5 ms·
To be fair, annual checkups (of many varieties), are not covered solely because people can't math. If an annual checkup reduces the risk of a high-value payout
by greggyb 11y ago
To be fair, annual checkups (of many varieties), are not covered solely because people can't math.
If an annual checkup reduces the risk of a high-value payout then it makes very much financial sense for the insurance company to pay for the annual checkup for you, as an incentive for you to get one.
In fact, if the average insuree is very unlikely to pay directly for an annual checkup and the annual checkup helps to reduce the likelihood of high-dollar-value insurance claims, then it is reasonable for a "free" annual checkup plan to be cheaper than one that does not offer such "free" benefits.
Note: I am not disagreeing with your statements that the insuree is definitely paying for regular costs, nor that people don't math well. I am just raising some of the nuance around what behavior makes sense for an insurance company given irrational insurees.
- obastani 11y agoActually, if the insuree is rational, it especially makes sense for the insurance company to pay for the annual checkup. If the insurance company only covers me when I get really sick, I lose money by going for the annual checkup -- I'm "better off" waiting to get really sick, and then having them cover all of my expenses.
- maxerickson 11y agoYou've defined rational as valuing money over health. (the jargon rational economic actor maximizes value, not dollars)
- greggyb 11y agoJust an addition: rationality in economics assumes a logical[0] ordering of preferences and behavior which maximizes value within this ordering. [0] Think transitivity: I prefer A to B and I prefer B to C; I must not prefer C to A. There's more nuance, but this is enough for the intuition. Without this ordering, maximizing value makes no sense.