5 ms·

The insurance system is itself a racket. Putting even more people into the insurance system only makes insurance companies richer, doesn't do much for the avera

by xlm1717 11y ago

The insurance system is itself a racket. Putting even more people into the insurance system only makes insurance companies richer, doesn't do much for the average American.

CamperBob2 11y ago
True, that. If pressed to name the single stupidest concept I've ever encountered in over forty years of life, I'd have to say it's the notion of selling "insurance" in a market where you know perfectly well that 99.9% of participants will eventually have to file expensive claims. Communism is way up there, along with smoking, and religion, and then there's the time that Circuit City tried to sell their own proprietary brand of self-destructing DVDs. But none of them can compare, in terms of sheer forehead-slapping stupidity, to the idea of "health insurance."
- frandroid 11y ago
  So what you're saying is that you're for communist single-payer healthcare, right?
  - CamperBob2 11y ago
    Well, it's certainly not a valid area for market economics to address, since everyone is forced to participate by virtue of being mortal. Single-payer is probably the optimum model for any advanced society, regardless of its political alignment. The thing is, our glorious capitalistic, market-based health care system already costs us as much as a single-payer system would. We just don't get the benefits.
    - prostoalex 11y ago
      > Single-payer is probably the optimum model for any advanced society If single payer system dispenses sufficient cash, the providers are happy. But if you look in places like Eastern Europe, they started with single payer, and it's still around, but the providers figured out they could set additional fees for higher priority, nicer treatment, less crowded hospital rooms, etc. At which point the incentives got switched to the point where single-payer doesn't get you much except a place in the back of the line and access to generics. How do you build a system that's single-payer and avoids corruption from providers' side? Providers grow to despise monopsony, and have market forces at their disposal.
  - pjc50 11y ago
    You left off the sarcasm tags.
    - frandroid 11y ago
      I know right? I got -2 for my trouble. :)
      - CamperBob2 11y ago
        I'm sure your implicit sarcasm tags weren't overlooked. If you're in the US like I am, the secret is to post opinions like these in the late afternoon or evening, West Coast time. The young, bootstrappy California crowd will mod you down reflexively before going to bed, but the Chinese won't care one way or another, and the Europeans will bail you out as soon as the sun comes up. Conversely, if you post in the morning in a US time zone, the story will be yesterday's news by the time the Europeans wake up the next day. You'll be left stranded at -4 with no salvation in sight. This would all be really funny if it weren't so predictable.
- baudehlo 11y ago
  I don't even understand how a progressive country like Canada can basically force people to take insurance because drugs (which if you have any health issue, you'll have to pay for) aren't covered by our universal healthcare system. It's ridiculous.
- api_or_ipa 11y ago
  Briefly, since I'm on mobile, I'll explain why I think you're completely wrong. Insurance doesn't seek to prevent the inevitable. That's not why we buy insurance. We buy insurance to insure against catastrophic risk. Would you rather flip a coin and lose your house, or flip 10,000 coins where each toss risks $100? Humans are risk averse, and there is plenty to say about the value of risk reduction. We buy insurance as a trade off: we know we're getting skimmed by the salesman, but our preference for reduced volatility means we gladly take a small certain loss instead of a possible huge one. On the other end, insurance sales men don't just sit on their obligations. They swap risk and find complementary risks: it's highly unlikely a hurricane in Florida will happen at the same time as an ice storm in the north east. Tally up all the insurance salesmen and you'll find they all aim to hold a bit of each other's risk. They, just like us, prefer to take a small certain loss than a possible disaster. This is the purpose of insurance: to dilute the 'pain' of singularly disasterous events across a large enough population so we collectively do better off. Health insurance is supposed to be the same way: you shouldn't need insurance for buying aspirin at Walgreens. $5 ain't gonna kill you. What will seriously damage you is an unforeseen large medical expense. As it stands, most people don't really need much in the way of serious medical care- it's true to say that a small population of people incur far higher medical expenses than the rest of society. This is exactly the purpose insurance was designed to deal with. I leave my discussion here. I recognize that there is something deeply unfair about leaving a population out in the cold. I agree, we ought to do something for them, but this is not a critique of our social policies at large. I mean to simply remark that insurance is exactly the financial vehicle that best serves to smooth out the consequences of unlikely yet expensive occurrences.
  - CamperBob2 11y ago
    I leave my discussion here. I recognize that there is something deeply unfair about leaving a population out in the cold. I agree, we ought to do something for them, but this is not a critique of our social policies at large. I mean to simply remark that insurance is exactly the financial vehicle that best serves to smooth out the consequences of unlikely yet expensive occurrences. The problem as I see it is that insurers swap and reinsure risk based on classifying the customers into various tranches. If I have a lot of accidents and tickets, I'll pay more for car insurance. I can expect the same fate if I buy a Corvette rather than a Civic. If my house has a thatched roof, I might have to pay more for fire insurance. If I live in Florida, I might pay more for flood insurance but less for earthquake insurance. If I smoke, I'll need to pay more for term life coverage. But my health expenses are correlated to nothing so much as my age. There's not that much I can do to change that. I can buy a different car, or a different house, or move to a different state, but no matter how healthy I strive to be, my last year of life is virtually certain to be more expensive than any other. Very possibly more expensive than all of the other years combined. My mother had great insurance, thanks to her civil-service career back in the 1950s and 1960s... and in the three weeks leading up to her death (of old age, more or less) in the 1990s, the medical bills probably consumed half the economic value she contributed during her lifetime. That was not a "risk"... it was practically a certainty. In the absence of a sudden cause of death. I'll probably experience the same thing, and you probably will too. So if "insurance" is just code for time-shifting the payments that the healthcare industry will eventually demand from almost all of us -- which it is -- how can that be the right economic model? It doesn't work anything like any other form of insurance. It might not be a racket, but it's also not a free market.
kevin_thibedeau 11y ago
They should have never let mutuals demutualize. That's when the criminal level exploitation kicked into high gear. Rather, there should be incentives for for-profit insurance to transform into a mutual.

by xlm1717 11y ago

The insurance system is itself a racket. Putting even more people into the insurance system only makes insurance companies richer, doesn't do much for the average American.

CamperBob2 11y ago

True, that. If pressed to name the single stupidest concept I've ever encountered in over forty years of life, I'd have to say it's the notion of selling "insurance" in a market where you know perfectly well that 99.9% of participants will eventually have to file expensive claims. Communism is way up there, along with smoking, and religion, and then there's the time that Circuit City tried to sell their own proprietary brand of self-destructing DVDs. But none of them can compare, in terms of sheer forehead-slapping stupidity, to the idea of "health insurance."

frandroid 11y ago
So what you're saying is that you're for communist single-payer healthcare, right?
- CamperBob2 11y ago
  Well, it's certainly not a valid area for market economics to address, since everyone is forced to participate by virtue of being mortal. Single-payer is probably the optimum model for any advanced society, regardless of its political alignment. The thing is, our glorious capitalistic, market-based health care system already costs us as much as a single-payer system would. We just don't get the benefits.
  - prostoalex 11y ago
    > Single-payer is probably the optimum model for any advanced society If single payer system dispenses sufficient cash, the providers are happy. But if you look in places like Eastern Europe, they started with single payer, and it's still around, but the providers figured out they could set additional fees for higher priority, nicer treatment, less crowded hospital rooms, etc. At which point the incentives got switched to the point where single-payer doesn't get you much except a place in the back of the line and access to generics. How do you build a system that's single-payer and avoids corruption from providers' side? Providers grow to despise monopsony, and have market forces at their disposal.
- pjc50 11y ago
  You left off the sarcasm tags.
  - frandroid 11y ago
    I know right? I got -2 for my trouble. :)
    - CamperBob2 11y ago
      I'm sure your implicit sarcasm tags weren't overlooked. If you're in the US like I am, the secret is to post opinions like these in the late afternoon or evening, West Coast time. The young, bootstrappy California crowd will mod you down reflexively before going to bed, but the Chinese won't care one way or another, and the Europeans will bail you out as soon as the sun comes up. Conversely, if you post in the morning in a US time zone, the story will be yesterday's news by the time the Europeans wake up the next day. You'll be left stranded at -4 with no salvation in sight. This would all be really funny if it weren't so predictable.
baudehlo 11y ago
I don't even understand how a progressive country like Canada can basically force people to take insurance because drugs (which if you have any health issue, you'll have to pay for) aren't covered by our universal healthcare system. It's ridiculous.
api_or_ipa 11y ago
Briefly, since I'm on mobile, I'll explain why I think you're completely wrong. Insurance doesn't seek to prevent the inevitable. That's not why we buy insurance. We buy insurance to insure against catastrophic risk. Would you rather flip a coin and lose your house, or flip 10,000 coins where each toss risks $100? Humans are risk averse, and there is plenty to say about the value of risk reduction. We buy insurance as a trade off: we know we're getting skimmed by the salesman, but our preference for reduced volatility means we gladly take a small certain loss instead of a possible huge one. On the other end, insurance sales men don't just sit on their obligations. They swap risk and find complementary risks: it's highly unlikely a hurricane in Florida will happen at the same time as an ice storm in the north east. Tally up all the insurance salesmen and you'll find they all aim to hold a bit of each other's risk. They, just like us, prefer to take a small certain loss than a possible disaster. This is the purpose of insurance: to dilute the 'pain' of singularly disasterous events across a large enough population so we collectively do better off. Health insurance is supposed to be the same way: you shouldn't need insurance for buying aspirin at Walgreens. $5 ain't gonna kill you. What will seriously damage you is an unforeseen large medical expense. As it stands, most people don't really need much in the way of serious medical care- it's true to say that a small population of people incur far higher medical expenses than the rest of society. This is exactly the purpose insurance was designed to deal with. I leave my discussion here. I recognize that there is something deeply unfair about leaving a population out in the cold. I agree, we ought to do something for them, but this is not a critique of our social policies at large. I mean to simply remark that insurance is exactly the financial vehicle that best serves to smooth out the consequences of unlikely yet expensive occurrences.
- CamperBob2 11y ago
  I leave my discussion here. I recognize that there is something deeply unfair about leaving a population out in the cold. I agree, we ought to do something for them, but this is not a critique of our social policies at large. I mean to simply remark that insurance is exactly the financial vehicle that best serves to smooth out the consequences of unlikely yet expensive occurrences. The problem as I see it is that insurers swap and reinsure risk based on classifying the customers into various tranches. If I have a lot of accidents and tickets, I'll pay more for car insurance. I can expect the same fate if I buy a Corvette rather than a Civic. If my house has a thatched roof, I might have to pay more for fire insurance. If I live in Florida, I might pay more for flood insurance but less for earthquake insurance. If I smoke, I'll need to pay more for term life coverage. But my health expenses are correlated to nothing so much as my age. There's not that much I can do to change that. I can buy a different car, or a different house, or move to a different state, but no matter how healthy I strive to be, my last year of life is virtually certain to be more expensive than any other. Very possibly more expensive than all of the other years combined. My mother had great insurance, thanks to her civil-service career back in the 1950s and 1960s... and in the three weeks leading up to her death (of old age, more or less) in the 1990s, the medical bills probably consumed half the economic value she contributed during her lifetime. That was not a "risk"... it was practically a certainty. In the absence of a sudden cause of death. I'll probably experience the same thing, and you probably will too. So if "insurance" is just code for time-shifting the payments that the healthcare industry will eventually demand from almost all of us -- which it is -- how can that be the right economic model? It doesn't work anything like any other form of insurance. It might not be a racket, but it's also not a free market.

kevin_thibedeau 11y ago

They should have never let mutuals demutualize. That's when the criminal level exploitation kicked into high gear. Rather, there should be incentives for for-profit insurance to transform into a mutual.