6 ms·

"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."" Ag

by 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.
rictic 9y ago
I'm not sure I agree. If my insurance is on the hook for prostate cancer treatment, then they may expect a prostate exam to save them money, in which case they would have an incentive to pay for it.
- bduerst 9y ago
  Precisely why healthcare insurance is different. Preventative health saves more resources than reactive health (i.e. catching cancer early as opposed to when it display symptoms). One of the big problems of healthcare insurance in the U.S. is treating it like car insurance - a numbers game of reactions to accidents. Some insurance policies cover 100% of annual checkups but it still trains people to avoid going to the hospital.
  - epmaybe 9y ago
    Wouldn't insurance companies want people to get preventative care over reactive care, to lower their own operating costs? I know that Cigna is a big proponent of this, but I can't think of any others that do the same.
  - lutorm 9y ago
    It's not that different, though. Preventative measures show up in many insurance contexts (although I guess usually as a premium discount, not as being paid for by the insurer): fire alarms, and training for motorcyclists and pilots, come to mind.
    - bduerst 9y ago
      Except your other insurers do not pay for fire alarms, oil changes, etc., which usually don't cost hundreds to thousands of dollars each year.
pharrlax 9y ago
>If regular, predictable events are covered, it is not insurance. Regular, predictable events are not insurable. The problem in the U.S. is that we have this bizarre system where hospitals charge exorbitant prices and then insurers haggle them down to something halfway sane. So when you're paying for "insurance" you're (ideally) getting both catastrophic coverage (i.e. actual insurance) as well as access to a cartel that negotiates prices down from impossible heights on your behalf -- even for routine care. Since most people who regularly access medical care do so through these cartels, care providers have no incentive to make care more affordable than what they can get away with -- and insurers have no incentive to allow the price to drop either, since people being able to afford care outside the cartels would ultimately undercut their profits. This system is fundamentally unworkable. There's really no way to detangle the perverse incentives here in a way that will bring prices down to a level comparable with single payer healthcare.
- kronin 9y ago
  The ultimate reason behind hospitals attempting to charge exorbitant prices is due to Medicare and Medicaid paying under cost for services. Hospitals need to make that difference up somewhere. Surprisingly, if you remove the profit hospitals make on ancillary services like the gift shop, parking fees and investment income, they are losing money.
  - hockley 9y ago
    The ultimate reason behind hospitals attempting to charge exorbitant prices is that you have no choice but to pay.
  - maroonblazer 9y ago
    Isn't the overly-litigious nature of the U.S.A also why costs are so high? The malpractice insurance that docs and hospitals need to carry in order to defend themselves should they be sued is passed onto consumers in the form of higher medical costs. Or at least that's how someone once explained it to me. Is that not also a contributing factor?
hockley 9y ago
Payors are healthcare wholesalers. They can buy health services from physicians and facilities at about a third to a tenth of the cost you can because: 1) It's not life or death for them; and 2) They can buy in bulk
Ntrails 9y ago
> Agreed. If regular, predictable events are covered, it is not insurance. Regular, predictable events are not insurable Ignoring the US specific stuff, there's a reason that my private health insurance basically covers a regular medical screening - and it's not because the cost is in the premium. It's because that preventative strategy allowed them to reduce the size of claims from people who otherwise would find problems later and those would be more expensive. Imagine, if you will, a car insurer who can't turn around and refuse to pay out on claims where the car hadn't been serviced in 5 years. The tyres are bald, the break pads worn, etc. Now imagine that they offer a yearly basic road-worthiness check for free each year. They'll sell more policies (because it's free stuff, and they care) and have fewer claims caused by poorly maintained cars. The costs are being paid, clearly, but they come in part from changes in the claim profile that you would be paying for otherwise.

by rsync 9y ago

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.

rictic 9y ago

I'm not sure I agree. If my insurance is on the hook for prostate cancer treatment, then they may expect a prostate exam to save them money, in which case they would have an incentive to pay for it.

bduerst 9y ago
Precisely why healthcare insurance is different. Preventative health saves more resources than reactive health (i.e. catching cancer early as opposed to when it display symptoms). One of the big problems of healthcare insurance in the U.S. is treating it like car insurance - a numbers game of reactions to accidents. Some insurance policies cover 100% of annual checkups but it still trains people to avoid going to the hospital.
- epmaybe 9y ago
  Wouldn't insurance companies want people to get preventative care over reactive care, to lower their own operating costs? I know that Cigna is a big proponent of this, but I can't think of any others that do the same.
- lutorm 9y ago
  It's not that different, though. Preventative measures show up in many insurance contexts (although I guess usually as a premium discount, not as being paid for by the insurer): fire alarms, and training for motorcyclists and pilots, come to mind.
  - bduerst 9y ago
    Except your other insurers do not pay for fire alarms, oil changes, etc., which usually don't cost hundreds to thousands of dollars each year.

pharrlax 9y ago

>If regular, predictable events are covered, it is not insurance. Regular, predictable events are not insurable. The problem in the U.S. is that we have this bizarre system where hospitals charge exorbitant prices and then insurers haggle them down to something halfway sane. So when you're paying for "insurance" you're (ideally) getting both catastrophic coverage (i.e. actual insurance) as well as access to a cartel that negotiates prices down from impossible heights on your behalf -- even for routine care. Since most people who regularly access medical care do so through these cartels, care providers have no incentive to make care more affordable than what they can get away with -- and insurers have no incentive to allow the price to drop either, since people being able to afford care outside the cartels would ultimately undercut their profits. This system is fundamentally unworkable. There's really no way to detangle the perverse incentives here in a way that will bring prices down to a level comparable with single payer healthcare.

kronin 9y ago
The ultimate reason behind hospitals attempting to charge exorbitant prices is due to Medicare and Medicaid paying under cost for services. Hospitals need to make that difference up somewhere. Surprisingly, if you remove the profit hospitals make on ancillary services like the gift shop, parking fees and investment income, they are losing money.
- hockley 9y ago
  The ultimate reason behind hospitals attempting to charge exorbitant prices is that you have no choice but to pay.
- maroonblazer 9y ago
  Isn't the overly-litigious nature of the U.S.A also why costs are so high? The malpractice insurance that docs and hospitals need to carry in order to defend themselves should they be sued is passed onto consumers in the form of higher medical costs. Or at least that's how someone once explained it to me. Is that not also a contributing factor?

hockley 9y ago

Payors are healthcare wholesalers. They can buy health services from physicians and facilities at about a third to a tenth of the cost you can because: 1) It's not life or death for them; and 2) They can buy in bulk

Ntrails 9y ago

> Agreed. If regular, predictable events are covered, it is not insurance. Regular, predictable events are not insurable Ignoring the US specific stuff, there's a reason that my private health insurance basically covers a regular medical screening - and it's not because the cost is in the premium. It's because that preventative strategy allowed them to reduce the size of claims from people who otherwise would find problems later and those would be more expensive. Imagine, if you will, a car insurer who can't turn around and refuse to pay out on claims where the car hadn't been serviced in 5 years. The tyres are bald, the break pads worn, etc. Now imagine that they offer a yearly basic road-worthiness check for free each year. They'll sell more policies (because it's free stuff, and they care) and have fewer claims caused by poorly maintained cars. The costs are being paid, clearly, but they come in part from changes in the claim profile that you would be paying for otherwise.