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
#2Isn't this common knowledge? I'm pretty sure this was something that was mention in a seminar on information asymmetry when I studied Microeconomics 101 a couple of years ago.
Re: The real reason health insurers won’t cover people with pre-existing conditions
#3Isn't this common knowledge? I'm pretty sure this was something that was mention in a seminar on information asymmetry when I studied Microeconomics 101 a couple of years ago.
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Re: The real reason health insurers won’t cover people with pre-existing conditions
#4This 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 argument in the US about health insurance.
Those opposed to government regulation want to handle the savings on their own. Those who like government regulation want it to force people to save for health care costs.
Re: The real reason health insurers won’t cover people with pre-existing conditions
#5Isn't this common knowledge? I'm pretty sure this was something that was mention in a seminar on information asymmetry when I studied Microeconomics 101 a couple of years ago.
It's still an information asymmetry story. From my cursory reading, the contribution is to identify what kind of information asymmetry is involved in healthcare, namely that it's more about the cost of treatment than about the probability of illness.
I know that health insurance is often used to teach asymmetric information models, but it wasn't always obvious that it's a good example. Someone selling a used car might know a lot more about the car's hidden costs than anyone else, but does the typical buyer of health insurance really know more about his or her probability of illness than a sophisticated insurer with good doctors and actuaries and a lot of data?
This led some economists to argue that the problem in health insurance markets is not asymmetric information, but rather too much information—the insurer already knows you will be a bad risk. This research makes it clear that there really is asymmetric information and spells out what it is.
Re: The real reason health insurers won’t cover people with pre-existing conditions
#6This 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 health plan.
Re: The real reason health insurers won’t cover people with pre-existing conditions
#7Isn't this common knowledge? I'm pretty sure this was something that was mention in a seminar on information asymmetry when I studied Microeconomics 101 a couple of years ago.
Read the The Cartoon Introduction to Economics Volume One, page 50. Everything more or less is there.
Re: The real reason health insurers won’t cover people with pre-existing conditions
#8Great 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.
Re: The real reason health insurers won’t cover people with pre-existing conditions
#9I 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?
Re: The real reason health insurers won’t cover people with pre-existing conditions
#10This 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…
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.