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

slate.com

51–60 of 64 posts

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

#51
post #39

Earlier quoted context omitted.

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.

I don't see how you can say that. We're currently headed towards comprehensive insurance whose holders pay very little out of pocket. Consumers will have no incentive to limit consumption or make cost / quality tradeoffs, and none to police providers for cost. And "guaranteed issue" is never _insurance_, it's cost sharing. Because it takes the known costs of some individuals and spreads them to others. It is a mandat…

Employees at many large companies today already have the option of high-deductible insurance; scaling the new, as-yet-unimplemented guaranteed issue system "back" to require a mandate only for high-deductible insurance (and thus guaranteed issue only for high-deductible insurance) would not be a major change.

You are articulating the "moral hazard" concern with universal health insurance. I am recognizing moral hazard, and saying that it can be addressed in a universal system simply by setting the threshold that the system pays out at a higher number.

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

#52
post #38

Earlier quoted context omitted.

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 t…

It is entirely possible for a person to rationally rule out future unbounded medical expenses if he or she has no desire to live in agony and spend hundreds of thousands of dollars to prolong his or her life by weeks or months. Such people are forced to subsidize people who want to live in agony at high cost for small periods of time. I don't think this is a significant problem, because the people who receive this su…

This argument basically says that people can avoid the expense of, say, a liver transplant by opting to die instead.

That's true, but it's not a winning argument.

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

#53
post #41

Earlier quoted context omitted.

Virtually everyone is insured as a side effect of being an employee at a company that provides access to a group health insurance plan as a benefit. This has the side effect of coupling people's jobs to their health insurance, which drastically reduces labor mobility.

83% is certainly a large majority, but it is not "virtually everyone".

The remainder in this statistic are covered by what? Medicare/medicaid? Private insurance? Co-op plans? Nothing at all?

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

#54
post #53

Earlier quoted context omitted.

83% is certainly a large majority, but it is not "virtually everyone".

The remainder in this statistic are covered by what? Medicare/medicaid? Private insurance? Co-op plans? Nothing at all?

17% have no coverage at all.

56% get it from their employer, and 8% buy their own private insurance.

Source: US Census Bureau, 2009 figures http://www.census.gov/prod/2010pubs/p60-238.pdf (Starting on page 22)

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

#55
post #51

Earlier quoted context omitted.

I don't see how you can say that. We're currently headed towards comprehensive insurance whose holders pay very little out of pocket. Consumers will have no incentive to limit consumption or make cost / quality tradeoffs, and none to police providers for cost. And "guaranteed issue" is never _insurance_, it's cost sharing. Because it takes the known costs of some individuals and spreads them to others. It is a mandat…

Employees at many large companies today already have the option of high-deductible insurance; scaling the new, as-yet-unimplemented guaranteed issue system "back" to require a mandate only for high-deductible insurance (and thus guaranteed issue only for high-deductible insurance) would not be a major change. You are articulating the "moral hazard" concern with universal health insurance. I am recognizing moral hazar…

I'm not talking about moral hazard.

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

#56
post #52

Earlier quoted context omitted.

It is entirely possible for a person to rationally rule out future unbounded medical expenses if he or she has no desire to live in agony and spend hundreds of thousands of dollars to prolong his or her life by weeks or months. Such people are forced to subsidize people who want to live in agony at high cost for small periods of time. I don't think this is a significant problem, because the people who receive this su…

This argument basically says that people can avoid the expense of, say, a liver transplant by opting to die instead. That's true, but it's not a winning argument.

He's not arguing against liver transplants so you've just thrown a redherring into the discussion.

I believe his argument is that expensive end-of-life care is unnecessary because death at that point is inevitable in the immediate future. You can gain months on average, but those months aren't economically invaluable.

With limited resources, its better to spend on treatments with the greatest quality of life to cost ratio.

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

#57
post #52

Earlier quoted context omitted.

This argument basically says that people can avoid the expense of, say, a liver transplant by opting to die instead. That's true, but it's not a winning argument.

He's not arguing against liver transplants so you've just thrown a redherring into the discussion. I believe his argument is that expensive end-of-life care is unnecessary because death at that point is inevitable in the immediate future. You can gain months on average, but those months aren't economically invaluable . With limited resources, its better to spend on treatments with the greatest quality of life to cost…

And I'm not arguing about expensive end-of-life care. I don't have a strong opinion about end-of-life care. There could be a lot of value in changing the way we finance end-of-life care. That doesn't change the fundamental problems we have with health insurance now: either it chains you to your current employer, or threatens you with an intolerable risk of bankruptcy.

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

#58
post #16

Earlier quoted context omitted.

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.

This is not true.

Your ideal universal system may ration on medical need. There might even be one in existence that does so...

...but I really doubt it.

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

#59
post #11

Earlier quoted context omitted.

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.

Sorry, health insurance providers.

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

#60
post #31
post #26

Earlier quoted context omitted.

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".

The Wikipedia article says "Whilst adverse selection in theory seems an obvious and inevitable consequence of economic incentives, empirical evidence is mixed." This paper gives more concrete empirical evidence.

The WP article later says: "On the other hand, "positive" test results for adverse selection have been reported in health insurance,[8] long-term care insurance[9] and annuity markets.[10]". The reference #9 is Finkelstein, A.; McGarry, K. (2006). "Multiple dimensions of private information: evidence from the long-term care insurance market". American Economic Review 96 (4): 938–958.

Then if you go to the actual paper by Nathaniel Hendren, linked to by the Slate article, you'll read:

"""Previous research has found minimal or no evidence of private information using the revealed preference approach in these settings. In life insurance, Cawley and Philipson [1999] find no evidence of adverse selection. He [2009] revisits this with a different sample focusing on new purchasers and does find evidence of small amounts of adverse selection. In long-term care, Finkelstein and McGarry [2006] find direct evidence of private information by showing subjective probabilities are correlated with subsequent nursing home use. However, they find no evidence that this private information leads to adverse selection in the form of a correlation between insurance purchase and subsequent losses in the LTC insurance market.35 To our knowledge, there is no previous study of private information in the non-group disability market."""

In other words, WP's "'positive' test results" isn't as strongly positive as you might think from that short WP summary. The finding from this paper is the development of a more useful model of the problem which can make more concrete statements like: "For those who would be rejected, private information imposes a barrier to trade equivalent to an implicit tax on insurance premiums of roughly 65-75% in long-term care, 90-130% in disability, and 65-130% in life insurance."

That could not have been done using the information in the Wikipedia article.

You complained about two things: that there are no new findings, and that the Slate article could have been writing from the Wikipedia article. I think I've shown that there are definite new findings in the actual report. It was interesting enough, after all, to get the researcher "offers from economics departments at Harvard, Stanford, and Princeton."

As to the quality of the Slate article - the entire first half is meant for someone who has never heard of "adverse selection", and it explains the topic much better than the WP article does. It then covers some of the research methodology, and describes the policy impact and ties to changes in US insurance law and politics. None of the last half is covered in the Wikipedia article.

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