9 ms·

Serious question: What is the alternative to an insurance? The worst case would be that everybody saves huge amounts of money on their own, not touching it, fo

by vog 10y ago

Serious question: What is the alternative to an insurance? The worst case would be that everybody saves huge amounts of money on their own, not touching it, for the case of a catastrophic event. If the catastrophe doesn't happen, or not as bad as feared, you wasted money. If the catastrophe is larger than expected, or happens when you are too young to have saved enough money, you are out of money despite the savings. Either way, this is the exact opposite of solidarity. Also, in that setting, not saving any money would be some kind of gamling, too. Solidarity means that if somebody had really bad luck, their peer will help them, because it could have happened to any of them. But that doesn't work well for large groups. On the other hand, we do want large groups to cover catastrophic events, because only then it is affordable. So we need some entity to coordinate their efforts: An insurance, a state, or something in between like a non-profit organization. Or, am I overlooking something here?

sverige 10y ago
I am a member of a community that takes care of its members. We are not perfect at it, but then neither are the more common social mechanisms like insurance. I recently had major surgery. The tremendous costs incurred are being paid. As fragmented as society is today, I can understand why people believe insurance is an absolute necessity, but I also believe that mechanisms like insurance contribute to and frequently cause that fragmentation. Insurance in particular warps normal market forces. For example, it seems likely to me that the very existence of huge pools of insurance money has contributed greatly to the hyperinflation in health care costs that has continued unabated and really unopposed for the last two generations. My mother told me recently that it cost a total of $80 for her to give birth to my sister in a hospital in 1959. I'm sure the billed cost for hospital birth today is many times that amount. That is an example of the great harm that insurance can do to society, as opposed to any perceived good.
- avar 10y ago
  > I am a member of a community that takes > care of its members. So you and your friends / family / community / church / cult / whatever are essentially implementing an insurance scheme, and yet you think insurance is a bad thing? > Insurance in particular warps normal > market forces. So would not having insurance and instead having everyone having to set up some ad-hoc insurance scheme as part of their own community.
  - vanderZwan 10y ago
    I suspect the implication is that he believes insurance as a market is a bad thing
  - ozim 10y ago
    Yes because insurance is instutionalized by for profit organizations that do not care about well beeing of those that buy insurance. Where church, family can be more down to earth and driven by moral obligations towards person that needs help. That is how I seen stuff working in asian societies, if you are not helping your fellows you quickly find out that no one will help you. Where for profit institution has all incentives to not help or help as little as they are obliged. They also can spend more on legal help which will protect them from spending. Predatory insurance companies are not insuring people who are likely to get sick. Family or church will provide help despite they know that person will have expensive treatment. Sad thing is that more and more people find themselves with no close family, organizations, because of how society in western countries (cities) develops.
    - tankenmate 10y ago
      World wide there are a large number of mutual organisations (member owned, democratic, member led organisations) that provide insurance. Indeed for a couple of hundred years this was the biggest segment of the insurance industry. If you don't want to hand over the gains to a private (or publicly) owned insurer then join an insurance mutual, or if one doesn't exist then start one.
    - valuearb 10y ago
      You are a little judgmental if you think that no insurance companies care about the welfare of their customers. If an insurance company doesn't care about customers, soon it has none. GEICO was founded because they though they could provide needed insurance cheaper direct through the mail, rather than through an expensive army of sales-people. They've saved their customers huge amounts of money over the last 60 years (for disclosure, I don't work for or use GEICO, I actually use USAA which is based on same premise). In church, you have a leader who is milking the flock for an unconscionable amount of tithing, and a bunch of people milking their religious connections to get more business. Of course they will all tell you to help each other out, it's part of how they scam the flock. And insurance can only work if it's priced according to it's risks. If you have an expensive illness or are likely to get one, it's actually selfish to think that an insurance company will take a massive loss to help you out. If you had purchased medical insurance from the company before you got sick, you'd still be covered and your costs/risks would have been part of a large pool that was correctly priced at the time. That's the problem with Obamacare, people wanting a free lunch. It destroyed the private insurance market by banning the consideration of prior health conditions, so now only sick people buy Obamacare. Before Obamacare I paid $400 a month for a $5,000 deductible coverage for my family. My first year of the ACA a similar plan cost $1,100 a month, second year $1,300 a month, and this year it's $1,800 a month. So now my family is on short term insurance and if I get sick it ends after 6 months. Plus I get to pay massive tax penalties for the privilege of having insurance that's not ACA approved. I'd like to go back to my old plan but the ACA banned it.
- rb666 10y ago
  You're living in a bubble. Almost all civilised countries have some form of single payer healthcare with for example required minimal insurance. It's the US that has hyperinflated healthcare simply because you do not regulate.
  - abtinf 10y ago
    > you do not regulate Inflation of healthcare costs is directly caused by government regulation.
    - frgtpsswrdlame 10y ago
      Perhaps you could explain this more? It seems to me that many first-world countries regulate much more than the United States (ie single payer or similar) and have lower costs.
      - seanp2k2 10y ago
        This. The result here is if you run out of money, sorry pal, you're worthless to society, game over, no one cares, literally go die.
      - Xixi 10y ago
        Not all regulation is born equal. When the single payer is also the regulator (which is the case for nationalized healthcare), regulation is introduced to limit the costs. When the regulator is being reelected thanks to the money given to it by the players, there's much more variance in the outcome of the regulations. There's a lot of bad regulations in the US, on top of my head: public hospitals are not allowed to negotiate the price of medical equipment, so pay 5-10x the price paid in France, for instance. Gross margin of health insurances is capped as a % of the underlying medical cost, so the higher the costs, the higher the profits. US healthcare system is simply crazy. I (and my family) have very very good coverage thanks to my current job, but I'm out of the country as soon as the situation change (not that I'd have much merit doing so: my visa doesn't allow me to change job, so if I'm fired or my employer collapse, we will have to leave anyway).
- nickonline 10y ago
  Medical insurance in the form that the USA likes to make it might be bad. Something like automotive insurance or disaster insurance is completely different.
- Guvante 10y ago
  Don't conflate health insurance with real forms of insurance. Health insurance is a weird beast which has an ancillary purpose of what insurance really is. Most notably health insurance was previously used as a tax free way to provide benefits to employees, has always provided access to phenomenally lower healthcare costs and now legally provides some fashion of free preventative care.
wu-ikkyu 10y ago
>The worst case would be that everybody saves huge amounts of money on their own, not touching it, for the case of a catastrophic event. If the catastrophe doesn't happen, or not as bad as feared, you wasted money. How is the money wasted if you still have it saved? Rather, it would have been wasted if you gave it to the insurance company instead of saving it yourself.
- ozim 10y ago
  Opportunity cost, inflation, maybe you would be able to invest in something that makes you 100x more wealthy instead of hoarding cash. This could make you so rich that you would not have to keep those savings but you would have "different" savings. You don't want to keep your emergency fund in non liquid investment or high risk one.
  - wu-ikkyu 10y ago
    There is always an opportunity cost incurred when personally saving up money for emergencies, but at least you have the principal if/when the emergency never occurs. However, if you had paid that money out to the insurance company rather than saved it yourself, then you lost both the opportunity cost and the principal.
    - contravariant 10y ago
      Those two aren't exactly equivalent, an insurance wouldn't cost nearly as much as the amount you need to save for emergencies. Saving money to mitigate an event that only has a 10% chance of happening requires 10 times as much money than you'd need on average. Even if an insurer asked twice as much as necessary that'd still leave you with 80% of the money free to spend, rather than 100% of it locked up in a savings account just in case.
      - seanp2k2 10y ago
        Ah, so we all give it to the insurance companies...who invest it for us and keep the profits from that for themselves? Why not just e.g. Maintain and ETrade account with enough to cover e.g. Vehicle minimums? In California at least, you can provide proof of financial responsibility in the form of a $35k deposit with the DMV or a $35k surety bond: https://www.dmv.ca.gov/portal/dmv/detail/pubs/brochures/fast_facts/ffvr18 https://www.dmv.ca.gov/portal/dmv/detail/pubs/brochures/fast...
VLM 10y ago
Bankruptcy is the alternative. There are legal system problems. The guy who loaned my mortgage has a good idea if I'll pay him back and even then its barely financially sustainable. Making my plumber go thru the same credit gyrations to figure out if I'm about to get into a car wreck and need to declare bankruptcy because I can't pay my car loan without a car and the side effect of that bankruptcy is the plumber gets stiffed as yet another unsecured creditor is asking too much to get a toilet installed and a bill sent. The cost of doing all services as cash and carry is too high especially for general contractors. Imagine a GC on a jobsite having to do payday at the top of every hour handing out cash to every sub. bankruptcy works as a social policy for financial disasters but applying them to other disasters is a mess. Its more disruptive to have a financial system clogged with bankruptcies due to wild fires destroying homes than to just balance it all out via insurance payments. You could kinda sorta work around it by exploding the concept of government disaster area financial giveaways to include fender bender car accidents but the government is incredibly inefficient compared to letting little insurance companies provide basically the same service. It would be like calling for a Marine Amphibious Assault Force because a neighbors dog pooped on my lawn. Banning insurance like behaviors like church food banks would be problematic. Things start scaling up and at some arbitrary point between soup kitchens and current day Catholic Financial Life Inc you'd have to draw a contentious line. Another similar solution to bankruptcy would be making past due accounts disappear rather than living forever. I had a girlfriend who was judgment proof and didn't make nearly enough money to get health insurance and wasn't set up under medicare either long before obamacare back when most 20-somethings spent some time uninsured. Anyway the collections people tried to collect, but she had nothing, not even worth garnishment, so eventually the debt just disappeared. Without collections agencies, if collecting were more expensive, the end result would likely be a lot of small businesses losing money and the destruction of the credit system oriented economy, which would probably be a net long term positive.

by vog 10y ago

sverige 10y ago

I am a member of a community that takes care of its members. We are not perfect at it, but then neither are the more common social mechanisms like insurance. I recently had major surgery. The tremendous costs incurred are being paid. As fragmented as society is today, I can understand why people believe insurance is an absolute necessity, but I also believe that mechanisms like insurance contribute to and frequently cause that fragmentation. Insurance in particular warps normal market forces. For example, it seems likely to me that the very existence of huge pools of insurance money has contributed greatly to the hyperinflation in health care costs that has continued unabated and really unopposed for the last two generations. My mother told me recently that it cost a total of $80 for her to give birth to my sister in a hospital in 1959. I'm sure the billed cost for hospital birth today is many times that amount. That is an example of the great harm that insurance can do to society, as opposed to any perceived good.

avar 10y ago
> I am a member of a community that takes > care of its members. So you and your friends / family / community / church / cult / whatever are essentially implementing an insurance scheme, and yet you think insurance is a bad thing? > Insurance in particular warps normal > market forces. So would not having insurance and instead having everyone having to set up some ad-hoc insurance scheme as part of their own community.
- vanderZwan 10y ago
  I suspect the implication is that he believes insurance as a market is a bad thing
- ozim 10y ago
  Yes because insurance is instutionalized by for profit organizations that do not care about well beeing of those that buy insurance. Where church, family can be more down to earth and driven by moral obligations towards person that needs help. That is how I seen stuff working in asian societies, if you are not helping your fellows you quickly find out that no one will help you. Where for profit institution has all incentives to not help or help as little as they are obliged. They also can spend more on legal help which will protect them from spending. Predatory insurance companies are not insuring people who are likely to get sick. Family or church will provide help despite they know that person will have expensive treatment. Sad thing is that more and more people find themselves with no close family, organizations, because of how society in western countries (cities) develops.
  - tankenmate 10y ago
    World wide there are a large number of mutual organisations (member owned, democratic, member led organisations) that provide insurance. Indeed for a couple of hundred years this was the biggest segment of the insurance industry. If you don't want to hand over the gains to a private (or publicly) owned insurer then join an insurance mutual, or if one doesn't exist then start one.
  - valuearb 10y ago
    You are a little judgmental if you think that no insurance companies care about the welfare of their customers. If an insurance company doesn't care about customers, soon it has none. GEICO was founded because they though they could provide needed insurance cheaper direct through the mail, rather than through an expensive army of sales-people. They've saved their customers huge amounts of money over the last 60 years (for disclosure, I don't work for or use GEICO, I actually use USAA which is based on same premise). In church, you have a leader who is milking the flock for an unconscionable amount of tithing, and a bunch of people milking their religious connections to get more business. Of course they will all tell you to help each other out, it's part of how they scam the flock. And insurance can only work if it's priced according to it's risks. If you have an expensive illness or are likely to get one, it's actually selfish to think that an insurance company will take a massive loss to help you out. If you had purchased medical insurance from the company before you got sick, you'd still be covered and your costs/risks would have been part of a large pool that was correctly priced at the time. That's the problem with Obamacare, people wanting a free lunch. It destroyed the private insurance market by banning the consideration of prior health conditions, so now only sick people buy Obamacare. Before Obamacare I paid $400 a month for a $5,000 deductible coverage for my family. My first year of the ACA a similar plan cost $1,100 a month, second year $1,300 a month, and this year it's $1,800 a month. So now my family is on short term insurance and if I get sick it ends after 6 months. Plus I get to pay massive tax penalties for the privilege of having insurance that's not ACA approved. I'd like to go back to my old plan but the ACA banned it.
rb666 10y ago
You're living in a bubble. Almost all civilised countries have some form of single payer healthcare with for example required minimal insurance. It's the US that has hyperinflated healthcare simply because you do not regulate.
- abtinf 10y ago
  > you do not regulate Inflation of healthcare costs is directly caused by government regulation.
  - frgtpsswrdlame 10y ago
    Perhaps you could explain this more? It seems to me that many first-world countries regulate much more than the United States (ie single payer or similar) and have lower costs.
    - seanp2k2 10y ago
      This. The result here is if you run out of money, sorry pal, you're worthless to society, game over, no one cares, literally go die.
    - Xixi 10y ago
      Not all regulation is born equal. When the single payer is also the regulator (which is the case for nationalized healthcare), regulation is introduced to limit the costs. When the regulator is being reelected thanks to the money given to it by the players, there's much more variance in the outcome of the regulations. There's a lot of bad regulations in the US, on top of my head: public hospitals are not allowed to negotiate the price of medical equipment, so pay 5-10x the price paid in France, for instance. Gross margin of health insurances is capped as a % of the underlying medical cost, so the higher the costs, the higher the profits. US healthcare system is simply crazy. I (and my family) have very very good coverage thanks to my current job, but I'm out of the country as soon as the situation change (not that I'd have much merit doing so: my visa doesn't allow me to change job, so if I'm fired or my employer collapse, we will have to leave anyway).
nickonline 10y ago
Medical insurance in the form that the USA likes to make it might be bad. Something like automotive insurance or disaster insurance is completely different.
Guvante 10y ago
Don't conflate health insurance with real forms of insurance. Health insurance is a weird beast which has an ancillary purpose of what insurance really is. Most notably health insurance was previously used as a tax free way to provide benefits to employees, has always provided access to phenomenally lower healthcare costs and now legally provides some fashion of free preventative care.

wu-ikkyu 10y ago

>The worst case would be that everybody saves huge amounts of money on their own, not touching it, for the case of a catastrophic event. If the catastrophe doesn't happen, or not as bad as feared, you wasted money. How is the money wasted if you still have it saved? Rather, it would have been wasted if you gave it to the insurance company instead of saving it yourself.

ozim 10y ago
Opportunity cost, inflation, maybe you would be able to invest in something that makes you 100x more wealthy instead of hoarding cash. This could make you so rich that you would not have to keep those savings but you would have "different" savings. You don't want to keep your emergency fund in non liquid investment or high risk one.
- wu-ikkyu 10y ago
  There is always an opportunity cost incurred when personally saving up money for emergencies, but at least you have the principal if/when the emergency never occurs. However, if you had paid that money out to the insurance company rather than saved it yourself, then you lost both the opportunity cost and the principal.
  - contravariant 10y ago
    Those two aren't exactly equivalent, an insurance wouldn't cost nearly as much as the amount you need to save for emergencies. Saving money to mitigate an event that only has a 10% chance of happening requires 10 times as much money than you'd need on average. Even if an insurer asked twice as much as necessary that'd still leave you with 80% of the money free to spend, rather than 100% of it locked up in a savings account just in case.
    - seanp2k2 10y ago
      Ah, so we all give it to the insurance companies...who invest it for us and keep the profits from that for themselves? Why not just e.g. Maintain and ETrade account with enough to cover e.g. Vehicle minimums? In California at least, you can provide proof of financial responsibility in the form of a $35k deposit with the DMV or a $35k surety bond: https://www.dmv.ca.gov/portal/dmv/detail/pubs/brochures/fast_facts/ffvr18 https://www.dmv.ca.gov/portal/dmv/detail/pubs/brochures/fast...

VLM 10y ago

Bankruptcy is the alternative. There are legal system problems. The guy who loaned my mortgage has a good idea if I'll pay him back and even then its barely financially sustainable. Making my plumber go thru the same credit gyrations to figure out if I'm about to get into a car wreck and need to declare bankruptcy because I can't pay my car loan without a car and the side effect of that bankruptcy is the plumber gets stiffed as yet another unsecured creditor is asking too much to get a toilet installed and a bill sent. The cost of doing all services as cash and carry is too high especially for general contractors. Imagine a GC on a jobsite having to do payday at the top of every hour handing out cash to every sub. bankruptcy works as a social policy for financial disasters but applying them to other disasters is a mess. Its more disruptive to have a financial system clogged with bankruptcies due to wild fires destroying homes than to just balance it all out via insurance payments. You could kinda sorta work around it by exploding the concept of government disaster area financial giveaways to include fender bender car accidents but the government is incredibly inefficient compared to letting little insurance companies provide basically the same service. It would be like calling for a Marine Amphibious Assault Force because a neighbors dog pooped on my lawn. Banning insurance like behaviors like church food banks would be problematic. Things start scaling up and at some arbitrary point between soup kitchens and current day Catholic Financial Life Inc you'd have to draw a contentious line. Another similar solution to bankruptcy would be making past due accounts disappear rather than living forever. I had a girlfriend who was judgment proof and didn't make nearly enough money to get health insurance and wasn't set up under medicare either long before obamacare back when most 20-somethings spent some time uninsured. Anyway the collections people tried to collect, but she had nothing, not even worth garnishment, so eventually the debt just disappeared. Without collections agencies, if collecting were more expensive, the end result would likely be a lot of small businesses losing money and the destruction of the credit system oriented economy, which would probably be a net long term positive.