4 ms·

Would you also describe auto insurance and home insurance as rent seeking? Because it sounds like the same thing.

eviltandem 7y ago
They could be. I'd argue the real problem is competition. A person buys their car insurance. The purchaser is the customer, there are lots of competing companies, and prices are good as a result. In health care typically your employer is the customer. The doctor and/or hospital also are customers. The insurance company is itself a customer. Unlike - say - car repair you don't get a good estimate up front so it's hard to shop. Many times there aren't many good alternatives anyway. If you don't like a choice one of the actual customers made it doesn't matter because you have no real purchasing power anywhere in the system.
- dsfyu404ed 7y ago
  For almost all non-emergency care you can get a good cost estimate up front though. Even for much "emergency" care it wouldn't be hard to provide an estimate and then stick withing a certain % of that. Stuff like stitches, pulling fish hooks out of people and all sorts of other "routine" things that are uncommon individually but are common from the perspective of the emergency room can also be estimated accurately. Chronic illnesses and long term care are what's really expensive.
learc83 7y ago
Health insurance isn't actually insurance though (at least not only insurance), it's more like prepaid medical care.
- athenot 7y ago
  Yes, it IS insurance. Its value is not to reimburse you for routine visits or minor procedures, it's to prevent you from going bankrupt if you get cancer or any similarly expensive condition to treat. A useful way to look at it is the cost to treat each condition multiplied by your odds of getting that condition. That's also why pre-ACA, insurers would discriminate against patients with pre-existing conditions: the cost to them was nearly guaranteed to happen as the odds were close to 1. If you were to start a health insurance company and only have a small pool of customers, you'd essentially be gambling as the variance is too unpredictable. (In reality, you'd be re-insured but that's a different story.) That is why a large pool of patients makes the most sense, and ideally, if the { pool of patients } = { country population } then you can rely on Public Health stats for risk modeling. And if you're not beholden to shareholders demanding a profit/dividends, there are some efficiencies that can be gained.
  - learc83 7y ago
    >Its value is not to reimburse you for routine visits or minor procedures, it's to prevent you from going bankrupt if you get cancer or any similarly expensive condition to treat. Notice the parenthetical where I said it's not only insurance. Clearly the value of most health insurance plans isn't only to cover catastrophic illnesses. Look at the difference in cost between catastrophic illness plans or a very high deductible plan and the cost of a more traditional plan. A huge chunk of your premium and therefore a huge chunk of the value is to pay for routine and less than catastrophic medical costs.

They could be. I'd argue the real problem is competition. A person buys their car insurance. The purchaser is the customer, there are lots of competing companies, and prices are good as a result. In health care typically your employer is the customer. The doctor and/or hospital also are customers. The insurance company is itself a customer. Unlike - say - car repair you don't get a good estimate up front so it's hard to shop. Many times there aren't many good alternatives anyway. If you don't like a choice one of the actual customers made it doesn't matter because you have no real purchasing power anywhere in the system.

dsfyu404ed 7y ago
For almost all non-emergency care you can get a good cost estimate up front though. Even for much "emergency" care it wouldn't be hard to provide an estimate and then stick withing a certain % of that. Stuff like stitches, pulling fish hooks out of people and all sorts of other "routine" things that are uncommon individually but are common from the perspective of the emergency room can also be estimated accurately. Chronic illnesses and long term care are what's really expensive.

learc83 7y ago

Health insurance isn't actually insurance though (at least not only insurance), it's more like prepaid medical care.

athenot 7y ago
Yes, it IS insurance. Its value is not to reimburse you for routine visits or minor procedures, it's to prevent you from going bankrupt if you get cancer or any similarly expensive condition to treat. A useful way to look at it is the cost to treat each condition multiplied by your odds of getting that condition. That's also why pre-ACA, insurers would discriminate against patients with pre-existing conditions: the cost to them was nearly guaranteed to happen as the odds were close to 1. If you were to start a health insurance company and only have a small pool of customers, you'd essentially be gambling as the variance is too unpredictable. (In reality, you'd be re-insured but that's a different story.) That is why a large pool of patients makes the most sense, and ideally, if the { pool of patients } = { country population } then you can rely on Public Health stats for risk modeling. And if you're not beholden to shareholders demanding a profit/dividends, there are some efficiencies that can be gained.
- learc83 7y ago
  >Its value is not to reimburse you for routine visits or minor procedures, it's to prevent you from going bankrupt if you get cancer or any similarly expensive condition to treat. Notice the parenthetical where I said it's not only insurance. Clearly the value of most health insurance plans isn't only to cover catastrophic illnesses. Look at the difference in cost between catastrophic illness plans or a very high deductible plan and the cost of a more traditional plan. A huge chunk of your premium and therefore a huge chunk of the value is to pay for routine and less than catastrophic medical costs.