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Why shouldn't pre-existing conditions be used to determine the price of your premiums? It directly impacts the amount of the insurance you're going to consume.

Why shouldn't pre-existing conditions be used to determine the price of your premiums? It directly impacts the amount of the insurance you're going to consume. Doesn't seem any different that how a poor driving record impacts the price of your auto-insurance.

nitrogen 13y ago
There's a moral argument to be made here. By the moral argument, pre-existing conditions, especially those not associated with voluntary behaviors like smoking, shouldn't affect insurance premiums because it unfairly penalizes a person for things beyond their control. The point of insurance from the consumer's perspective is to mitigate the risks borne by any individual for black swan medical events, not to provide another reason for the already healthy to feel superior and contribute even less money to the collective insurance pool. Unlike many health conditions, poor driving is something the driver can change, either through conscious choice or through additional driver training.
- mikeash 13y ago
  Another interesting way to look at it is that insurance is fundamentally based on future uncertainty. Imagine if it somehow became possible to predict with perfect accuracy a person's future payouts under a given insurance policy. Bob goes to buy house insurance and they can predict with certainty that he'll eventually get $400,000 paid out (presumably because his house got destroyed somehow) while Steve is predicted to have nothing paid out. If the insurance company has access to these predictions, they will naturally charge Bob about $400,000, plus a profit margin, while they'll charge Steve next to nothing. In this situation, insurance policies become nothing more than elaborate savings accounts. On the other hand, if the clients have access to these predictions, Bob will buy the best policy he can find, while Steve will naturally not buy any policy. In this scenario, insurance companies all go out of business instantaneously because it becomes impossible to make any money, or even break even. Yet both sides have huge incentives to try to approximate these scenarios as best they can. The better insurance companies can predict people's insurance usage, the more profitable they can be. The better clients can predict their own usage, the less they spend. But let both parties achieve their predictive goals and the whole thing falls apart utterly. Medical science is driving relentlessly toward that goal, to the extent that many people were being shut out. The ACA tries to attack both sides of it, by preventing insurance companies from charging differing prices based on certain predictive information, and by preventing clients from refusing to purchase the product. In theory, this returns you to a flatter risk pool where all people contribute roughly equally and everybody sort of pretends they don't know that Bob's house is going to burn down.
  - nitrogen 13y ago
    So either we start practicing eugenics (bad), or we change insurance to serve as a collective safety net for societal benefit rather than simple risk mitigation for individual benefit.
chimeracoder 13y ago
> Why shouldn't pre-existing conditions be used to determine the price of your premiums? It directly impacts the amount of the insurance you're going to consume. I never said it shouldn't - but people seem to be under the impression that it doesn't. I commonly see statements to the effect of, "I don't care what the insurance companies know about me, since they have to provide me coverage." Maybe that's true if the only thing that matters to you is whether or not you have some form of insurance, at any cost, but that's not the case for most people. As for whether or not it should be considered, that's a value judgement (and therefore inherently subjective). Do you believe that all people should pay the same amount for insurance that covers events beyond their control (ie, congenital diseases/defects[0])? You might argue that it's unfair to hide that information from the insurance companies or prevent them from acting on that (because information asymmetry in free markets is bad[1]), or you could argue that it's the responsibility of society to care for those who have conditions that require expensive treatment just to stay alive (because letting people die of preventable diseases is bad). [I don't have an answer for that - I'm just clarifying the question, since you brought it up. :)] [0] I use the example of congenital diseases because one does have influence over one's own chance of getting lung cancer (ie, if you don't smoke, the chances are far lower), but not for congenital diseases (your mother may have had some influence over that, but you yourself certainly didn't). [1] Alternative argument: These costs just get spread to everyone who is insured. Assume the country consists of two people (Alice and Bob). If the true (expected) cost of insuring Alice and Bob are $50 and $100, it's unfair to Alice to force them both to "split the difference" and be insured at $75 each.
aianus 13y ago
Because it's inhumane to jack the premiums so high that you basically refuse coverage. It's better to force everyone to buy coverage at the same price and just diffuse the risks/costs amongst a large population.
neilk 13y ago
If you only look at the business-customer transaction, it's the same. But otherwise it's totally different. If a bad driver can't get insurance, they are taken out of the pool of people who are driving. Everyone wins. There are fewer accidents - even the former driver is less of a danger to themselves. It makes the former driver's life a bit more difficult when they need to get around, but they have alternatives like transit. Other people see what happened to the bad driver, and modify their behavior accordingly. People who have pre-existing health conditions are not immediately taken out of the pool of people who are healthing (i.e. euthanized). There is no alternative to living. If they don't get insurance - or it's harder for them to get insurance - they go on living, with increased misery, until the costs hit everybody with trips to the emergency room. It is very unclear whether that example will influence others to be more healthy - most diseases are effectively random, or strike with the kinds of probabilities that most humans are bad at integrating into their decisions. Even alcoholism has a component of genetic predisposition, and some people might even become addicted as children. This is, of course, setting aside the moral argument, but this is is HN.
mikeash 13y ago
What's different is that you can still lead a full, productive life if you're unable to afford car insurance, but you frequently can't if you have a pre-existing condition (which you may have been born with!) and are therefore unable to afford health insurance. One can certainly argue that this shouldn't be the responsibility of the insurance companies, but that is still a major difference.
- rtpg 13y ago
  the car insurance is pretty dependent on where you live.
  - mikeash 13y ago
    I can't figure out why this is relevant to my comment.

nitrogen 13y ago

There's a moral argument to be made here. By the moral argument, pre-existing conditions, especially those not associated with voluntary behaviors like smoking, shouldn't affect insurance premiums because it unfairly penalizes a person for things beyond their control. The point of insurance from the consumer's perspective is to mitigate the risks borne by any individual for black swan medical events, not to provide another reason for the already healthy to feel superior and contribute even less money to the collective insurance pool. Unlike many health conditions, poor driving is something the driver can change, either through conscious choice or through additional driver training.

mikeash 13y ago
Another interesting way to look at it is that insurance is fundamentally based on future uncertainty. Imagine if it somehow became possible to predict with perfect accuracy a person's future payouts under a given insurance policy. Bob goes to buy house insurance and they can predict with certainty that he'll eventually get $400,000 paid out (presumably because his house got destroyed somehow) while Steve is predicted to have nothing paid out. If the insurance company has access to these predictions, they will naturally charge Bob about $400,000, plus a profit margin, while they'll charge Steve next to nothing. In this situation, insurance policies become nothing more than elaborate savings accounts. On the other hand, if the clients have access to these predictions, Bob will buy the best policy he can find, while Steve will naturally not buy any policy. In this scenario, insurance companies all go out of business instantaneously because it becomes impossible to make any money, or even break even. Yet both sides have huge incentives to try to approximate these scenarios as best they can. The better insurance companies can predict people's insurance usage, the more profitable they can be. The better clients can predict their own usage, the less they spend. But let both parties achieve their predictive goals and the whole thing falls apart utterly. Medical science is driving relentlessly toward that goal, to the extent that many people were being shut out. The ACA tries to attack both sides of it, by preventing insurance companies from charging differing prices based on certain predictive information, and by preventing clients from refusing to purchase the product. In theory, this returns you to a flatter risk pool where all people contribute roughly equally and everybody sort of pretends they don't know that Bob's house is going to burn down.
- nitrogen 13y ago
  So either we start practicing eugenics (bad), or we change insurance to serve as a collective safety net for societal benefit rather than simple risk mitigation for individual benefit.

chimeracoder 13y ago

> Why shouldn't pre-existing conditions be used to determine the price of your premiums? It directly impacts the amount of the insurance you're going to consume. I never said it shouldn't - but people seem to be under the impression that it doesn't. I commonly see statements to the effect of, "I don't care what the insurance companies know about me, since they have to provide me coverage." Maybe that's true if the only thing that matters to you is whether or not you have some form of insurance, at any cost, but that's not the case for most people. As for whether or not it should be considered, that's a value judgement (and therefore inherently subjective). Do you believe that all people should pay the same amount for insurance that covers events beyond their control (ie, congenital diseases/defects[0])? You might argue that it's unfair to hide that information from the insurance companies or prevent them from acting on that (because information asymmetry in free markets is bad[1]), or you could argue that it's the responsibility of society to care for those who have conditions that require expensive treatment just to stay alive (because letting people die of preventable diseases is bad). [I don't have an answer for that - I'm just clarifying the question, since you brought it up. :)] [0] I use the example of congenital diseases because one does have influence over one's own chance of getting lung cancer (ie, if you don't smoke, the chances are far lower), but not for congenital diseases (your mother may have had some influence over that, but you yourself certainly didn't). [1] Alternative argument: These costs just get spread to everyone who is insured. Assume the country consists of two people (Alice and Bob). If the true (expected) cost of insuring Alice and Bob are $50 and $100, it's unfair to Alice to force them both to "split the difference" and be insured at $75 each.

aianus 13y ago

Because it's inhumane to jack the premiums so high that you basically refuse coverage. It's better to force everyone to buy coverage at the same price and just diffuse the risks/costs amongst a large population.

neilk 13y ago

If you only look at the business-customer transaction, it's the same. But otherwise it's totally different. If a bad driver can't get insurance, they are taken out of the pool of people who are driving. Everyone wins. There are fewer accidents - even the former driver is less of a danger to themselves. It makes the former driver's life a bit more difficult when they need to get around, but they have alternatives like transit. Other people see what happened to the bad driver, and modify their behavior accordingly. People who have pre-existing health conditions are not immediately taken out of the pool of people who are healthing (i.e. euthanized). There is no alternative to living. If they don't get insurance - or it's harder for them to get insurance - they go on living, with increased misery, until the costs hit everybody with trips to the emergency room. It is very unclear whether that example will influence others to be more healthy - most diseases are effectively random, or strike with the kinds of probabilities that most humans are bad at integrating into their decisions. Even alcoholism has a component of genetic predisposition, and some people might even become addicted as children. This is, of course, setting aside the moral argument, but this is is HN.

mikeash 13y ago

What's different is that you can still lead a full, productive life if you're unable to afford car insurance, but you frequently can't if you have a pre-existing condition (which you may have been born with!) and are therefore unable to afford health insurance. One can certainly argue that this shouldn't be the responsibility of the insurance companies, but that is still a major difference.

rtpg 13y ago
the car insurance is pretty dependent on where you live.
- mikeash 13y ago
  I can't figure out why this is relevant to my comment.