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The real reason health insurers won’t cover people with pre-existing conditions

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Re: The real reason health insurers won’t cover people with pre-existing conditions

#11

Post by yuhong »

anonymoushn wrote: post #6
ars wrote: post #4

This article demonstrates a very common mistake: People think health insurance covers health bills. It doesn't. It covers unexpected health bills, which is a very different thing. Any type of situation that is expected to happen can not be covered by insurance, it needs to be covered by savings instead. However many people want insurance premiums to be a type of forced savings plan, which is why there is such a huge…

I came here to say just this. In the United States, though, we use "Insurance" to refer to a very expensive form of prepaid health plan. We keep costs up by making laws that prevent employees from knowing how much their prepaid health plan costs. Just in case people might want to react to the high costs by not purchasing a plan, in the near future everyone in the U.S. will be required by law to purchase a prepaid hea…

They did limit the profit of the health care providers which happened to reduced lobbying.

Re: The real reason health insurers won’t cover people with pre-existing conditions

#12

Post by tptacek »

ars wrote: post #4

This article demonstrates a very common mistake: People think health insurance covers health bills. It doesn't. It covers unexpected health bills, which is a very different thing. Any type of situation that is expected to happen can not be covered by insurance, it needs to be covered by savings instead. However many people want insurance premiums to be a type of forced savings plan, which is why there is such a huge…

Without sparking off a huge thread on free markets versus socialized medicine, the idea behind single payer health insurance is that nobody has to worry about "expected health bills", because everyone shares a giant risk pool in which uniformly low premiums end cover everyone by shifting expenses from people who do get sick to the (larger) pool of people who don't.

Part of the philosophical idea behind single payer is that people have minimal control over financially devastating illness and injury, and one thing society can do that individuals can't is allow everyone to share the risk, transforming a small probability of an untenable expense into a certain probability of a manageable expense.

You're right, and usefully so, to point out that private health insurance is treated like a utility instead of an insurance plan; knowing that also allows consumers to select high-deductible plans, and to take advantage of HSAs for tax-advantaged funding of the health care bills they do expect.

But single-payer insurance can handle both problems (routine billing and catastrophic coverage) coherently.

Re: The real reason health insurers won’t cover people with pre-existing conditions

#14

Post by davidw »

tptacek wrote: post #9

I read this yesterday and was unimpressed; it seems that the finding here is "adverse selection", which is more or less the classic canonical problem in insurance. Did I miss something?

My read of it is that it's not just adverse selection, but a situation where instead of both parties having a vague idea of what their costs may be, one party now has a really good idea about their costs, and is therefore in a much better bargaining position.

Re: The real reason health insurers won’t cover people with pre-existing conditions

#15

Post by tptacek »

davidw wrote: post #14
tptacek wrote: post #9

I read this yesterday and was unimpressed; it seems that the finding here is "adverse selection", which is more or less the classic canonical problem in insurance. Did I miss something?

My read of it is that it's not just adverse selection, but a situation where instead of both parties having a vague idea of what their costs may be, one party now has a really good idea about their costs, and is therefore in a much better bargaining position.

Sure; adverse selection and asymmetric information are two sides of the same coin.

Re: The real reason health insurers won’t cover people with pre-existing conditions

#16

Post by davidw »

RyanMcGreal wrote: post #13

All the more reason to take economics out of it and provide health coverage via universal single payer insurance.

I'm pretty happy with the health care system here in Italy. It's so much less of a hassle than in the US: get sick? go to the doctor, no paperwork, no forms to fill out (which, in Italy, is really something of a minor miracle), but "economics" are always with us, because health care is a scarce good.

Re: The real reason health insurers won’t cover people with pre-existing conditions

#17

Post by DanBC »

sunsu wrote: post #8

Great article! I just don't agree with the author's confidence in the "guiding hand of the government" in his conclusion. I would much rather have the freedom to purchase future options to buy healthcare rather than have my freedoms removed because the of the fear that the "average 20-year-old" may not have enough foresight to think about his/her future.

There's no reason they have to be exclusive. The UK has dual public / private provision of healthcare.

(Personally, I would never use private health care in the UK. I know people who have.)

Re: The real reason health insurers won’t cover people with pre-existing conditions

#18

Post by FireBeyond »

davidw wrote: post #14
tptacek wrote: post #9

I read this yesterday and was unimpressed; it seems that the finding here is "adverse selection", which is more or less the classic canonical problem in insurance. Did I miss something?

My read of it is that it's not just adverse selection, but a situation where instead of both parties having a vague idea of what their costs may be, one party now has a really good idea about their costs, and is therefore in a much better bargaining position.

Not so much that, to me - both parties have a great idea of what their costs might be, but the consumer has the critical information - "of the options open to me, which will I choose, if any?"

The "ignorance" is in "likelihood of utilization", not "cost of utilization".

Re: The real reason health insurers won’t cover people with pre-existing conditions

#19

Post by RyanMcGreal »

davidw wrote: post #16
RyanMcGreal wrote: post #13

All the more reason to take economics out of it and provide health coverage via universal single payer insurance.

I'm pretty happy with the health care system here in Italy. It's so much less of a hassle than in the US: get sick? go to the doctor, no paperwork, no forms to fill out (which, in Italy, is really something of a minor miracle), but "economics" are always with us, because health care is a scarce good.

> health care is a scarce good.

It's true that every health care system rations care. The difference is that a universal system rations based on medical need (triage) whereas a market system rations based on ability to pay.

Re: The real reason health insurers won’t cover people with pre-existing conditions

#20

Post by jberryman »

ars wrote: post #4

This article demonstrates a very common mistake: People think health insurance covers health bills. It doesn't. It covers unexpected health bills, which is a very different thing. Any type of situation that is expected to happen can not be covered by insurance, it needs to be covered by savings instead. However many people want insurance premiums to be a type of forced savings plan, which is why there is such a huge…

> It doesn't. It covers unexpected health bills, which is a very different thing.

I see conservatives (not trying to label you) make this argument a lot, and I think it is a mischaracterization of 1) what most people mean by health insurance, and 2) what health insurance and health plans are really about: pooling risk and creating groups that can negotiate for lower prices.

Re. 1: just skim the wikipedia article for health insurance (http://en.wikipedia.org/wiki/Health_insurance); the distinction between health plans vs. what you mean by "health insurance" all gets rather confused.

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