repair costs are increasingly more expensive or on par with replacement costs. Right to repair can lower auto/property insurance rates over time by making shit repairable, and liability/workers comp can begin coming down once healthcare is meaningfully addressed* Not being mentioned in the report (but raised by other commenters) is the general cost of living will continue driving wages higher (along with costs to replace those wages from injury or loss via insurance schemes) until and unless we actually address the underlying crises. This means lowering housing costs, lowering rent, lowering transit costs (either through cheaper cars or expanded public transport, ideally both), lowering food costs, lowering utility costs, lowering healthcare costs, lowering childcare costs (universal childcare or incentives for more single-earner/single-income households), etc.This report hits the highlights, but this is a huge issue that’s only going to get worse if we don’t start seriously addressing the myriad of root causes.

alephnerd: > Stop tying healthcare to private insurers and employers. State-level single-payer models by default via fixed payroll deductions per employee, and let the government dictate or negotiate costs.Most state-run workers compensation and Medicaid funds are already insolvent. Until that gets resolved, no attempt at single payer is possible.> stop subsidizing huge consumers (like data centers) by raising customer rates, and keep expanding renewables and battery storage to depress costs in the long haulMost DC projects in the US have already integrated renewable and battery storage systems thanks to Biden-era subsidizes and capacity building.Utilities are using data centers as a scapegoat, but the reality is most are stuck with fiscal liabilities due to COVID> Right to repair can lower auto/property insurance rates over time by making shit repairable, and liability/workers comp can begin coming down once healthcare is meaningfully addressedI support right-to-repair at a personal level as a tinkerer, but that wouldn't move the needle for the insurance problem.The big issue is the COVID pandemic era liabilities that continue to require to be paid out to this day.It's the same for workers comp as most workers comp funds are already insolvent.> Not being mentioned in the report (but raised by other commenters) is the general cost of living will continue driving wages higher...Becuase that's not something that dramatically impacts the bottom line in most industries.

stego-tech: This started decades before COVID, and has been summarily ignored for the entire time. We’re still insuring properties in areas we known sea level rise and climate change make uninsurable, we still refuse to let the government negotiate with or dictate rates, we still tie healthcare to employment, and we still let manufacturers sell top-tier/unrepairable vehicles while constantly discontinuing anything remotely affordable or repairable.The market isn’t going to correct itself now that we have enough data to know where to squeeze next, and how hard it can go. The only way to unwind this disaster is meaningful regulations and wholesale reforms.

alephnerd: Potentially. The issue is how do you manage solvency.State Medicaid and Workers Compensation funds were already insolvent before the 2024 election, and as such most states lack the fiscal overhead needed to fully support a fully funded single payer program today.It would end up the same way the NHS has in the UK.Vast swathes of the US are deeply fiscally troubled due to the impact of the COVID pandemic, and if that is not solved then we cannot even start to contemplate single payer.IMO austerity is not the answer.

epistasis: That makes sense for the "utilities" bucket, and to a small degree for the health insurance bucket, which are the biggest buckets linked.Utilities have had complete regulatory capture of most states' Public Utilities Commissions. It's blatant and obvious in places like Arizona that have open corruption in their elections and commission decisions. But in places like California it's far more hidden: the massive increase in cost of utilities is mostly from increased costs for the transmission and distribution grid, but CPUC has basically zero information for the public to understand why they keep on handing over more money to the big utilities. There definitely seems to be massive corruption but where is it and what is the actual mechanism? It's so well hidden and sophisticated that if there is corruption nobody understands what the F is going on.How do you replace a state-sponsored monopoly like a utility into something competitive? I don't know, when I learned econ 101 utilities were given as the example of a "natural" monopoly. But clearly that's not working out... maybe it just needs to be "state" rather than "state sponsored monopoly." The only other state sponsored monopoly we really have is the state itself. What does the public gain by allowing monopoly utilities that giving away the public's money to investors? The incentives are all off.

blargthorwars: Here in the Pacific Northwest, the catch-and-release of car thieves drove up costs for everyone. If I change my address away from the craziness, my policy drops by half.

labcomputer: The dirty little not-so-secret is that we pay doctors too much in the US. To the tune of several times as much as other large developed countries, like Germany, France and England. Medical care in the US will never ever be as cheap as those countries as long as the providers here earn 2x or 3x.That's partly because we have a doctor shortage here (medical schools collude to limit the number of new doctors created each year).Another part of the problem is the bloated administrative bureaucracy of hospitals in the US, we well as the fact that you aren't allowed to build a new hospital (and yes, this is actually true) unless you can prove that a hospital is needed in a particular community.With no competitive market for healthcare providers, nor a competitive market for places where they work, why shouldn't they extract as much as they can from the rest of us?They get away with it, too, because "medical doctor" is one of the highest trusted and most reputable professions. It's badthink to discuss these things in polite company.Until we fix those things, it simply doesn't matter how the insurance/payment system works. Every time I hear that we need to get rid of private insurers, nobody can seem to explain how doing that will save more than 10-15% despite the fact that insurance companies have a statutorily-limited profit margin.

underlipton: Financialization and the diffusion, across the economy, of the risk of dozens of major bad-bet nuclear detonations in the securities and commodities markets. The bets were never closed - not really - because the losses would have lead to immediate collapse. You're still paying for 2008 (and earlier debacles, and later ones, too). The economic output of the next few decades is already spoken for.

collabs: Let us not worry about "the whole economy". Yes, we know there is massive Executive overreach with tariffs and immigration. Yes, we know Congress is deadlocked to the point of being worse than useless. Yes, the SCOTUS also has its own problems with a majority of the public no longer having any faith in the judiciary. Lets start with things the FEDeral Reserve can fix, right here, right now.Narrow banking now.This is something the Federal Reserve can actually fix. Give every single US person (I am not a lawyer and I can't define what counts as a US person) a fee-free bank account with the Federal Reserve. Cut out the middle men of commercial banks. I think that alone will go a long way to drive down business costs.

lovich: What do you proscribe as a solution then?

mcs5280: Unhinged greed

testing22321: And in the process make every member of congress less more rich tomorrow.Never, ever going to happen.

collabs: Right, also turns out the regional banks of the FED are de facto owned by commercial banks. Why would they vote against their own interest if they can get money from the Federal Reserve at about three percent interest and then turn around and lend it at six percent?

burntpineapple: fee free banking + KYC + free instant transacting = ooo eee modern banking infra

Retric: Gong single payer is a drastic drop in the cost of healthcare as a percentage of GDP. There’s no fiscal advantage to the current system whatsoever.The core issue is it suddenly destroys a large number of companies and removes millions of unnecessary jobs form the economy.

shimman: Doctor salaries alone do not account for the hundreds of billions in profit that health insurance companies extract from us. You are right there is not a competitive market place because the US government cannot provide a universal plan for anyone. We all know the insurance companies would fold overnight as government welfare programs are extremely popular (just look at how much corporations love government welfare).Odd how the most popular programs in the US, social security + medicare, are the ones with zero means testing.Maybe let's not blame one of the few only noble professions left in our greed fueled world.Blame the hospital administrators or pharmaceutical reps before you start blaming doctors.

collabs: If we had a functioning Federal Government, we need this like yesterday. I know the EU and the China Mainland are showing ridiculous incompetence today but they won't be incompetent forever. Digital Euro and Digital RMB are coming, perhaps as soon as within a decade. We are essentially playing catch up with the US Dollar at this point. Fed Now is a good start but it really is not enough.What you said, fee free banking + KYC + free instant transacting is something we definitely need, even if it hurts JP Morgan Chase a little bit.

h4kunamata: Enshitification and the weird desire to please modern audience, are the only reasons.Until the early 2000s, things were built to last, solid build, simple.Now, even fridge has AI in it like what the actual f!!! Cars are tablets on wheels, Tesla and others, rather than just being cars.And this weird desire to please modern audience costing movies, products, videos games billions of dollars, closing studios thousands of jobs lost unable to make the investment back as consequences and yet, companies seem to do not read the room.

nradov: The shortage of physicians has nothing to do with medical schools. The immediate bottleneck is a shortage of residency slots. Every year, students graduate from medical schools but are unable to practice medicine because they don't get matched to a residency program. (Some do get matched the following year.) This is primarily due to limited funding from Medicare, although some residency slots are funded from other sources.https://savegme.org/I agree that certificate of need laws should be repealed to increase competition between healthcare facilities. That only impacts some states, not the whole country.https://nashp.org/state-tracker/50-state-scan-of-state-certi...

rayiner: It’s a red flag whenever someone talks about healthcare and they focus on health insurance companies and hospital administrators. It’s a sign that they’re working backwards from some ideological beef rather than looking at where the costs actually are.Health insurance companies have profit margins around 5% or less. Hospitals are half that. A Subway franchise has a higher profit margin. That’s just not where your healthcare dollars are going.