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The problem rather is the insane amount of red tape involved if you want to set up your own health insurance company. Thus hardly any competition for the establ
by aleph_minus_one 11mo ago
The problem rather is the insane amount of red tape involved if you want to set up your own health insurance company. Thus hardly any competition for the established player arises.
The result is what any arbitrary textbook about economy will tell you: if there are large barriers to entry into a market (i.e. the opposite of "free market"), the customer won't get the positive consequences of a free market, but instead oligopolies will form - with their negative consequences.
- AlotOfReading 11mo agoThere's around a thousand organizations in the US that have gone through the paperwork to set up as a health insurance company and continue to file paperwork to that effect.
- jqpabc123 11mo agoThere are lots of health insurance companies operating in the USA. United Health is the largest but they only have a 15% market share. All these companies follow suit with the market forces described above. They all want to insure young healthy people and deny old sick people --- simply because they make more money by doing so. Over time, everyone (including you) will naturally gravitate from young and healthy to old and sick --- aka uninsurable. Are you content for yourself or your family to be uninsured when they need it most --- after a lifetime of paying premiums? This is what private, for-profit health insurance manifests. This is not due to "red tape" or lack of competition but is a fundamental and unavoidable characteristic of the "free market" itself.
- aleph_minus_one 11mo ago> All these companies follow suit with the market forces described above. They all want to insure young healthy people and deny old sick people --- simply because they make more money by doing so. A private health insurance company is based on the idea that if you are young, you pay a lot more so that an actuarial reserve is built, which is then reduced again when you age. This means that if you want fair premiums when you are old, you will have to pay a lot larger premium in the young age. Concerning your claim: "They all want to insure young healthy people and deny old sick people --- simply because they make more money by doing so." Insurance companies don't make more money when they insure young vs old people - but they will just calculate risk-appropriate premiums for each group. If you start your insurance coverage at a health insurance company when you are already old, no actuarial reserve has been built up (during the years when you were young), so the premiums will of course be much larger.
- jqpabc123 11mo agono actuarial reserve has been built up This is laughable. Health insurance companies don't have no steenkin "actuarial reserve". Inventing one is an act of rhetorical desperation on your part. They only thing these companies consider or respond to is next quarter's profits.
- aleph_minus_one 11mo ago> Health insurance companies don't have no steenkin "actuarial reserve". Inventing one is an act of rhetorical desperation on your part. This is how private health insurance companies work in Germany and many other countries (more precisely for Germany "private Krankenversicherung nach Art der Lebensversicherung" (Google Translate: private health insurance in the form of life insurance); formally, in Germany there also exists "private Krankenversicherung nach Art der Schadenversicherung" (Google Translate: private health insurance according to the type of indemnity insurance)). Facts: - I have already worked with certified actuaries, and I am thus very certain that building an actuarial reserve which is then phased out when you get older [in German: Auf- und Abbau der Deckungsrückstellung (for life insurance) und Altersrückstellung (for health insurance) (in English, the term "actuarial reserve" is used for both kinds of reserves)]) is how the mathematics of life and private health insurance companies works (OK, formally only for the kind of health insurance that in German is called "private Krankenversicherung nach Art der Lebensversicherung" (Google Translate: private health insurance in the form of life insurance)) - if you still don't believe my claims, just read a good textbook about insurance of persons
- everforward 11mo agoI don’t think that really exists in a literal sense of “your policy has a reserve of money to pay out for you”. I think it exists in the same way social security does: money from people who pay in but don’t withdraw goes to people who do withdraw. There’s probably some reserve, but I’d guess it’s thin because withdrawals should be fairly predictable for large insurers.
- 11mo ago