5 ms·

> The elephant in the room is that this is not the typical case - http://www.forbes.com/sites/theapothecary/2013/09/25/double-.. http://www.forbes.com/sites/the

> The elephant in the room is that this is not the typical case - http://www.forbes.com/sites/theapothecary/2013/09/25/double-.. http://www.forbes.com/sites/theapothecary/2013/09/25/double-.... It still boggles my mind that people are surprised by this. Mathematically, including people with pre-existing conditions will mean either that those people are required to pay for the (expected, not actual) costs of their own care, or that other people will be required to pay for those costs[0]. This effect is much larger than the effect of mandating insurance for younger, healthier people who otherwise elected out of getting insurance[1]. Note: this is not a normative statement about whether this is a "good" outcome. This is just a a mathematical observation about the way insurance works, from a mathematical and economic perspective. [0] Subsidies come from taxpayer money, so they have no net effect on this accounting - it changes how the money changes hands, but the money still has to come from somewhere. [1] I'm waving my hands around the math here, but if people are interested I can dig up the more detailed blog post draft that I did a while back explaining this in full detail.

lukasb 13y ago
The effect that you're ignoring is that insurance premiums have a hefty amount of margin built into them, and the ACA produces a collective bargaining effect that gives insurers an incentive to offer a competitive price on the exchange.
powertower 13y ago
> It still boggles my mind that people are surprised by this... I was surprised because I was told that this new coverage affordability came from getting insurance companies greed in check. I didn't know that insurance companies were actually lobying for Obamacare, not against it. http://www.policymic.com/articles/62541/here-s-the-proof-obamacare-is-for-the-insurance-companies-and-not-for-you http://www.policymic.com/articles/62541/here-s-the-proof-oba...
- EpicEng 13y ago
  Of course they are; this bill feeds them a guaranteed customer base. This is the largest issue I have with ObamaCare. The sole job of an insurance company is to assess risk. With a government mandated customer base there is no longer any risk to asses. So... Why are the insurance companies involved at all? Why are they still in business? That's rhetorical, I know the answer, and I don't like it. We're all paying a middle man to do nothing for us.
  - r00fus 13y ago
    > Of course they are; this bill feeds them a guaranteed customer base. This is the largest issue I have with ObamaCare. The sole job of an insurance company is to assess risk. With a government mandated customer base there is no longer any risk to asses. I'm no fan of insurance companies, but this statement does not compute. Of course there's still risk involved - the risk that the patient's costs will exceed premiums. If you set the premium too high, the customer will flee to a competitor. You also can't raise your premiums too high, because you have the 80% medical loss ratio - you can no longer just eat the rest as profit [1]. Totally agree that government should be the single payer or even the sole provider of healthcare (though that model isn't as widely implemented (UK NHS, US Veterans Admin) and has it's challenges as well). [1] http://www.cms.gov/CCIIO/Resources/Forms-Reports-and-Other-Resources/Downloads/2012-medical-loss-ratio-report.pdf http://www.cms.gov/CCIIO/Resources/Forms-Reports-and-Other-R...
  - lhc- 13y ago
    Because Obama was unable to garner enough support for Single Payer... at least, not yet. While the ACA is hardly a perfect law, its quite possible that the greatest thing it accomplishes is showing Americans how much worse our current system is than the Single Payer systems the rest of the 1st world employs. While the insurance companies were generally lobbying for the ACA (although there's definitely clauses they did not support), they are vehemently against Single Payer, since it puts them all out of business.
joshuahedlund 13y ago
> It still boggles my mind that people are surprised by this. I agree with your mathematical observation, but maybe part of the surprise that such math was often underplayed or outright ignored in the claims that premiums would be going down, ex. [0][1]) [0] http://www.washingtonpost.com/blogs/fact-checker/post/president-obamas-claim-that-insurance-premiums-will-go-down/2012/08/09/424048f2-e245-11e1-a25e-15067bb31849_blog.html http://www.washingtonpost.com/blogs/fact-checker/post/presid... [1] http://www.nytimes.com/2013/07/17/health/health-plan-cost-for-new-yorkers-set-to-fall-50.html?_r=0 http://www.nytimes.com/2013/07/17/health/health-plan-cost-fo...
001sky 13y ago
It still boggles my mind that people are surprised by this. Mathematically, ... Its an interesting social phenomenon, that large-scale opaque repricing of a commodity is met with opportunistic ~scalping. This happened accross europe during the conversion to the Euro. US consumers are probably rightly suprised. Despite the expectations of economists that the euro change over would have no effect on prices, European consumers perceived the opposite. To shed some light on this puzzle, we develop a model of imperfect information in which cheaper goods experience higher price growth after the changeover. Retailers, aware of consumers’ difficulties in adopting the new currency, use currency changeovers to increase profits by in creasing prices. The lower the price transparency after the changeover, the higher the euro–related inflation. Using data on inflation (Eurostat) and price levels (Economist Intelligence Unit), we show that although the euro changeover did not significantly increase inflation, it nevertheless had distortionary effect on prices. {etc} http://www.kellogg.northwestern.edu/faculty/dziuda/personal/pdf/jcmb_veryfinalrevision2.pdf http://www.kellogg.northwestern.edu/faculty/dziuda/personal/...

lukasb 13y ago

The effect that you're ignoring is that insurance premiums have a hefty amount of margin built into them, and the ACA produces a collective bargaining effect that gives insurers an incentive to offer a competitive price on the exchange.

powertower 13y ago

> It still boggles my mind that people are surprised by this... I was surprised because I was told that this new coverage affordability came from getting insurance companies greed in check. I didn't know that insurance companies were actually lobying for Obamacare, not against it. http://www.policymic.com/articles/62541/here-s-the-proof-obamacare-is-for-the-insurance-companies-and-not-for-you http://www.policymic.com/articles/62541/here-s-the-proof-oba...

EpicEng 13y ago
Of course they are; this bill feeds them a guaranteed customer base. This is the largest issue I have with ObamaCare. The sole job of an insurance company is to assess risk. With a government mandated customer base there is no longer any risk to asses. So... Why are the insurance companies involved at all? Why are they still in business? That's rhetorical, I know the answer, and I don't like it. We're all paying a middle man to do nothing for us.
- r00fus 13y ago
  > Of course they are; this bill feeds them a guaranteed customer base. This is the largest issue I have with ObamaCare. The sole job of an insurance company is to assess risk. With a government mandated customer base there is no longer any risk to asses. I'm no fan of insurance companies, but this statement does not compute. Of course there's still risk involved - the risk that the patient's costs will exceed premiums. If you set the premium too high, the customer will flee to a competitor. You also can't raise your premiums too high, because you have the 80% medical loss ratio - you can no longer just eat the rest as profit [1]. Totally agree that government should be the single payer or even the sole provider of healthcare (though that model isn't as widely implemented (UK NHS, US Veterans Admin) and has it's challenges as well). [1] http://www.cms.gov/CCIIO/Resources/Forms-Reports-and-Other-Resources/Downloads/2012-medical-loss-ratio-report.pdf http://www.cms.gov/CCIIO/Resources/Forms-Reports-and-Other-R...
- lhc- 13y ago
  Because Obama was unable to garner enough support for Single Payer... at least, not yet. While the ACA is hardly a perfect law, its quite possible that the greatest thing it accomplishes is showing Americans how much worse our current system is than the Single Payer systems the rest of the 1st world employs. While the insurance companies were generally lobbying for the ACA (although there's definitely clauses they did not support), they are vehemently against Single Payer, since it puts them all out of business.

joshuahedlund 13y ago

> It still boggles my mind that people are surprised by this. I agree with your mathematical observation, but maybe part of the surprise that such math was often underplayed or outright ignored in the claims that premiums would be going down, ex. [0][1]) [0] http://www.washingtonpost.com/blogs/fact-checker/post/president-obamas-claim-that-insurance-premiums-will-go-down/2012/08/09/424048f2-e245-11e1-a25e-15067bb31849_blog.html http://www.washingtonpost.com/blogs/fact-checker/post/presid... [1] http://www.nytimes.com/2013/07/17/health/health-plan-cost-for-new-yorkers-set-to-fall-50.html?_r=0 http://www.nytimes.com/2013/07/17/health/health-plan-cost-fo...

001sky 13y ago

It still boggles my mind that people are surprised by this. Mathematically, ... Its an interesting social phenomenon, that large-scale opaque repricing of a commodity is met with opportunistic ~scalping. This happened accross europe during the conversion to the Euro. US consumers are probably rightly suprised. Despite the expectations of economists that the euro change over would have no effect on prices, European consumers perceived the opposite. To shed some light on this puzzle, we develop a model of imperfect information in which cheaper goods experience higher price growth after the changeover. Retailers, aware of consumers’ difficulties in adopting the new currency, use currency changeovers to increase profits by in creasing prices. The lower the price transparency after the changeover, the higher the euro–related inflation. Using data on inflation (Eurostat) and price levels (Economist Intelligence Unit), we show that although the euro changeover did not significantly increase inflation, it nevertheless had distortionary effect on prices. {etc} http://www.kellogg.northwestern.edu/faculty/dziuda/personal/pdf/jcmb_veryfinalrevision2.pdf http://www.kellogg.northwestern.edu/faculty/dziuda/personal/...