
Hospitals Block ‘Surprise Billing’ Measure - howard941
https://californiahealthline.org/news/hospitals-block-surprise-billing-measure/
======
Someone1234
This is why the very concept of insurance discounts are problematic. It might
sound counter-intuitive to argue against "discounts" as a solution to bringing
costs down, but it actually would.

Medical facilities are forced to artificially inflate bills. Insurance then
artificially gets a discount back to a sane price. This helps insurance look
like they're "doing something" even when they aren't e.g. High Deductible when
you pay 100% up to the deductible ("at least I got the insurance rate!").

Out of network also suffers from this. The networks themselves are discount
networks and prices for uncovered patients are artificially high.

If you banned insurance discounts and insurance had to pay the same dollar to
dollar cash price (without kickbacks/incentives), it would help the uninsured,
it would help re-align patient/insurer motivations (i.e. both demanding low
cash prices), it would make price transparency actually meaningful, and it
would eliminate insurance networks.

But ideas like this, and removing employer provided healthcare (e.g. everyone
on an open health insurance exchange) are politically impossible in the US
because no politician can get elected for "taking people's employer insurance
and taking their discounts." Even if they're the right thing to do to
simplify, reduce costs, align goals, and force insurers to compete again.

~~~
criddell
> If you banned insurance discounts and insurance had to pay the same dollar
> to dollar cash price (without kickbacks/incentives)

It never occurred to me before that this is an option. That sounds like a good
idea.

I also wonder why health insurance should be allowed as an employee benefit.
How does it make any sense to tie my access to healthcare with my employment
status?

~~~
baddox
As far as I can tell, the main advantages of getting health insurance from an
employer are 1) the tax deduction and 2) favorable group insurance plans.

For 1, it's just completely insane that all medical expenses aren't
automatically tax-deductible. It's silly that it's advantageous to have my
employer pay $200 a month for my insurance plan rather than just pay me an
extra $200 and let me use that on whatever plan I want.

For 2, that may be a little trickier politically. Group insurance gets more
efficient the larger the group, assuming there's a mechanism to prevent
adverse selection. So obviously, we want to increase group size. That was one
of the claimed justifications for the individual mandate.

~~~
Ididntdothis
For 2 the simple solution is to make the whole country the risk pool.

~~~
baddox
Not the simplest politically, of course, but yeah, that's one of the primary
economic arguments for nationalized health care or at least nationalized
health insurance.

------
wayne_skylar
I'm currently uninsured and trying to deal with the healthcare system in the
US is so annoying it makes me want to give up and move to Canada.

I went to an urgent care center and had a doctor perform a routine examination
for a sinus infection. No special tools or materials were used. Before I went
in I signed a form stating that I acknowledged that I was on the hook for
whatever extra it cost if the situation required it. I was thinking along the
lines of bloodwork, x-rays, etc. The doctor was very helpful in avoiding
unnecessary expense as well.

A month after I paid and left I got a bill in the mail stating the that doctor
had performed an 'extensive examination' and that cost an extra hundred
dollars. They had all the information necessary to bill me this as I left the
urgent care. Yet they chose to wait and send me a bill because it's a complete
fraud.

I really wish I could find out the answer to how this works, but my guess is
that there is some automated process that tacks on extra billing where
possible as a way of boosting income. Ordinarily it's a 'victimless' crime in
that it is paid for by an insurance company.

But ultimately we're fucked in this country with regards to healthcare. It is
a disaster that keeps people sick, yet we need it because it's such a large
part of our economy. Little by little this sector has inserted themselves into
the literal lifeblood of the nation's finance and health and is holding
everyone hostage.

~~~
refurb
Your exam notes are sent to billing, who, using the notes tries to determine
which billing codes are correct. Obviously they have every incentive to “up
code” and get the most amount of money.

~~~
sizzle
This process needs to be more transparent upfront. The physician should know
exactly what services they are referring between the course of you entering
their room, a formal diagnosis and treatment plan of action being made, and
you exiting the room.

Why is it okay to tack on all these mysterious services rendered after the
fact that may not have actually transpired and were instead 'upcoded' as the
insurance company may cover it. This creates perverse incentives and allows
physicians to bill the max rate and optimize for rendering the most lucrative
number of services and they can reasonably get away with.

I've seen dentists do this time and time again if you come in with PPO and put
the pressure on you for extra services if you have an HMO cause they are
barely getting paid, recommending laser treatment for killing bacteria and a
plethora of other scare tactics to get you to pay for their fancy equipment
and hygienists, etc (confirmed this with a dentist relative).

~~~
refurb
Agreed!

I can understand when some complicated procedures can’t be correctly estimated
until after, but there is no reason why routine procedures can’t be priced out
ahead of time.

When my daughter had her tongue tie fixed at a dentist, they gave us the
procedure codes ahead of time and I could ask insurance exactly what it would
cost. It was beautiful.

It’s such a big problem now I’m surprised a hospital doesn’t use it as a
selling point “we give you a guaranteed estimate and if we’re wrong, we eat
any additional cost”. I know that would weigh pretty highly when I’m selecting
a hospital.

------
blackflame7000
Balance billing is a total scam. One time I broke my hand while in another
city. I went to a clinic and they told me they could perform the surgery on
site in about an hour and that they would talk to my insurance company. I got
a voicemail from the clinic 2 days before my surgery saying they talked with
my insurance company and everything was all set. My surgery went fine and took
an hour as expected.

My insurance company calculated that the average cost of the surgery should be
about 10k and that's what they were willing to pay. 6 months later I got a
bill for $150,000 even for the surgery. First, what are the chances that a
bill that large is perfectly even? It's an obvious scam that these places will
literally try to charge as much as they think they can get away with. They ask
for huge numbers hoping to settle above market rate. At no point during this
process was I told anything other than you're covered and with a broken hand,
it's not exactly easy to do research.

~~~
asark
I've seen enough over- or mis-charging "errors" from healthcare billing
departments that I'm 100% sure a good portion of them are intentionally
committing fraud, knowing that if you call them on it they can just go "oops
sorry didn't mean to send that here let me fix it" and not get in any trouble
at all. Even if they do it over, and over, and over.

~~~
LorenPechtel
I have long felt that errant bills should be inverted, not simply gotten rid
of. You legitimately owe $100, they bill you for $300. Now they owe you $200.

There are far too many such mistakes for it to be pure chance. Some of it
certainly is carelessness but they don't care if they make such mistakes. (For
example, once my wife got back to the exam room before it was realized that
the appointment shouldn't have ever existed--she was sent home without
anything being done. Many months later they bill for the co-pay for that
visit. Obviously some auditing procedure noted the "visit" and the lack of a
corresponding bill and "fixed" it.)

~~~
perl4ever
I volunteered at a hospital not too long ago, and they required all volunteers
to have an up to date physical. Well, I hadn't had one in the previous year.
So I checked with my primary care doctor, but they couldn't give me an
appointment for about 6 months. Ok, no problem, I can get it done at the
hospital's employee health clinic. Oops, they're too busy with new employees,
they don't have time to do volunteers. Ok, I live right next to one of the
urgent care clinics run by the same hospital so I thought I'd go there. Well,
they have never heard of such a thing, and they charge $100 for anything, but
I figure, if I'm donating my time, might as well not worry about it. So they
do the exam, but on my way out, some manager or whatever buttonholes me and
says "oh, we didn't realize you were a _volunteer_ , there won't be any
charge". I say, well, I already paid...so they reverse the charge on my credit
card, after a couple of tries.

So...a week later, I get a bill, because their system knows I was there and
didn't pay them. And I think about calling up and telling them it was supposed
to be free, and then I ask myself if I really want to debate this with their
billing department and I just paid it.

------
erentz
In my case I would’ve received treatment for a serious neurological issue
sooner but for the fact that the hospital did not extend to me an _honest_
price for the treatment. I think this kind of thing effectively amounts to
denying some patients treatment and should be treated as such.

We went in the ER and I was admitted. The five day course of treatment on
admission we were told would run in the vicinity of $20,000. Something I could
afford given the extreme circumstances if insurance were to deny it (longer
story there).

But the next day we were told that insurance would deny and the total would
now end up around $100,000 for the full treatment. Not something we could
afford. And I was not in the state of mind or ability to handle this smartly
or know I could get a lawyer or try to start some negotiation with them as
people might suggest.

So we had to be discharged without completing the treatment. A month later I
had been relocated across country to change insurance to a provider that
covered it and was able to start treatment. Now we could see that an insurance
company was only paying $16,000 for the full course.

This effectively denied me treatment (amongst other things) and caused pretty
significant harm.

(This is not ignoring that I am lucky to be in a position to afford a $16,000
treatment bill and many aren’t, but this is to say that when the hospital
jacks up the price 7 fold in a situation like this they’re effectively saying
“go away we won’t treat you”. They could’ve just as easily given me the real
pricing and then I would’ve been able to be treated.)

~~~
sizzle
Was it an experimental procedure? Why would insurance not cover it once your
max out of pocket amount is passed? Sorry if I'm mistaken, health insurance is
mind boggling for me, just trying to learn from others if I find myself in the
same situation moving forward.

~~~
erentz
So in the USA if you work for a medium-large company they will almost
certainly have you on a "self funded health plan". These are plans where the
Cigna, Anthem, etc. card you get makes it look like that's your insurer, but
in actual fact your _employer_ is your ensurer. The Cigna/Anthem/etc. you are
interfacing with is just a contracted administrator that handles the billing,
claims, etc. processes, then passes the full costs back to the employer. (The
employer will also have various re-insurance set ups to limit their total
liability in case of very expensive situations.)

This administrator (Cigna et al.) will have a bunch of policies for certain
treatments and drug uses that define when they can be used. These operate like
a firewall rule, being parsed, and if you don't match perfectly, you get
denied. Sometimes they'll be more flexible, but some are known to be terrible
( _cough_ Cigna _cough_ ).

If you don't match this policy perfectly then your treatment gets classified
as "experimental". At that point they point you to something called the "XYZ
Company Handbook" which is something your employer maintained. This is a
document that almost _never_ exists in reality, but the gist is that "XYZ
Company Handbook" will say experimental treatments are not covered.

(There was nothing really experimental about my treatment, it’s just high dose
IVIG, with lots of patients on it and a half dozen of my doctors all
supporting it. Experimental seems to be their euphemism for “expensive, so we
don’t want to cover it”.)

So administrator points to employer, then you go to your employer, they point
to the administrator. Then you go to a lawyer or your state insurance
commission for help, and they say because it's a self funded health plan it is
not technically an insurance product, and is regulated under federal law as an
ERISA plan. This means years in court, and the maximum you can ever recoup is
only the costs of the treatment. So you have to pay for treatment up front,
then fight to get those costs reimbursed. And because there can be no punitive
penalties there is no real incentive to act in good faith.

Your lawyer (or state insurance comission) will also point out that because
the plan is self funded your employer is actually the ultimate authority and
can approve or deny or make exceptions for any claim.

The appeals process can include something called an independent review, where
an outside organization can review your case and recommend treatment or not.
This is a time consuming process though. Also it doesn't always work out. And
they tell you that they are not bound by the results of the IRO anyway.

In our case we were able to change from our employer's self funded plan to a
legacy brokered plan, an old school type one where your premiums actually go
to the insurance company and the insurance company pays for all treatments.
These are regulated by state insurance commissions. This plan was actually
provided by a _not for profit_ Blue Cross/Blue Shield and they covered the
treatment immediately because my case was pretty darn obvious that I needed
it.

~~~
sizzle
Thanks for the in-depth reply, and I'm glad you sorted it out. Hope you never
have to go through this again.

------
mc32
This is ridiculous, along with that judge blocking the order to bring cost
transparency to advertised drugs.

But here we are in California a self described progressive state, but the pols
pull this?

Note, I’m not a progressive as I agree and disagree with many things and am
politically all over the map but I think these are things that are good for
all of us.

~~~
davidw
California talks the progressive game, but in housing for instance, they've
failed and failed.

Oregon passed significant housing reform this year - California failed (OR HB
2001 vs CA SB 50).

Lots of articles on this:

[https://www.sfchronicle.com/opinion/article/San-Francisco-
Ba...](https://www.sfchronicle.com/opinion/article/San-Francisco-Bay-Area-is-
not-progressive-on-13319525.php)

[https://marketurbanismreport.com/blog/the-disconnect-
between...](https://marketurbanismreport.com/blog/the-disconnect-between-
liberal-aspirations-and-liberal-housing-policy-is-killing-coastal-u-s-cities)

And one on Oregon's bill: [https://www.sightline.org/2019/06/30/oregon-just-
voted-to-le...](https://www.sightline.org/2019/06/30/oregon-just-voted-to-
legalize-duplexes-on-almost-every-city-lot/)

~~~
blackflame7000
There are a lot of NIMBYs in California. It's really easy to signal virtue but
to actually follow through takes real work.

------
doggydogs94
Politicians talk big on health care reform and do nothing. And California’s
assembly is over 2/3 Democrat; no Republicans to be the fall guy.

------
jimbob45
Seems like this problem could be solved by forcing an insurance provider to
cover every emergency room in a state (note, not Urgent Care).

And in all honesty, it seems that 60% of the problem with modern insurance
lies with these totally arbitrary delineations of what is in-network and what
is not. The insurance company gains implicit power over where you get treated
by making up these "networks". Why should an insurance company be the one
certifying hospitals? Shouldn't that be done by, yknow, a government agency
and not a profit-seeking insurance firm?

~~~
tathougies
> Why should an insurance company be the one certifying hospitals? Shouldn't
> that be done by, yknow, a government agency and not a profit-seeking
> insurance firm?

I mean, governments do certify hospitals. If you don't have gov't
certification, you can't provide medical services.

------
cameldrv
I'm not sure that on its face that this makes much sense. It reminds me of the
kids song "I don't know why she swallowed the fly." Fundamentally the problem
is that prices are set by a market, but the market has some inherently unusual
characteristics, and has become controlled by a series of government
sanctioned cartels.

With private insurance, your insurance contracts with some hospitals. If you
go to a hospital that's not contracted, your insurance will pay what it deems
"reasonable", and you have to pay the balance of whatever the hospital decides
to charge you. With a law like this, the hospital would have to just take
whatever the insurance company deemed to be the correct price. This would seem
to incentivize insurance companies to have very low "reasonable" prices for
out of network visits.

------
ericol
I don't understand health care in the US.

I live in Argentina, that's like being the most-dysfunctional and mentally
challenged cousing in an already dysfunctional extended family (South &
Central America).

We have lots of issues with health care here, _specially_ for those that work
on our own (I don't exactly work on my own, but working for a foreign company
is more or less the same).

There are lot of stories going around (some of them I know first hand because
some relative's kid has a rather strange syndrome, and getting their health
care org to cover that was an impossible task) but still, the "You broke your
leg here's a 50K bill" kind of story I often get from the us is a total and
utter madness.

I kind of enjoy in a bewildered amusement these public displays of lobbying,
thought.

------
oceanghost
A certain number of these surprise bills are fraudulent as well.

I had to go to the ER during the middle of the night. Saw the doctor for 10
mins total. A few months later, I got a bill from the physician on duty saying
they were out of network; it was for a shade under $1000.

I called the insurance company, and they said, the hospital had a history of
sending fraudulent bills, that they had already paid the physician _AND_
previously had sued the hospital for sending these fraudulent bills and
obtained a legal settlement enjoining them from doing it.

In another incident, my wife's OBGYN kept sending us small bills, $29, $74,
etc. even though we have paid our co-pays. I called them up and asked what the
bills were for, and they honestly couldn't tell me-- saying they would call us
back. Which they never did. Which I assume meant, "you caught us lying."

~~~
vkou
The only question I have is: How are these doctors and bill coders not sharing
a jail cell with Bernie Madoff, and that guy who keeps stealing six-packs from
my grocery?

------
droithomme
I've been through the surprise billing stuff multiple times. At this point
unless I am unconscious and can not consent, I'm not going to the hospital.
I'll bleed out and die on the street if necessary, or spread ebola or
whatever. No way am I going there. You go in, they do nothing, then you have
$30,000 in bills that arrive in hundreds of stages over the next 24 months.

You're better off borrowing money from the mafia than you are visiting most
any emergency room in the US. The mafia has much more straightforward billing
transparency, fewer surprises, and is generally more honest.

~~~
avionicsguy
I've been both insured and uninsured. I agree with you. I'd rather die than go
to a hospital and leave with enough debt to cover Harvard, Standford, or [name
your institution].

Also, know that the primary care givers (nurses mostly but also doctors) don't
get paid as much as you think they might. The insurance companies are all for
profit so the system is gamed this way.

[Edit] If you need non-emergent surgery and have an idea of what you need you
can check out:
[https://surgerycenterok.com/pricing/](https://surgerycenterok.com/pricing/)

Disclaimer: I have no affiliation with this organization but I applaud them!

~~~
droithomme
Thanks for that link! For non-urgent routine care I have a local doctor. I was
going to recommend to you a2zimaging, which was a service I used for discount
MRIs using unused capacity nationwide, but I see just now they've gone defunct
in the last year or so. They used to have MRI scans for $250-$500 depending on
state. This was less than the over $10,000 I was quoted without. I seems
there's other services claiming to do something similar now but I have no
experience with them.

I've also paid cash at old specialists who don't accept Medicare, and traveled
to Mexico for care. I've also gotten superb care while overseas. Single payer
is probably the answer. If I need serious surgery some day I will likely do it
in India. Your site there seems a reasonable alternative I would look into.

But this still leaves open the situations with a serious accident requiring
immediate care which would surely bankrupt anyone. Insurance never covers
whatever care is nearest to a random accident site, and this scheme is by
design, along with the curious situation where each hospital and their staff
are carefully partitioned out to different networks.

------
gregkerzhner
The American system is pretty messed up compared to the rest of the world, but
I think the elephant in the room is that if you are insured and have money to
spend, I think the American system is better just because you have more
options and can see specialists quicker.

I broke my ankle in a really bad way rock climbing two years ago. When I first
broke it, my health insurance was Kaiser, an HMO, which is a decent example of
how a government healthcare system might look like in other parts of the world
(you cannot just go see a specialist and everything is controlled by
referrals). I had major trauma in my ankle that required surgery, but Kaiser
won't even let me see an orthopedic surgeon. Their policy was that since it
was foot injury, I would only be able to see a Podiatrist, and I had no choice
in that matter since I had no control over which kind of specialist I could or
coudn't see. When I talked to my orthopedic surgeon friend about this referral
to a Podiatrist, they thought it was crazy.

I went to see that Podiatrist and they basically told me that my ankle was
screwed, there was not much they could do for me, and that I will spend the
rest of my life in pain. I think in another country like Canada or Britain,
that would probably be the end of the story.

I am pretty young, so I didn't want to give up just yet. I went and got a
second, third, fourth, etc... opinion from other doctors, just paying in cash
outside of my insurance. Eventually, I switched insurances to a PPO plan (just
a regular Obamacare plan) and found my way to The Steadman Clinic in Vail,
which is where a lot of pro sports players get orthopedic surgery. There, a
surgeon recommended a procedure where they use stem cells during the surgery
to rebuild dead tissue. I was able to have that procedure.

Two years later, my ankle is still pretty messed up, so I went to that doctor
again, and he recommended a third surgery to clean up a bunch of dead tissue.
From the time when I decided to see the doctor again to the time I had the
surgery was 1.5 weeks!

All this is a great example of why the US system is bad overall, but actually
good for the patient if you have money. I have seen like 10 orthopedic
surgeons for this injury and have had 3 surgeries, all because I was motivated
to try to get better and to try all options. I don't think I would have gotten
nearly that much or that good of care under a government plan. The amazing
thing about the US system is that if you have money, and you want to try
stuff, you just can! There is noone telling you otherwise.

~~~
theluketaylor
That's not how it would go in Canada. Doctors can refer you to whomever they
see fit, no approvals and the only oversight is the general process to
maintain their medical license.

The ER doc would refer you to an orthopedic surgeon. You might spend some time
in a boot waiting for a surgery slot since your injury isn't life threatening,
but you would get surgery.

------
blendo
It's important to point out that in California, if you are treated "out of
network" AND your health insurer is an HMO (such as Kaiser), you WILL NOT
receive a surprise bill (see [https://caselaw.findlaw.com/ca-supreme-
court/1001051.html](https://caselaw.findlaw.com/ca-supreme-
court/1001051.html)).

Anecdotally, our family have been Kaiser members for nearly 25 years, and
we've NEVER been party to a billing dispute. Perhaps Kaiser fights with SF
General or other ER providers, but they thankfully keep their members out of
it.

Finally, my yearly cost to remain with Kaiser tends to be about 10% less than
our company's other PPO options.

------
fortran77
No they didn't. Lawmakers did.

------
godzillabrennus
I read recently that the Cleveland Clinic has lost 91% of its net income:
[https://www.beckershospitalreview.com/finance/cleveland-
clin...](https://www.beckershospitalreview.com/finance/cleveland-clinic-s-
annual-net-income-drops-91-on-heavy-investment-losses.html)

This just a few years after a 71% loss of operating income:
[https://www.beckershospitalreview.com/finance/cleveland-
clin...](https://www.beckershospitalreview.com/finance/cleveland-clinic-s-
operating-income-plummets-71.html)

Maybe healthcare systems are in a pinch?

~~~
mwerd
Their net income swing is almost entirely attributable to a ~1 billion change
in investment returns. Their operating income only fell 20%, because they had
8% increase in operating expenses without a commensurate increase in revenue.

It's actually all laid out in your link.

~~~
dredmorbius
Curiously, the 1980's liability insurance crisis also arose out of dramatic
swings in investment returns, _not_ massive changes to the liability risk side
(instances or awards). Which itself precipitated from the Volker Fed's
exceedingly ill-considered moves to reign-in inflation (ironically because the
financial / FIRE sector dislikes high inflation).

Insurers (and the Cleveland Clinic) achieve income through _both_ premiums
charged _and_ investment return on those premiums. Because premiums are a
competitive market, more subscribers can be acquired by lowering premiums,
possible by pursuing higher investment income. Which works until it doesn't.

Premiums and payouts are locked-in contractually, whilst currency valuation
and investments float on the market. Stay on the right side of that and you're
Life's Golden Child. Get on the wrong side and nothing can go right.

Curiously, the insurance (that is: risk-management industry) seems blind to
the investment-side risk and keeps getting bit by that bug every decade or
two.

Wikipedia's (very brief, incomplete) treatment:

[https://en.wikipedia.org/wiki/Liability_insurance_crisis](https://en.wikipedia.org/wiki/Liability_insurance_crisis)

------
Havoc
My European insurance policy specifies

>Global except north america

i.e. You go to war torn Sudan we've got your back but if you dare going
anywhere near that bastion of freedom known as the US...you're on your own.

The fact that medical insurance companies are down with Sudan, North Korea and
China...but not the US...that would suggest the need for some introspection
frankly.

(Bit puzzled by the Canada inclusion though - any ideas?)

~~~
swebs
Can you link the policy? I highly doubt they cover Sudan.

~~~
fesoliveira
That is not really his point. He means that he can go almost to any other
country and be covered, but if he goes to the US, which is one of the richest
and most medically advanced countries in the world, he won't.

~~~
Havoc
>That is not really his point.

Correct. Thanks for elaborating.

------
godelski
I'll start this by saying that I'm highly in favor of universal health care.
Seems like the best insurance company would be the one with the most patients,
which can thus negotiate the best deals. So with that out of the way...

Doesn't this bill completely undermine the insurance business? If a hospital
can't charge more than the median value that in network patients are charged,
why would you buy insurance? I must have misunderstood or misread something.

I would think this would make it substantially more difficult for insurance
providers to make negotiations and cut deals with hospitals. I would imagine
they would just pass off the cost to the consumers, as they typically do.

It always seems to me that these half way positions between universal health
care and commercial end up being worse than either. From a very high level it
sounds like a fantastic thing, preventing patients from getting screwed, but
isn't the cost that those with insurance pay more? I would assume that there's
far more people paying insurance than the number of people that get these
surprise bills. Though I'll admit the whole system feels rigged at this point
and is likely intentionally convoluted to make consumers uninformed (by level
of difficulty).

~~~
bhelkey
> If a hospital can't charge more than the median value that in network
> patients are charged, why would you buy insurance?

You would buy health insurance for the same reason anyone buys any kind of
insurance (above legal minimums).

Suppose a thousand people have a 1% chance of owing $10,000. Their EV is
-$100.

If a company offers insurance for $120, the company benefits by making $20 *
1000 and the individuals benefit by removing variance from their life.

~~~
michaelmrose
A massive portion of medical expenses presently paid for by insurance are
predictable costs that the insured knew going into the year.

You can find affordable car insurance because your actual payout from your
insurer is very likely zero this year.

If your actual payout this year is certainly 10-100k this year depending on
what actually goes wrong this year how on earth do you affordably insure that
individual. Remember also that sickness stunts family income.

Insurance only makes sense for large hard to predict expenses.

~~~
singron
It makes sense for insurance to incentivize preventative care (e.g. by paying
for it or requiring it), since it reduces future large claims. Otherwise it
can be cheaper for individuals to forgo preventative care and wait for
insurance to cover the large claims.

~~~
perl4ever
"It makes sense for insurance to incentivize preventative care (e.g. by paying
for it or requiring it), since it reduces future large claims."

This is a popular thing to say, but the trouble with the logic is that the
cost of preventative care, albeit small, is multiplied by everybody, while the
cost of the large claims is multiplied by a small fraction of everybody.

So whether it is actually profitable to prevent problems is very sensitive to
the cost of the prevention, and the likelihood of the consequences without
prevention.

I think a lot of people are familiar with the scene in the movie Fight Club
where the guy is talking about the cost-benefit equation for initiating an
automotive recall. If prevention was automatically profitable, then that scene
couldn't exist or make sense.

------
Pinckney
It died without a vote, and thus it's not even clear from the article who I
ought to be calling and yelling at. Chiu? Presumably he pulled it because of
pressure from others. Is there some way for me, as a voter, to determine which
individual legislators are to blame?

------
Yizahi
Don't worry, the free market (tm) will sort itself. It's all for the best for
consumers.

