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> Since the collective probability of rare, but expensive health issues is basically 100%, I would describe it less as insurance and more as wealth redistributi

> Since the collective probability of rare, but expensive health issues is basically 100%, I would describe it less as insurance and more as wealth redistribution. Humm no... It's just risk amortization...

lotsofpulp 3y ago
If it was just that (in the US), then there would be no need to prevent insurers from pricing based on health of the insured. Or legislating a 3x cap on premiums between highest and lowest premium. Or legislating out of pocket maximums. The premiums are very explicitly a subsidy from young to old, which I view as a tax by a different name. Except instead of it being based on one’s income/wealth, it is based on age.
- BurningFrog 3y ago
  What we in the US call "health insurance" is today very different from the textbook definition of insurance.
  - lotsofpulp 3y ago
    I don’t think any developed country in the world has an alternative “health insurance” model. I believe Switzerland and Germany require people to purchase health insurance and it is not priced based on health risk. Health risks in general are very predictable and very high, especially as one ages.
- soulbadguy 3y ago
  > If it was just that (in the US), then there would be non need to prevent insurers from pricing based on health of the insured. Or legislating a 3x cap on premiums between highest and lowest premium. Or legislating out of pocket maximums. I do not follow the point you are making here. The regulation and legislation around health insurance do not change the nature of it. I think you are assuming that insurers have perfect risk assessments power and thus regulating them should be unnecessary. But they don't and we have to. > The premiums are very explicitly a subsidy from young to old You are just repeating your assertions here. I would love some arguments. > which I view as a tax by a different name. Except instead of it being based on one’s income/wealth, it is based on age. Sure, as long as we agree that is just your point view and nothing rooted in reality.
  - lotsofpulp 3y ago
    Sorry, I don’t really know how else I can explain it. The age rating factor itself is pretty self explanatory. Instead of charging a sicker or older person $10,000 per month and healthier or younger people $100 per month because that is close to the expected loss in the calendar year for the insurer, they are mandated to charge younger/healthier people $1,000 per month so the older person can only be charged $3,000 per month. Imagine a similar law for motor vehicles. The car insurance companies can only charge the worst and riskiest drivers 3x what the safest driver pays. Basically, you can keep getting into collisions and at some point your premium will stop increasing. Where will the money to pay for all the damages come? > I think you are assuming that insurers have perfect risk assessments power and thus regulating them should be unnecessary. I do not assume this. Insurance and tax/wealth redistribution is a spectrum.
    - soulbadguy 3y ago
      Here what i am understanding of the point you are making : When we offer a service to a group of person, and somehow mandate a flat price for that service. The people using the service less are subsidizing the cost for the people who use the service less.?
      - lotsofpulp 3y ago
        Yes, although I think you meant to type > The people using the service less are subsidizing the cost for the people who use the service more.? Also, it is not a flat price, it is a capped price. As an aside, think about how the optics would have been if the politicians were transparent that a significant portion of the tax liability to pay for the healthcare would be levied based on age. Then think about older, rich people taking advantage of this and retiring early (between age 50 to 65), and because they can afford to have very low income (but a lot of assets), they qualify for even more subsidies during their most expensive years to insure, without negatively affecting their lifestyle. https://www.healthcare.gov/glossary/premium-tax-credit https://www.healthcare.gov/glossary/premium-tax-credit
    - eszed 3y ago
Scene_Cast2 3y ago
Is it risk amortization because we just can't predict certain health issues? Let's suppose that we had a "health oracle" (or something not too far off) to predict medical issues in individuals. How would you structure health insurance in that case?
- soulbadguy 3y ago
  If we had a health oracle, what would be the point of health insurance ? I think with a 100% health oracle, health inssurance will become more like group buys for negotiating better prices with health providers.
  - lotsofpulp 3y ago
    That is why the industry term for health insurers in the US is “managed care organizations” (MCOs). When you (or your employer) buys a policy from UNH, Elevance, Cigna, CVS, Humana, etc, part of what they pay for is access to the MCOs pricing services. And vetting services to minimize errors/fraud (a process which itself is ridden with errors/fraud).

lotsofpulp 3y ago

If it was just that (in the US), then there would be no need to prevent insurers from pricing based on health of the insured. Or legislating a 3x cap on premiums between highest and lowest premium. Or legislating out of pocket maximums. The premiums are very explicitly a subsidy from young to old, which I view as a tax by a different name. Except instead of it being based on one’s income/wealth, it is based on age.

BurningFrog 3y ago
What we in the US call "health insurance" is today very different from the textbook definition of insurance.
- lotsofpulp 3y ago
  I don’t think any developed country in the world has an alternative “health insurance” model. I believe Switzerland and Germany require people to purchase health insurance and it is not priced based on health risk. Health risks in general are very predictable and very high, especially as one ages.
soulbadguy 3y ago
> If it was just that (in the US), then there would be non need to prevent insurers from pricing based on health of the insured. Or legislating a 3x cap on premiums between highest and lowest premium. Or legislating out of pocket maximums. I do not follow the point you are making here. The regulation and legislation around health insurance do not change the nature of it. I think you are assuming that insurers have perfect risk assessments power and thus regulating them should be unnecessary. But they don't and we have to. > The premiums are very explicitly a subsidy from young to old You are just repeating your assertions here. I would love some arguments. > which I view as a tax by a different name. Except instead of it being based on one’s income/wealth, it is based on age. Sure, as long as we agree that is just your point view and nothing rooted in reality.
- lotsofpulp 3y ago
  Sorry, I don’t really know how else I can explain it. The age rating factor itself is pretty self explanatory. Instead of charging a sicker or older person $10,000 per month and healthier or younger people $100 per month because that is close to the expected loss in the calendar year for the insurer, they are mandated to charge younger/healthier people $1,000 per month so the older person can only be charged $3,000 per month. Imagine a similar law for motor vehicles. The car insurance companies can only charge the worst and riskiest drivers 3x what the safest driver pays. Basically, you can keep getting into collisions and at some point your premium will stop increasing. Where will the money to pay for all the damages come? > I think you are assuming that insurers have perfect risk assessments power and thus regulating them should be unnecessary. I do not assume this. Insurance and tax/wealth redistribution is a spectrum.
  - soulbadguy 3y ago
    Here what i am understanding of the point you are making : When we offer a service to a group of person, and somehow mandate a flat price for that service. The people using the service less are subsidizing the cost for the people who use the service less.?
    - lotsofpulp 3y ago
      Yes, although I think you meant to type > The people using the service less are subsidizing the cost for the people who use the service more.? Also, it is not a flat price, it is a capped price. As an aside, think about how the optics would have been if the politicians were transparent that a significant portion of the tax liability to pay for the healthcare would be levied based on age. Then think about older, rich people taking advantage of this and retiring early (between age 50 to 65), and because they can afford to have very low income (but a lot of assets), they qualify for even more subsidies during their most expensive years to insure, without negatively affecting their lifestyle. https://www.healthcare.gov/glossary/premium-tax-credit https://www.healthcare.gov/glossary/premium-tax-credit
  - eszed 3y ago

Scene_Cast2 3y ago

Is it risk amortization because we just can't predict certain health issues? Let's suppose that we had a "health oracle" (or something not too far off) to predict medical issues in individuals. How would you structure health insurance in that case?

soulbadguy 3y ago
If we had a health oracle, what would be the point of health insurance ? I think with a 100% health oracle, health inssurance will become more like group buys for negotiating better prices with health providers.
- lotsofpulp 3y ago
  That is why the industry term for health insurers in the US is “managed care organizations” (MCOs). When you (or your employer) buys a policy from UNH, Elevance, Cigna, CVS, Humana, etc, part of what they pay for is access to the MCOs pricing services. And vetting services to minimize errors/fraud (a process which itself is ridden with errors/fraud).