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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

#31

Post by tptacek »

dalke wrote: post #26
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?

You missed that this was describing research which shows adverse selection is a "at least partly" behind the problem. Without research, you're just hand-waving that it might be a problem, but you don't know if it's actually a significant influence. Quoting from the article: Hendren didn’t invent the idea of markets falling apart because customers know something that companies don’t. Nobel prizes were awarded to a tri…

I think we're talking past each other. To make my review pithier: this is an article that could largely have been written from the Wikipedia article on "adverse selection".

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

#32

Post by tptacek »

jberryman wrote: post #20
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…

The conservative objection to single payer health insurance is that single payer may be a terrible way to achieve cost negotiation. In a system of guaranteed issue private insurance, people could tune their exposure to risk by selecting plans with greater or lower deductibles, and then use HSAs to set up a rolling facility for paying their day-to-day coverage costs.

The fundamentals of the system we're moving towards in the US is actually a conservative plan from the '90s: an exchange-based market for private health insurance coupled with guaranteed issue and a mandate for coverage. That plan was itself a response to the original liberal vision of universal health insurance: nationwide government-run single payer insurance.

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

#33

Post by tptacek »

bunderbunder wrote: post #24
onemoreact wrote: post #10

Earlier quoted context omitted.

In the US the insurance companies also negotiate the costs with various heath care providers. It's possible to pay 6,000$ / year in premiums, never hit your deductible so the insurance company does not pay anything out of pocket and still save money .

Last time I saw a hard figure on it, which was admittedly a long time ago, was while I was working at an immediate care clinic. Uninsured folks were getting billed roughly 170% what insured folks were thanks to these negotiated rates.

As someone who has paid out-of-pocket for an MRI (it needed to get done ASAP for logistical reasons and there was a bookkeeping screwup with my insurance): the markup for out-of-coverage services can be way way more than 170%.

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

#34

Post by crag »

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…

"Any type of situation that is expected to happen can not be covered by insurance, it needs to be covered by savings instead."

Yeah right. Until you run out of money. Then what?

In your world, you die. Good for everyone, until it's you or someone you care about. Then, like everyone else, you off running to the SS office to apply for (Medicare) disability.

The whole point of insurance is to protect against risk. Else why have it at all?

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

#35

Post by anarchotroll »

tptacek wrote: post #12
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 i…

Individuals can opt into an insurance plan. That's sharing risk.

What "society" (government) can do is force everyone to share THE SAME risks

single-payer insurance == monopoly

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

#36

Post by chernevik »

tptacek wrote: post #12
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 i…

Individuals can share risk, that's what insurance does.

The transformation of insurance into a savings scheme puts considerable distortion on that model. It becomes impossible to see what payment is for expected treatment, and what is for risk assignment. The model then encourages people to use more ("I've already paid for it") and to pay no attention to cost. And it encourages the attitude that any problem should be paid for. It's hard to exaggerate the impact of these effects on health care's crazy cost structures.

The real problem isn't people who are riskier, it's people who are costlier. Someone with a prior condition isn't a risk, they're a cost. Insisting they should have "access to insurance" is simply insisting on cost redistribution. The circumstances under which that cost redistribution is a good idea socially should be an entirely different question than the efficient structure of health care payments.

These concepts are deliberately obscured by the political rhetoric around "health insurance", precisely to obscure the cost shifting nature of the project and to create a sensibility that the problems is somehow the greed of financiers. (Obscuring the cost drivers is also a goal, it's a very large industry that employs a lot of people, many of whom, at many levels, stand to lose a good deal if the system were ever seriously rationalized.) It's a very effective rhetorical strategy, especially given the abstractions around risk, but it shouldn't be confused with an actual discussion of the economic problem.

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

#37

Post by anarchotroll »

bunderbunder wrote: post #24
onemoreact wrote: post #10

Earlier quoted context omitted.

In the US the insurance companies also negotiate the costs with various heath care providers. It's possible to pay 6,000$ / year in premiums, never hit your deductible so the insurance company does not pay anything out of pocket and still save money .

Last time I saw a hard figure on it, which was admittedly a long time ago, was while I was working at an immediate care clinic. Uninsured folks were getting billed roughly 170% what insured folks were thanks to these negotiated rates.

That's cause most of the people are insured and there is no pressure for lowering rates for the uninsured.

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

#38

Post by tptacek »

anarchotroll wrote: post #35
tptacek wrote: post #12

Earlier quoted context omitted.

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 i…

Individuals can opt into an insurance plan. That's sharing risk. What "society" (government) can do is force everyone to share THE SAME risks single-payer insurance == monopoly

Part of the notion that suggests people should be forced into sharing those risks is that nobody can rationally rule out future unbounded medical expenses; you can't predict the future, and virtually nobody has enough money to cover every plausible medical expense they might face.

So the freedom we're really talking about is --- notionally --- the freedom to make what basically must be an irresponsible choice.

It's true; single payer systems do create a monopoly for health care funding; that monopoly takes its place alongside the monopoly for military force, for air traffic control, for fire prevention, for oceanic weather surveillance, &c.

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

#39

Post by tptacek »

chernevik wrote: post #36
tptacek wrote: post #12

Earlier quoted context omitted.

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 i…

Individuals can share risk, that's what insurance does. The transformation of insurance into a savings scheme puts considerable distortion on that model. It becomes impossible to see what payment is for expected treatment, and what is for risk assignment. The model then encourages people to use more ("I've already paid for it") and to pay no attention to cost. And it encourages the attitude that any problem should be…

This is a concern that could be addressed by providing guaranteed issue and a mandate for high-deductible health insurance, and then leaving it to the market to resolve the financing of everything below that high deductible.

That system is in fact not too far from what we're trending towards in the US.

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

#40

Post by anarchotroll »

DanBC wrote: post #17
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.)

If you can opt out of public helthcare, then it is fine. But if you can opt out, I wouldn't call it "public" anymore.

If you can't opt out, then choosing private basically means paying for both.

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