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I wanted to post this essay to HN because I think the specific mechanism of how averages hide highs and lows is of interest to a technology community. Vouchers

by TimPC 5y ago

I wanted to post this essay to HN because I think the specific mechanism of how averages hide highs and lows is of interest to a technology community. Vouchers are one instance of this problem but I am confident there are many others hiding in plain sight.

fundad 5y ago
Thanks. Math illiteracy aside, the effort to privatize public schools is as old as integration. They’re not tricking people aside from decades of attacks against all social services except policing.
sharemywin 5y ago
I'm sure the medical system works the same way. In general, it's using averages and then being able to filter out people. Investors work that way too. Let the entrepreneur take the largest risk upfront and then pluck the highest things likely to succeed.
- TimPC 5y ago
  I’d love to hear which aspects of the medical system you think work this way. I’m looking for other examples to write the broader essay on understanding averages but I’m not completely sure which particular issue you mean here.
  - _aavaa_ 5y ago
    Medical insurance is the obvious example that comes to mind. If everyone is forced the pay for medical insurance (e.g. everyone is taxed for it), then the net results is the same, the healthy people subsidise those the sick. Which is why in countries where medical care is not guaranteed through taxes (e.g. USA) insurance companies try to find out about any pre-existing conditions before they give you a rate; they try to figure out if you're in the healthy group which would otherwise be subsidizing the sick people, or you are one of those sick people. I say that without any value judgements one way or the other. The same is true with other forms of insurance. See broadly Adverse Selection, https://en.wikipedia.org/wiki/Adverse_selection https://en.wikipedia.org/wiki/Adverse_selection.
  - bsder 5y ago
    Note how few "indemnity" health plans we have anymore in the US--everything is now HMO/PPO. This was the mechanism. The HMO/PPOs were wildly more profitable--because they picked off the "below average cost" patients leaving the "above average cost" people to the indemnity plans. Of course, then the indemnity plans collapsed under the weight. And then the HMO/PPO systems created "recission groups" to prevent having to take them on. And then it took until the Affordable Care Act forced the coverage of "preexisting conditions" to unwind the bullshit that the HMO/PPO systems caused in the first place.

by TimPC 5y ago

fundad 5y ago

Thanks. Math illiteracy aside, the effort to privatize public schools is as old as integration. They’re not tricking people aside from decades of attacks against all social services except policing.

sharemywin 5y ago

I'm sure the medical system works the same way. In general, it's using averages and then being able to filter out people. Investors work that way too. Let the entrepreneur take the largest risk upfront and then pluck the highest things likely to succeed.

TimPC 5y ago
I’d love to hear which aspects of the medical system you think work this way. I’m looking for other examples to write the broader essay on understanding averages but I’m not completely sure which particular issue you mean here.
- _aavaa_ 5y ago
  Medical insurance is the obvious example that comes to mind. If everyone is forced the pay for medical insurance (e.g. everyone is taxed for it), then the net results is the same, the healthy people subsidise those the sick. Which is why in countries where medical care is not guaranteed through taxes (e.g. USA) insurance companies try to find out about any pre-existing conditions before they give you a rate; they try to figure out if you're in the healthy group which would otherwise be subsidizing the sick people, or you are one of those sick people. I say that without any value judgements one way or the other. The same is true with other forms of insurance. See broadly Adverse Selection, https://en.wikipedia.org/wiki/Adverse_selection https://en.wikipedia.org/wiki/Adverse_selection.
- bsder 5y ago
  Note how few "indemnity" health plans we have anymore in the US--everything is now HMO/PPO. This was the mechanism. The HMO/PPOs were wildly more profitable--because they picked off the "below average cost" patients leaving the "above average cost" people to the indemnity plans. Of course, then the indemnity plans collapsed under the weight. And then the HMO/PPO systems created "recission groups" to prevent having to take them on. And then it took until the Affordable Care Act forced the coverage of "preexisting conditions" to unwind the bullshit that the HMO/PPO systems caused in the first place.