A question on insurance

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Some level of pooling is important to insurance, but that doesn't mean maximizing pooling is a good idea. Once an insurance company reaches the point where pooling is sufficient to even out statistical fluctuations, further pooling is not beneficial, and may be harmful. For example, in automobile insurance, it makes sense to have specialized companies serving the collector automobile market, because the concerns are different from, say, commuter vehicles.


In the case of health insurance, you may well be able to design a subculture that is more health conscious. Certainly when I have had physical examinations, a big part of what my insurance company makes my doctor do is inquire about my dietary and exercise habits, and give me advice on that. One benefit of having competing insurance companies is that different insurance companies may be able to explore different health habits, adding to our knowledge of how to be healthy.

Before you can really go wading into the examination of health insurance as a pure service marketplace you have to tackle the fundamental question:

"Is universal access to medically necessary health care a service that government is obliged to ensure for its citizens?"

Every developed nation has already answered this question in the affirmative--even the United States. You might not agree with that, but it does not change the fact that government expends considerable resources and policy authority into the direct purchase of health care for citizens, as well as regulating health insurance, which is the primary vehicle by which citizens procure those services on their own.

Where nations differ is how we give effect to that ideal of universality.

In some cases, health care is a directly provided government service, free to the user at the point of delivery--much as public education is presently in the United States. Others have gone to a single payer insurance system. Still others have hybridized. No nation has got it right, because no nation has access to limitless resources.

In my country, the vast amount of primary care is paid for by publicly managed, single payer systems. This allows government to exercise some degree of control over the costs of care, meaning that Canadian governments can spend far less that their US counterparts on health both in per capita terms and in terms of percentage of GDP, while achieving comparable, or sometimes better general performance indicators.

That's not to say that we do not have shortcomings--physicians and nurses are more poorly compensated, and have increasing access to the United States under NAFTA. Wait times are a constant source of political pressure. But this is the price we pay for price control. The price that you pay is insurer control of access to services.

Health care can never be looked as as a pure market. Widespread insurance creates a moral hazard that insulates consumers from the cost of their choices, so there is no incentive on the part of service providers to deliver price sensitivity. Innovation in medicine is oriented towards efficacy, not efficiency.

If you are prepared to abandon the principle of universality of access, then you can start to examine the market freed of the framework under which is presently operates.

I responded to your question purely on a micro economical perspective (it seemed a theoretical question at first), I know almost nothing of the north american market of insurance or healthcare system, and I can't stop laughing at people saying "death panels" on youtube.

It's a hyped up word and I've avoided using it before because it's absurd but I figure I may as well use it as a semantic weapon since I know exactly what they're talking about and that private healthcare insurance does the exact same thing (and arguably in a more lethal and ruthless way).

Very simple. Government monopoly = no choice.

With a monopoly there is no choice. You don't like the coverage? Too bad, you die. With free markets there is competition and choice. You can go elsewhere. And the final option is you can always pay for it yourself.

There is rationing, and always will be. It is a cost savings to enact policies of eugenics. When costs go thru the roof, sterilization of undesirables becomes more appealing. Right now government doesn't foot the bill, so it's easy to get laws to prevent such things. But when government actually has to pay for everyones healthcare things change. (Time to enact Godwin's law) And if you don't like it you get put on a train and sent to a nice camp for your type of people.

Choice is not always a good thing and it's not exactly like people shop around for insurance. The vast majority of people only shop around between what they can afford and how much coverage they're willing to give up and that isn't shopping around, it's (again!) rationing how much healthcare you want. And it's not even a sane system in that sense: you can't afford the higher premiums so you get less coverage then you end up having to pay more on the back end and getting farther in debt if you happen to go beyond your coverage. So it's not only no choice but it's also rationing care and putting individuals into debt for health issues.

Coverage "choice" is not like choice in soda. "Choice" means you either pay more up front (if you can) or you pay a ton more on the back end (which you've already established that you can't if you're going for the cheaper option).

If it had been the Republican Healthcare bill, then yes people would be shopping around for insurance, or rather their employers would be. If a bunch of small businesses can get together and jointly negotiate insurance policies with an insurance company, they would effectively have the purchasing power of a large corporation.

An individual may not have much in the way of bargaining power, but if it is a series of small businesses say 20 of them with 50 employees each. We're talking 1,000 insurance policies, playing games at that point wouldn't just be oh well it was just one person, really annoying those businesses could seriously hurt the insurance company financially. Not to mention the other corporations that have policies might leave said insurance company too. An insurance company would have to be even more careful if they are competing with a large number of insurance companies and would be looking to offer the best rates and the best service and still make a profit.

Insurance companies also will go after waste and fraudulent claims where the Government will at most make a token effort, because it fraud costs them money and may make it so they aren't competive enough to keep from losing business.

20 people determining the healthcare availability and options for 1,000. That's statistically 2% having a choice, or, no choice at all if you want to be realistic about it for the other 980 people involved.

And when you expand it to real world situations with the corporations that employ thousands per company and, in some instances, millions, that percentage of who decides the health care is even smaller. Again, you pick how little coverage you have but you don't actually shop your own health care.

The illusion of choice.

And even further on your own example is that this is granting power equally to all those involved. That may not be the case and there may be those who end up having more sway and power over the other 15 or 18 or so. Which means that there's really even less choice!

Your numbers are cute but flawed in the real world and merely a ruse to prop up an industry that will collapse or its people will.

I just saw that I actually did that incorrectly. It should be 1000+20...so actually I should have done 20/1020 for the percentage that actually represents and should have said 1000 instead of 980.

I'm going to break this down for you, unlike the Federal Government, a small business owner actually has a reason to make sure that his employees are getting good health care and aren't getting hosed. Further an employee always has the choice not to go with the business's health plan. Normally, employees choose to let their boss or the representative of the boss or in the case collection of business owners represent them or the individual hired to represent those owners at the bargaining table.



You really have no idea how economics work do you?

The employees don't have to get the insurance that the company negotiates, but usually chooses to because they don't have to deal with the pre-existing garbage, gets better rates, and the insurance company is more hesitent to play games with someone that could yank all those policies from them and give that business to another insurance company.

*facepalm*

I'm arguing for 100% government run healthcare and pointing out how there's no actual choice and you insult me on economics? You think I don't understand why companies get better rates? How come you don't understand how there is no actual choice that way? Is it because there's theoretically a choice for a minority of people? What kind of idiot are you to think that freedom for 40% matters to the other 60%?

Let me break this down for you:

Under government health care you will have some unelected pencil pushers determining what treatments you are allowed to get, if any, and whether or not you are even worth the cost to give treatment.

I can't help it that the school you went to didn't teach history or how people in countries like the Soviet Union were treated.

Fact is, Government had someone see an eye doctor to see if his vision had improved so they could kick him off disability. The man no longer had eyes to see with, how could his vision improve, but still they forced the man to go through with that doctor visit.

If elected officials are handling the healthcare it will be politicized, if it is unelected officials with next to no accountability, they won't even see you as a person just another statistic, and they couldn't care less if you die because all they see you as is just another drain on the system.

Furthermore, the majority of Americans want Obamacare REPEALED, I got news for you, YOU ARE NOT IN THE MAJORITY.

Not necessarily. Risk pooling is the major advantage, but we have to remember the whole issue of marginal benefits. Frankly, our pools can probably be smaller than the entire population and still get most of the benefits of risk pooling, just like our statistical samples can be smaller than a census in order to have good estimations. Even further, as other posters have pointed out, monopolies do tend to have incentive issues.


Even this is not necessarily the case. Private monopolies can be challenged by new entrants. Private monopolies also still have incentives to push away from bureaucracy. Public offices don't do well at avoiding the red tape, and for the most part, the incentives to make sure government services are efficient probably is very low. People may be concerned, but I'd bet that most voting occurs on less valuable issues such as gay marriage and things like that.

How is that different from an unelected pencil pusher at a call centre in Bangalore deciding whether or not your treatment is covered?

In my own practice, I treat Canadians covered under publicly funded insurance systems from every province. I also treat privately insured visitors, some of whom have travel insurance policies and others of whom are covered under "out of country" provisions on their ongoing private insurance.

I do not need to get approval for treatments, other than experimental treatments, for patients covered by my home province's system, or indeed any other provincial system. But I do have to deal with pre-approval from private insurers. The visitors whose insurers most often refuse to approve treatment are visitors with private insurance from the United States.



How about how people in Canada, the United Kingdom, France, Germany, Italy and Japan are treated? Lets even extend that to the entire OECD. Then at least we are looking at countries with economies large enough to provide for health care.



And private insurers who provide short-term and long-term disability benefits do precisely the same type of thing. You're taking an anecdote, but failing to recognize that it is equally applicable to the system that you prefer.



I have news for you. Health care is politicized. So long as people have an expectation of access to health care, they are going to expect government to ensure that there is a system there to care for them. It doesn't matter whether that system is publicly delivered, paid for from public insurance, or simply publicly regulated--it is going to be politicized.

The only way to depoliticize health care is to completely deregulate it. That worked really well with savings and loan in the 80's and 90's. It worked really well with subprime. So it's bound to work well with healthcare, isn't it?



Fair enough. But all I will say is, "Be careful what you wish for. You just might get it."