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Lies, Maths, And Health Insurance

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Re: Lies, Maths, And Health Insurance

#11

Post by Empact »

kgrin wrote: post #4
jdminhbg wrote: post #3

The Monty Hall problem has nothing to do with his statistics, which in any case are completely dependent on his unsupported assertions, cf.: "If, as I suspect, rescission is targeted toward the truly bankrupting cases – the top 1%..." "But let’s not forget that the very nature of the forms is designed to create inaccuracies" Not to mention: "I tend to think of traditional banking and traditional insurance as mirror i…

That's true, though if you're on the hook for a person's catastrophic care, you may very well want to give them economic incentives (i.e. cheap/free doctor's checkups) to invest in preventative care. Now, this doesn't mean that we ought to necessarily have a big, bad program (government or private) control everything. But it does mean that the "insurance is for catastrophes, everything else should be out-of-pocket" m…

It's actually quite common for High-Deductible plans to include payment for standard preventative care (e.g. annual physical). After all the costs covered are predictable and well-contained anyway (typically a few hundred a year).

Beyond that, the emerging "direct Primary Care" model (e.g. http://qliance.com/) is another way to remove the financial disincentive to use preventative care. With them you get unlimited around-the-clock primary care for $50+/month, so there's no additional cost to come in for a checkup. And the barriers to interacting with them are even lower than an insurance-bound doctor, as they embrace modern forms of communication so you can e-mail them about problems which otherwise would not have risen to the level of motivating an appointment.

Note that in this case, subscribers would then favor insurance which does not cover preventative care, or else they'd be paying for it twice, so it's not necessarily beneficial that all people get this support from their insurance.

Re: Lies, Maths, And Health Insurance

#12

Post by gleb »

daeken wrote: post #2

It constantly amazes me as to how even the simplest and most shallow of figures ("It affects less than one-half of one percent of people we cover.") can lie in a spectacular way. I tend to think of myself as a fairly well-educated person, but I wouldn't have looked twice at this statement unless I was given good reason to. How many people are being manipulated by 'simple' and seemingly pure figures every day?

Then the article "lies" in the same way: "If the top 5% is the absolute largest population for whom rescission would make sense, the probability of having your policy cancelled given that you have filed a claim is fully 10% (0.5% rescission/5.0% of the population)." Let's assume his numbers are correct. Is 10% high or low? Who knows. What is the probability of the applicant having lied, given that they have filed that type of claim, and what is the probability for the rest of their customers?

The whole "evil insurance companies" thing is ridiculous. Companies are amoral and profit seeking. Insurance companies just take groups (as regulated by government), provide them level of coverage (as regulated by government), figure out the actuarial risks (based on factors regulated by government), spread those risks around members of the group (with a low-risk members subsidizing the high risk at the level regulated by government) and sell insurance product designed to maximize their profit within a competitive marketplace. A similar product to what he is suggesting, that covers pre-existing conditions already exists in CA as a shall-issue product, it's called a small group coverage. It's also many times more expensive than individual insurance.

Should an individual insurance product with transparent pre-existing condition coverage exist? Absolutely. It's going to be more expensive than today's individual coverage, and that's why an insurance company could not successfully sell it against existing competing products in the current individual marketplace, even if regulators allowed it to. It's up to the government to set up or to allow insurance companies to setup such a group/coverage/underwriting-criteria combination. It's also up to the government to get rid of perverse tax incentives that subsidize group policies and drive people away from individual policies. Of course, grilling insurance company executives on TV is so much more fun than actually doing work.

Re: Lies, Maths, And Health Insurance

#13

Post by kgrin »

weaksauce wrote: post #10
jhancock wrote: post #8

Earlier quoted context omitted.

The essential problem is that the person paying the premium is not the insurance companies "customer". The health insurance company's customer is the shareholder, not the premium payer, that has to end. I have built software for health insurance companies. I can tell you for certain they only look at the details of a policy for rescission purposes for those policies that are costing them far more than the premium has…

That is so true. The insurance companies for health care should be non-profits with set salaries for all the employees. The reason that people buy health insurance is for exactly the reason that the insurance companies drop the insured; They cost more money than they spend.

The latter point isn't entirely true - at its core, buying insurance isn't necessarily about using more than you put in over time, but rather mitigating risks (hedging). That's not necessarily how everyone treats the current system, or for that matter how it's set up, but there's certainly a tension between the "insurance" model and the "health savings account" model (and the current system sort of tries to do both).

In terms of insurance companies being run as non-profits, let me ask two pointed (and I assure you, not-meant-to-be-trollish) questions:

1) If insurance companies should be non-profits with set salaries and so forth, why not just have the government do it at that point?

2) Two recently prominent examples of non-profits set up to further socially useful goals without actually being government agencies are Sallie Mae and Freddie Mac. Those didn't turn out so hot. How would you set up these non-profits to avoid the same sorts of problems?

Actually, I should throw in a third: does anyone know of any examples (successful or not) of a non-profit insurance entity or cooperative?

Re: Lies, Maths, And Health Insurance

#14

Post by thras »

gleb wrote: post #12
daeken wrote: post #2

It constantly amazes me as to how even the simplest and most shallow of figures ("It affects less than one-half of one percent of people we cover.") can lie in a spectacular way. I tend to think of myself as a fairly well-educated person, but I wouldn't have looked twice at this statement unless I was given good reason to. How many people are being manipulated by 'simple' and seemingly pure figures every day?

Then the article "lies" in the same way: "If the top 5% is the absolute largest population for whom rescission would make sense, the probability of having your policy cancelled given that you have filed a claim is fully 10% (0.5% rescission/5.0% of the population)." Let's assume his numbers are correct. Is 10% high or low? Who knows. What is the probability of the applicant having lied, given that they have filed tha…

The whole "evil insurance companies" thing is ridiculous. Companies are amoral and profit seeking.

Wrong. Industries have distinct cultures, usually formed through self-selection due to the sort of people who choose careers in them. Compare police officers and firemen, for example. Similar sorts of work, but wildly different cultures due to self-selection effects.

Now, what sort of culture do insurance companies have? I think that there's good evidence that it's a sick and cancerous one.

Otherwise, good point about the necessity of government intervention in this market.

Re: Lies, Maths, And Health Insurance

#15

Post by greendestiny »

gleb wrote: post #12
daeken wrote: post #2

It constantly amazes me as to how even the simplest and most shallow of figures ("It affects less than one-half of one percent of people we cover.") can lie in a spectacular way. I tend to think of myself as a fairly well-educated person, but I wouldn't have looked twice at this statement unless I was given good reason to. How many people are being manipulated by 'simple' and seemingly pure figures every day?

Then the article "lies" in the same way: "If the top 5% is the absolute largest population for whom rescission would make sense, the probability of having your policy cancelled given that you have filed a claim is fully 10% (0.5% rescission/5.0% of the population)." Let's assume his numbers are correct. Is 10% high or low? Who knows. What is the probability of the applicant having lied, given that they have filed tha…

His numbers aren't even attempting to be correct, he's pointing out that in fact 0.5% isn't necessarily low. What it shows is there is quite an obvious strategy for insurance companies to pursue which would have a level of 0.5% rescission but completely destroy the expectation that you be covered in the event that you really needed your health insurance.

Re: Lies, Maths, And Health Insurance

#16

Post by weaksauce »

kgrin wrote: post #13
weaksauce wrote: post #10

Earlier quoted context omitted.

That is so true. The insurance companies for health care should be non-profits with set salaries for all the employees. The reason that people buy health insurance is for exactly the reason that the insurance companies drop the insured; They cost more money than they spend.

The latter point isn't entirely true - at its core, buying insurance isn't necessarily about using more than you put in over time, but rather mitigating risks (hedging). That's not necessarily how everyone treats the current system, or for that matter how it's set up, but there's certainly a tension between the "insurance" model and the "health savings account" model (and the current system sort of tries to do both).…

The discourse on this site is great. No need to apologize for questioning anything. Here are my answers to your questions:

1. There is a big difference between government intervention and government run organizations. Government run implies inefficiency and waste. There will always be people that game the system. I am well aware of that, but if all the government did was make it a non profit it would do a lot to mitigate against the mass profitering that is going on right now.

2. Sallie Mae no longer has any ties with the government and Freddie Mac is a government sponsored enterprise. In fact they were both set up as government sponsored enterprises when they first started. Enterprise implies an entity that is in it for the money.

As for your third question I do not know of any but it would be enlightening if someone knew of one.

Re: Lies, Maths, And Health Insurance

#17

Post by mnemonicsloth »

thras wrote: post #14
gleb wrote: post #12

Earlier quoted context omitted.

Then the article "lies" in the same way: "If the top 5% is the absolute largest population for whom rescission would make sense, the probability of having your policy cancelled given that you have filed a claim is fully 10% (0.5% rescission/5.0% of the population)." Let's assume his numbers are correct. Is 10% high or low? Who knows. What is the probability of the applicant having lied, given that they have filed tha…

The whole "evil insurance companies" thing is ridiculous. Companies are amoral and profit seeking. Wrong. Industries have distinct cultures, usually formed through self-selection due to the sort of people who choose careers in them. Compare police officers and firemen, for example. Similar sorts of work, but wildly different cultures due to self-selection effects. Now, what sort of culture do insurance companies have…

Now, what sort of culture do insurance companies have? I think that there's good evidence that it's a sick and cancerous one.

If you have evidence to support this claim, provide it. It might be interesting.

If you don't, you're just resorting to name-calling so you can win a boring argument about politics. We don't like that sort of thing here.

http://ycombinator.com/newsguidelines.html

Re: Lies, Maths, And Health Insurance

#18

Post by jwhitlark »

weaksauce wrote: post #16
kgrin wrote: post #13

Earlier quoted context omitted.

The latter point isn't entirely true - at its core, buying insurance isn't necessarily about using more than you put in over time, but rather mitigating risks (hedging). That's not necessarily how everyone treats the current system, or for that matter how it's set up, but there's certainly a tension between the "insurance" model and the "health savings account" model (and the current system sort of tries to do both).…

The discourse on this site is great. No need to apologize for questioning anything. Here are my answers to your questions: 1. There is a big difference between government intervention and government run organizations. Government run implies inefficiency and waste. There will always be people that game the system. I am well aware of that, but if all the government did was make it a non profit it would do a lot to miti…

Heh. Anecdote about govt. run organizations: My wife and I, upon being told that the US Post Office only offered a service between 10 and 4, commented that that was rather inconvenient for those of us with a 9 to 5 job.

The response? "We're not here for your convenience."

Wish I could have gone to someone who was...

Re: Lies, Maths, And Health Insurance

#19

Post by davidw »

mnemonicsloth wrote: post #17
thras wrote: post #14

Earlier quoted context omitted.

The whole "evil insurance companies" thing is ridiculous. Companies are amoral and profit seeking. Wrong. Industries have distinct cultures, usually formed through self-selection due to the sort of people who choose careers in them. Compare police officers and firemen, for example. Similar sorts of work, but wildly different cultures due to self-selection effects. Now, what sort of culture do insurance companies have…

Now, what sort of culture do insurance companies have? I think that there's good evidence that it's a sick and cancerous one. If you have evidence to support this claim, provide it. It might be interesting. If you don't, you're just resorting to name-calling so you can win a boring argument about politics. We don't like that sort of thing here. http://ycombinator.com/newsguidelines.html

> If you don't, you're just resorting to name-calling so you can win a boring argument about politics. We don't like that sort of thing here.

Which is why "we" flag all of these articles:-)

Re: Lies, Maths, And Health Insurance

#20

Post by Elepsis »

kgrin wrote: post #13
weaksauce wrote: post #10

Earlier quoted context omitted.

That is so true. The insurance companies for health care should be non-profits with set salaries for all the employees. The reason that people buy health insurance is for exactly the reason that the insurance companies drop the insured; They cost more money than they spend.

The latter point isn't entirely true - at its core, buying insurance isn't necessarily about using more than you put in over time, but rather mitigating risks (hedging). That's not necessarily how everyone treats the current system, or for that matter how it's set up, but there's certainly a tension between the "insurance" model and the "health savings account" model (and the current system sort of tries to do both).…

There are a number of cooperative health insurance companies. Group Health in Seattle is one: http://www.ghc.org/about_gh/index.jhtml
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