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> 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 beca

> 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 ago
no 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 ago
    I 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.
    - aleph_minus_one 11mo ago
      > There’s probably some reserve, but I’d guess it’s thin because withdrawals should be fairly predictable for large insurers. At least in the EU, by Solvency II, insurance companies are obliged to fulfill prescribed solvency ratios (i.e. have sufficient capital resources available). I would strongly assume that there exist similar regulations in the USA.
      - everforward 11mo ago
        There are, but I would consider them fairly thin. If I'm reading right, and I may not be, the US only requires a solvency ratio of 1.45. I never worked in health insurance, but I did work for a P&C insurance company and I believe we had assets far in excess of that but kept close to the minimum in liquid assets (returns on investing premiums we hadn't paid out yet was the majority of our profit).
  - scott00 11mo ago
    The key difference seems to be German private health insurance contracts are long-term affairs. Multi-year, or perhaps even lifetime? US health insurance contracts are typically a year at a time. So German companies have to reserve for costs projected to occur far in the future because they are liable for them, while US companies have no idea if their customer will still be around in 20 years. My guess would be there's a healthy dollop of regulation pushing the German insurance market into that shape, otherwise you would probably see short-term insurers outcompeting long-term insurers since they wouldn't have to do old-age reserves and could therefore charge lower premiums. Consumers tend not to be nearly as good at rationally planning for long term expenditures as are actuaries.

jqpabc123 11mo ago

no 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 ago
  I 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.
  - aleph_minus_one 11mo ago
    > There’s probably some reserve, but I’d guess it’s thin because withdrawals should be fairly predictable for large insurers. At least in the EU, by Solvency II, insurance companies are obliged to fulfill prescribed solvency ratios (i.e. have sufficient capital resources available). I would strongly assume that there exist similar regulations in the USA.
    - everforward 11mo ago
      There are, but I would consider them fairly thin. If I'm reading right, and I may not be, the US only requires a solvency ratio of 1.45. I never worked in health insurance, but I did work for a P&C insurance company and I believe we had assets far in excess of that but kept close to the minimum in liquid assets (returns on investing premiums we hadn't paid out yet was the majority of our profit).
- scott00 11mo ago
  The key difference seems to be German private health insurance contracts are long-term affairs. Multi-year, or perhaps even lifetime? US health insurance contracts are typically a year at a time. So German companies have to reserve for costs projected to occur far in the future because they are liable for them, while US companies have no idea if their customer will still be around in 20 years. My guess would be there's a healthy dollop of regulation pushing the German insurance market into that shape, otherwise you would probably see short-term insurers outcompeting long-term insurers since they wouldn't have to do old-age reserves and could therefore charge lower premiums. Consumers tend not to be nearly as good at rationally planning for long term expenditures as are actuaries.