40 ms·

It won't, because the insurance doesn't become worthless. It only means that, if you were able to get it, you're less likely to need a payout.

• tomxor 7y ago
  I'm offering an extreme dichotomy to highlight the effect... reality will not be so extreme but the value difference will be great enough to cause competition (self correction). Another aspect of a company focused on reducing payout by selection is that they will probably be less prepared to support customers who actually need help, it all feeds into an opportunity for competition as the product of the gambling insurer has less and less value. It boils down to two quite opposed principles: 1. I want to try to prevent payout and focus on taking home as much of the sales as possible. 2. I want to try to spread the cost of health care and provide an honest and valuable service. It's hard do both well. I'd rather be in boat #2 in case I actually need help i'd trust them to be to be more capable of providing it since they are expecting it rather than trying to avoid it. If enough people realise this, they will all head for option 2, and option 1s will have to change their principles or pivot into some sort of health vetting service.
  • deogeo 7y ago
    Looks to me like an insurer that manages to discriminate who they insure, but pays out as well or better than non-discriminating insurers (say, because they have more money, because they need to pay less often), will come out on top. I don't think the principles of trying to maximize profit, and paying out insurance, are so acutely opposed they could not coexist in the same company. It's just the conflict between cutting costs and maintaining quality - something almost all companies face.