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> If a hospital can't charge more than the median value that in network patients are charged, why would you buy insurance? You would buy health insurance for t

> If a hospital can't charge more than the median value that in network patients are charged, why would you buy insurance? You would buy health insurance for the same reason anyone buys any kind of insurance (above legal minimums). Suppose a thousand people have a 1% chance of owing $10,000. Their EV is -$100. If a company offers insurance for $120, the company benefits by making $20 * 1000 and the individuals benefit by removing variance from their life.

michaelmrose 7y ago
A massive portion of medical expenses presently paid for by insurance are predictable costs that the insured knew going into the year. You can find affordable car insurance because your actual payout from your insurer is very likely zero this year. If your actual payout this year is certainly 10-100k this year depending on what actually goes wrong this year how on earth do you affordably insure that individual. Remember also that sickness stunts family income. Insurance only makes sense for large hard to predict expenses.
- singron 7y ago
  It makes sense for insurance to incentivize preventative care (e.g. by paying for it or requiring it), since it reduces future large claims. Otherwise it can be cheaper for individuals to forgo preventative care and wait for insurance to cover the large claims.
  - godelski 7y ago
    I wouldn't say our insurance system even remotely promotes preventive care. My insurance plan gives me one official a year and to teeth cleaning. That physical does not cover even basic testing that the doctor may want to do (this is ridiculous for people with family histories of problems). While I'd say this is better than just seeing a doctor when you're not okay, I wouldn't really call this preventive or actively incentivising people on the plan to get preventive treatment or testing (other than those things are already cheaper, but that's by the nature of the disease/problem not because the insurance is doing anything to incentivize this behavior)
  - perl4ever 7y ago
    "It makes sense for insurance to incentivize preventative care (e.g. by paying for it or requiring it), since it reduces future large claims." This is a popular thing to say, but the trouble with the logic is that the cost of preventative care, albeit small, is multiplied by everybody, while the cost of the large claims is multiplied by a small fraction of everybody. So whether it is actually profitable to prevent problems is very sensitive to the cost of the prevention, and the likelihood of the consequences without prevention. I think a lot of people are familiar with the scene in the movie Fight Club where the guy is talking about the cost-benefit equation for initiating an automotive recall. If prevention was automatically profitable, then that scene couldn't exist or make sense.
- perl4ever 7y ago
  Health insurance in the US generally has large deductibles in my experience, so they wouldn't normally be paying out. If you have no deductible, it's basically just your employer giving you a tax-exempt bonus, I think.
dsfyu404ed 7y ago
>If a company offers insurance for $120, the company benefits by making $20 * 1000 and the individuals benefit by removing variance from their life. More like they offer you the insurance for $99.99 and make money by having $99.99 * num_customers sized chunk of money to play with (i.e. invest into things). But yeah, your general comment is correct.

michaelmrose 7y ago

A massive portion of medical expenses presently paid for by insurance are predictable costs that the insured knew going into the year. You can find affordable car insurance because your actual payout from your insurer is very likely zero this year. If your actual payout this year is certainly 10-100k this year depending on what actually goes wrong this year how on earth do you affordably insure that individual. Remember also that sickness stunts family income. Insurance only makes sense for large hard to predict expenses.

singron 7y ago
It makes sense for insurance to incentivize preventative care (e.g. by paying for it or requiring it), since it reduces future large claims. Otherwise it can be cheaper for individuals to forgo preventative care and wait for insurance to cover the large claims.
- godelski 7y ago
  I wouldn't say our insurance system even remotely promotes preventive care. My insurance plan gives me one official a year and to teeth cleaning. That physical does not cover even basic testing that the doctor may want to do (this is ridiculous for people with family histories of problems). While I'd say this is better than just seeing a doctor when you're not okay, I wouldn't really call this preventive or actively incentivising people on the plan to get preventive treatment or testing (other than those things are already cheaper, but that's by the nature of the disease/problem not because the insurance is doing anything to incentivize this behavior)
- perl4ever 7y ago
  "It makes sense for insurance to incentivize preventative care (e.g. by paying for it or requiring it), since it reduces future large claims." This is a popular thing to say, but the trouble with the logic is that the cost of preventative care, albeit small, is multiplied by everybody, while the cost of the large claims is multiplied by a small fraction of everybody. So whether it is actually profitable to prevent problems is very sensitive to the cost of the prevention, and the likelihood of the consequences without prevention. I think a lot of people are familiar with the scene in the movie Fight Club where the guy is talking about the cost-benefit equation for initiating an automotive recall. If prevention was automatically profitable, then that scene couldn't exist or make sense.
perl4ever 7y ago
Health insurance in the US generally has large deductibles in my experience, so they wouldn't normally be paying out. If you have no deductible, it's basically just your employer giving you a tax-exempt bonus, I think.

dsfyu404ed 7y ago

>If a company offers insurance for $120, the company benefits by making $20 * 1000 and the individuals benefit by removing variance from their life. More like they offer you the insurance for $99.99 and make money by having $99.99 * num_customers sized chunk of money to play with (i.e. invest into things). But yeah, your general comment is correct.