8 ms·

Before you go thinking about how this applies to healthcare... health insurance in the U.S. is different from other types of insurance and personally I think we

by asr 9y ago

Before you go thinking about how this applies to healthcare... health insurance in the U.S. is different from other types of insurance and personally I think we'd all be better off it were not even called "insurance." Health insurance is a mix of pre-paying for predictable and certain expenses with tax-free dollars, a transfer/entitlement system to ensure that more people can afford insurance (by design, your premium does not match your expected risk--either you are pooled with others at your employer, or your exchange account is subject to rating band requirements which means, for example, that in many states old people can only be charged 3X more than young people even though old people are likely to be much more than 3x more expensive to insure), and actual insurance. I'm not sure what percentage of your premium reflects the cost of actually insuring you against uncertain future health events, but it's far from 100%. This is an interesting article, and some of it applies to healthcare in the U.S., but much of it does not.

joshfraser 9y ago
If your insurance covers pre-existing conditions, it's not insurance anymore.
- klipt 9y ago
  The problem is that every condition becomes a "pre-existing condition" when you change insurer. And because insurance is tied to jobs, people are forced to change insurers frequently (whenever they change jobs, or whenever their employer changes providers). So you're on insurance A with no pre-existing conditions and get cancer. Next year your employer switches to insurance B. Now you have a "pre-existing condition" - is it fair to suddenly refuse to treat you? If that's the case, what's the point of having "insurance" at all?
  - dfabulich 9y ago
    If this were an "insurance" market, when you get diagnosed with a problem (cancer, say), the old insurance A would have to pay for the cancer treatment, and keep paying even if you leave the insurer. Any "new" conditions would be covered by your new insurer B (or not covered, if you didn't get new insurance), and insurer B would have the right to refuse to pay for pre-existing conditions because those would be covered by your old insurance A. But that isn't to say that if we had "insurance" life would be altogether better. Insurers would increase the premiums of people who beat cancer, because cancer has a habit of coming back. Quite likely anybody who beat cancer would be unable to afford insurance in the future.
- analog31 9y ago
  Not necessarily. In my view, all insurance is a creature of regulation. Insurance needs regulatory oversight to manage substantial moral hazards and arbitrages, otherwise nobody would buy it. The enabling regulations for health insurance could include provisions for managing the care of people who have pre-existing conditions.
  - joshfraser 9y ago
    That's not true. Look at insurance clubs in third world countries (funeral insurance clubs in South Africa for example). It's completely unregulated, but people band together to help amortize the cost/risk of rare financially devastating events.
    - analog31 9y ago
      That's fair, but I suspect that the insurance industry as we know it would be reduced to a microscopic fraction of itself without enabling regulations. Likewise for business in general without liability limitation and other corporate regulations.
- bduerst 9y ago
  Pre-existing conditions includes disorders that makes you more susceptible to diseases while not guaranteeing you'll get them. That's still insurance.
- sjwright 9y ago
  If you're talking about the pre-existing condition of broken leg, I agree with you. You should not be able to sign up for insurance after breaking your leg and get all the relevant care paid for. If you're talking about the pre-existing condition of fat and family history of heart disease, then I disagree.
  - joshfraser 9y ago
    It wasn't meant as a political statement. Instead I was commenting on how the terminology doesn't make sense. A single payer system would remove a lot of the perverse incentives we have with our current model that prioritizes profits over care.
rsync 9y ago
"health insurance in the U.S. is different from other types of insurance and personally I think we'd all be better off it were not even called "insurance."" Agreed. If regular, predictable events are covered, it is not insurance. Regular, predictable events are not insurable. Be cause math. Wellness checkups and scheduled preventative care and yearly mammograms/prostate are all fantastic things ... but they're not insurable. If someone is selling "insurance" for those things, you can be certain that you're paying 100% of the cost somewhere.
- kazinator 9y ago
  > If someone is selling "insurance" for those things, you can be certain that you're paying 100% of the cost somewhere. Nope; probably more like 150%. Except I hear that in America, those insurers can get a deal for you for the routine stuff compared to someone un-"insured". Pretty f'ed up.
- snaily 9y ago
  There's some nuance here: It might be that a rational insurance provider encourages their clients to do regular checkups for conditions that can be caught early and treated at a much lower cost. Now, the parent comment still is correct that that cost would have to be covered by premiums, but the premiums should still be equal or lower than they were if they didn't provide the checkups. In effect, in such cases the insurer could market the regular checkup as a benefit, but rationally if they could they'd rather make the checkups a policy obligation to preserve their margins. This is what aligned incentives looks like :)
  - Johnny555 9y ago
    There's some nuance here: It might be that a rational insurance provider encourages their clients to do regular checkups for conditions that can be caught early and treated at a much lower cost. I'm a member of Kaiser HMO, and they do just that -- they regularly notify me of screening tests I should be doing and they offer several ways to contact my doctor without actually seeing my doctor. If I'm not sure I need to go in to see him for that lump on my toe, I can call a triage nurse for advice, set up a phone call appointment with my doctor, or do a video chat with him. For my last annual checkup, my doctor emailed me, asked me to go in for some bloodwork, then a few days later, I went to visit the doctor and we talked over the results while he conducted the physical. I know some people don't like Kaiser, but I've had only good experiences with the system, and I love their electronic records system - I can view test results online, and if I'm referred to another doctor, the other doctor has instant access to my records.
epmaybe 9y ago
Isn't it still insurance though, as in insurance against tremendous healthcare costs without it? Maybe I'm misunderstanding, but I thought the definition of insurance was just protection from loss
- mbucc 9y ago
  Here's a great blog post on insurance and healthcare: https://healthcareinamerica.us/how-to-ask-good-questions-about-health-reform-725887002c03 https://healthcareinamerica.us/how-to-ask-good-questions-abo... I think insurance is not an accurate word for the health care industry. I, like you, think of that word as coverage for risk, and in fact that is how the industry started in sixteenth century Netherlands (mentioned in that blog post). But the business of insurance is about defining and measuring risk, and putting people into pools so that you can charge the riskier people more. I don't think that maps well to health care, especially when you consider how good DNA testing will be in a matter of years. "Yup, your kid is in a high-risk pool for leukemia. You get to pay $50,000 a year for family insurance instead of the normal $19,000." [The first number is made up.] Also, if you run an insurance business and someone with a pre-existing condition knocks on your door, their "market" rates will be their cost of treatment as their risk has become a certainty. If you don't think charging people based on your best knowledge of the risk is fair, then it is a government program, a forced redistribution of risk across a larger pool; not insurance.
  - epmaybe 9y ago
    I see what you're saying, thanks. Also, as far as I know health insurance companies can't charge different rates based on genetic testing. How would this be different, than, say, laws preventing car insurance companies from charging different premiums based on race?
colanderman 9y ago
Don't forget collective bargaining against hospitals. [1] [1] https://en.wikipedia.org/wiki/Chargemaster https://en.wikipedia.org/wiki/Chargemaster

by asr 9y ago

joshfraser 9y ago

If your insurance covers pre-existing conditions, it's not insurance anymore.

klipt 9y ago
The problem is that every condition becomes a "pre-existing condition" when you change insurer. And because insurance is tied to jobs, people are forced to change insurers frequently (whenever they change jobs, or whenever their employer changes providers). So you're on insurance A with no pre-existing conditions and get cancer. Next year your employer switches to insurance B. Now you have a "pre-existing condition" - is it fair to suddenly refuse to treat you? If that's the case, what's the point of having "insurance" at all?
- dfabulich 9y ago
  If this were an "insurance" market, when you get diagnosed with a problem (cancer, say), the old insurance A would have to pay for the cancer treatment, and keep paying even if you leave the insurer. Any "new" conditions would be covered by your new insurer B (or not covered, if you didn't get new insurance), and insurer B would have the right to refuse to pay for pre-existing conditions because those would be covered by your old insurance A. But that isn't to say that if we had "insurance" life would be altogether better. Insurers would increase the premiums of people who beat cancer, because cancer has a habit of coming back. Quite likely anybody who beat cancer would be unable to afford insurance in the future.
analog31 9y ago
Not necessarily. In my view, all insurance is a creature of regulation. Insurance needs regulatory oversight to manage substantial moral hazards and arbitrages, otherwise nobody would buy it. The enabling regulations for health insurance could include provisions for managing the care of people who have pre-existing conditions.
- joshfraser 9y ago
  That's not true. Look at insurance clubs in third world countries (funeral insurance clubs in South Africa for example). It's completely unregulated, but people band together to help amortize the cost/risk of rare financially devastating events.
  - analog31 9y ago
    That's fair, but I suspect that the insurance industry as we know it would be reduced to a microscopic fraction of itself without enabling regulations. Likewise for business in general without liability limitation and other corporate regulations.
bduerst 9y ago
Pre-existing conditions includes disorders that makes you more susceptible to diseases while not guaranteeing you'll get them. That's still insurance.
sjwright 9y ago
If you're talking about the pre-existing condition of broken leg, I agree with you. You should not be able to sign up for insurance after breaking your leg and get all the relevant care paid for. If you're talking about the pre-existing condition of fat and family history of heart disease, then I disagree.
- joshfraser 9y ago
  It wasn't meant as a political statement. Instead I was commenting on how the terminology doesn't make sense. A single payer system would remove a lot of the perverse incentives we have with our current model that prioritizes profits over care.

rsync 9y ago

"health insurance in the U.S. is different from other types of insurance and personally I think we'd all be better off it were not even called "insurance."" Agreed. If regular, predictable events are covered, it is not insurance. Regular, predictable events are not insurable. Be cause math. Wellness checkups and scheduled preventative care and yearly mammograms/prostate are all fantastic things ... but they're not insurable. If someone is selling "insurance" for those things, you can be certain that you're paying 100% of the cost somewhere.

kazinator 9y ago
> If someone is selling "insurance" for those things, you can be certain that you're paying 100% of the cost somewhere. Nope; probably more like 150%. Except I hear that in America, those insurers can get a deal for you for the routine stuff compared to someone un-"insured". Pretty f'ed up.
snaily 9y ago
There's some nuance here: It might be that a rational insurance provider encourages their clients to do regular checkups for conditions that can be caught early and treated at a much lower cost. Now, the parent comment still is correct that that cost would have to be covered by premiums, but the premiums should still be equal or lower than they were if they didn't provide the checkups. In effect, in such cases the insurer could market the regular checkup as a benefit, but rationally if they could they'd rather make the checkups a policy obligation to preserve their margins. This is what aligned incentives looks like :)
- Johnny555 9y ago
  There's some nuance here: It might be that a rational insurance provider encourages their clients to do regular checkups for conditions that can be caught early and treated at a much lower cost. I'm a member of Kaiser HMO, and they do just that -- they regularly notify me of screening tests I should be doing and they offer several ways to contact my doctor without actually seeing my doctor. If I'm not sure I need to go in to see him for that lump on my toe, I can call a triage nurse for advice, set up a phone call appointment with my doctor, or do a video chat with him. For my last annual checkup, my doctor emailed me, asked me to go in for some bloodwork, then a few days later, I went to visit the doctor and we talked over the results while he conducted the physical. I know some people don't like Kaiser, but I've had only good experiences with the system, and I love their electronic records system - I can view test results online, and if I'm referred to another doctor, the other doctor has instant access to my records.

epmaybe 9y ago

Isn't it still insurance though, as in insurance against tremendous healthcare costs without it? Maybe I'm misunderstanding, but I thought the definition of insurance was just protection from loss

mbucc 9y ago
Here's a great blog post on insurance and healthcare: https://healthcareinamerica.us/how-to-ask-good-questions-about-health-reform-725887002c03 https://healthcareinamerica.us/how-to-ask-good-questions-abo... I think insurance is not an accurate word for the health care industry. I, like you, think of that word as coverage for risk, and in fact that is how the industry started in sixteenth century Netherlands (mentioned in that blog post). But the business of insurance is about defining and measuring risk, and putting people into pools so that you can charge the riskier people more. I don't think that maps well to health care, especially when you consider how good DNA testing will be in a matter of years. "Yup, your kid is in a high-risk pool for leukemia. You get to pay $50,000 a year for family insurance instead of the normal $19,000." [The first number is made up.] Also, if you run an insurance business and someone with a pre-existing condition knocks on your door, their "market" rates will be their cost of treatment as their risk has become a certainty. If you don't think charging people based on your best knowledge of the risk is fair, then it is a government program, a forced redistribution of risk across a larger pool; not insurance.
- epmaybe 9y ago
  I see what you're saying, thanks. Also, as far as I know health insurance companies can't charge different rates based on genetic testing. How would this be different, than, say, laws preventing car insurance companies from charging different premiums based on race?

colanderman 9y ago

Don't forget collective bargaining against hospitals. [1] [1] https://en.wikipedia.org/wiki/Chargemaster https://en.wikipedia.org/wiki/Chargemaster