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Indeed, same with healthcare. For example here in the Netherlands there's universal (mandatory) healthcare. The basic premium for full standard coverage (which

Indeed, same with healthcare. For example here in the Netherlands there's universal (mandatory) healthcare. The basic premium for full standard coverage (which is pretty much anything you'd want that affects health) is about $150 a month regardless of age. So me (30) and my dad (75) pay the same amount. You can see here [0] that I'm averaging about 2k per year in costs and he's averaging about 12k a year in costs, or 6x the amount. For us it's actually closer to 0 vs 20k. No difference in premiums. Of course it must be noted that the state pays something like 80% of it through taxes which are progressive, my dad on low-income pays essentially nothing, I pay at high-income essentially everything between us. It makes sense to set a high deductible for me, that's the only way to get a discount on the premiums. I'm super happy with this system, don't get me wrong. But financially it makes no sense, and if the state allowed it, our premiums would be massively different. (mine much lower, his much higher to the extent of completely unaffordability). The life insurance market is interesting in that at a young age the rates are really tiny (at least in certain countries, for term-coverage), like the cost of an expensive coffee or a couple sandwiches per month, for those ultra-rare early-death risks. I guess people just aren't that price sensitive around $5 or $15 a month, when insuring against half a million in coverage. Maybe that explains it? Otherwise you'd think the first competitor to offer insurance at say 5x the actuary table instead of 10x would just simply take the market, while still massively profiting. [0] https://www.rivm.nl/sites/default/files/2018-11/kosten%20van%20ziekten.jpg https://www.rivm.nl/sites/default/files/2018-11/kosten%20van...

rocqua 5y ago
I dislike our deductible choice. It forces the poor to choose between less income and "I am in severe pain but cannot afford specialist care". We have countermeasures like visits to tge GP being free. But I know of at least one person with complex mental illness who literally cannot afford the deductible it would take to get treatment. I think the deductible should be income dependent, and higher incomes should have the option to pay more premiums for less deductible. That amounts to a tax where people can pick their risk-appetite. Important here is where this kicks in. Place the transition at too low an income, and the extra tax here starts kicking in just as the toeslagen drop and you get marginal rax rates above 100% (in more cases than we already do)
- IkmoIkmo 5y ago
  Well, the maximum mandatory deductible is about 30 euros a month. It's not nothing, but it's also hard to find many situations where it's completely unaffordable, I'd guess this would amount to a small number of people. Those people all get 'zorgtoeslag', which covered virtually the entire premium of 100 a month, leaving only that deductible which can be paid monthly. And if that can't be paid, municipalities have all kinds of programs (e.g. bijzondere bijstand). It can be tricky to navigate the system, but the amount of people who cannot access care due to the deductible after exhausting all options really is quite low. Having no deductible at all creates moral hazard problems for the other 17 million people in the Netherlands, which increases the total costs going towards ineffective care, and thus total premiums, making healthcare potentially less affordable. It's a tricky pros/cons assessment that must be done, but I have to say the current deductible set-up isn't too crazy to me. What I would like to see are more deductible exceptions, particularly for issues with a low-moral hazard chance. For example my dad is on chronic medication for two decades, and will likely be for the rest of his life. Deductibles make no real sense here as there's no moral hazard issue. > I think the deductible should be income dependent, and higher incomes should have the option to pay more premiums for less deductible. That amounts to a tax where people can pick their risk-appetite. Well it's to start with a tax on income. I think that's completely fine, but we already have that massively. About 80% of healthcare costs in the Netherlands are paid by the state. In the Netherlands the richest 25% about 77 %of the income taxes. [0] The lowest 25% pay 1.3%. In other words, effectively the vast majority of healthcare costs are already income-based. The second part is people setting their risk-appetite, but that has big adverse selection issues. There's massive correlation between health and income. If you'd split the population in two groups, low-income vs high-income, and let the market offer a competitive rate, the true premiums for the rich would be much lower than for the poor. This makes healthcare unaffordable for those who really need it. You can create a similar situation of having different insurance rates for rich/poor by having the same standard premium, but adjustable deductibles. Letting people set deductibles always increases insurance premiums for those who need insurance, which is why the Netherlands caps it at something like 800 euros. If you'd uncap it you'd find a lot of rich, healthy folks essentially self-insure, which means their premiums go down and the premiums for the unhealthy and poor tend to go up. [0] https://opendata.cbs.nl/statline/#/CBS/nl/dataset/70991ned/table?fromstatweb https://opendata.cbs.nl/statline/#/CBS/nl/dataset/70991ned/t...

rocqua 5y ago

I dislike our deductible choice. It forces the poor to choose between less income and "I am in severe pain but cannot afford specialist care". We have countermeasures like visits to tge GP being free. But I know of at least one person with complex mental illness who literally cannot afford the deductible it would take to get treatment. I think the deductible should be income dependent, and higher incomes should have the option to pay more premiums for less deductible. That amounts to a tax where people can pick their risk-appetite. Important here is where this kicks in. Place the transition at too low an income, and the extra tax here starts kicking in just as the toeslagen drop and you get marginal rax rates above 100% (in more cases than we already do)

IkmoIkmo 5y ago
Well, the maximum mandatory deductible is about 30 euros a month. It's not nothing, but it's also hard to find many situations where it's completely unaffordable, I'd guess this would amount to a small number of people. Those people all get 'zorgtoeslag', which covered virtually the entire premium of 100 a month, leaving only that deductible which can be paid monthly. And if that can't be paid, municipalities have all kinds of programs (e.g. bijzondere bijstand). It can be tricky to navigate the system, but the amount of people who cannot access care due to the deductible after exhausting all options really is quite low. Having no deductible at all creates moral hazard problems for the other 17 million people in the Netherlands, which increases the total costs going towards ineffective care, and thus total premiums, making healthcare potentially less affordable. It's a tricky pros/cons assessment that must be done, but I have to say the current deductible set-up isn't too crazy to me. What I would like to see are more deductible exceptions, particularly for issues with a low-moral hazard chance. For example my dad is on chronic medication for two decades, and will likely be for the rest of his life. Deductibles make no real sense here as there's no moral hazard issue. > I think the deductible should be income dependent, and higher incomes should have the option to pay more premiums for less deductible. That amounts to a tax where people can pick their risk-appetite. Well it's to start with a tax on income. I think that's completely fine, but we already have that massively. About 80% of healthcare costs in the Netherlands are paid by the state. In the Netherlands the richest 25% about 77 %of the income taxes. [0] The lowest 25% pay 1.3%. In other words, effectively the vast majority of healthcare costs are already income-based. The second part is people setting their risk-appetite, but that has big adverse selection issues. There's massive correlation between health and income. If you'd split the population in two groups, low-income vs high-income, and let the market offer a competitive rate, the true premiums for the rich would be much lower than for the poor. This makes healthcare unaffordable for those who really need it. You can create a similar situation of having different insurance rates for rich/poor by having the same standard premium, but adjustable deductibles. Letting people set deductibles always increases insurance premiums for those who need insurance, which is why the Netherlands caps it at something like 800 euros. If you'd uncap it you'd find a lot of rich, healthy folks essentially self-insure, which means their premiums go down and the premiums for the unhealthy and poor tend to go up. [0] https://opendata.cbs.nl/statline/#/CBS/nl/dataset/70991ned/table?fromstatweb https://opendata.cbs.nl/statline/#/CBS/nl/dataset/70991ned/t...