
What do we need health insurers for anyway? - jamesbressi
http://articles.latimes.com/2010/feb/28/business/la-fi-hiltzik28-2010feb28
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htsh
No, I've decided that it doesn't make sense for me right now. When I stopped
working at at a law firm, my cobra payments were $600/month. Since the law
firm ceased to exist (heller ehrman), even the option to even pay $600/month
for that premium care lasted only a few months. Independent of some sort of
union, my cost will be around that same $600/month for the lowest level of HMO
with large copays, and this is what I did for a few months before deciding it
didn't make sense.

I am relatively young (33), relatively healthy (knock on wood), and I have a
decent enough network in India such that I can drop in on a moment's notice.
In India, healthcare is 10-30% of the cost for similar care (American run
hospitals, often by universities like Harvard). There are other concerns, but
purely on cost, its actually cheaper to fly from NY to India or another
country and have many popular medical operations performed. An MRI costs $1500
here, in India its $100. A broken arm can cost $25,000* here with
hospitalization, less than $1000 in India.

This leaves me wide-open for catastrophic events, for which I wish I could buy
"urgent-only" insurance to cover this small probability. I'd like to insure my
urgent care in the US but for anything else that requires a doctor and is not
urgent, I'll take care of it elsewhere, likely planned around vacation.

Some people seem to have decent rates and plans for their small companies, but
I'm finding quoted rates much higher for very new companies or individuals
than they used to be.

(* edit: I've never broken my arm but I got the 25k # from a reddit
conversation about ridiculous emergency room hourly costs for the uninsured. A
quick google search for "broken arm cost" reveals that though 25k may be high,
ppl have reported 20k and 5 figures seems to be the norm -- looks like it
depends on the amount of emergency room time req'd.)

~~~
josefresco
"A broken arm can cost $25,000 here with hospitalization"

While you're probably right (and that's scary) that's one helluva broken arm.
I broke my arm when I was 13 or so and don't remember spending more than a few
hours in the hospital. My arm wasn't crushed or anything but I think 25K might
be a stretch.

~~~
axod
Most of it likely goes on administration and bureaucracy.

------
RyanMcGreal
Ask America: how much more wildly dysfunctional does your healthcare industry
have to get before you finally admit what every other industrialized country
on earth already understands: that health care is a public service, not a
commodity?

~~~
pragmatic
Please define "wildly dysfunctional".

~~~
cabalamat
How abvout this graph: [http://www.fivethirtyeight.com/2010/01/healthcare-
spending-a...](http://www.fivethirtyeight.com/2010/01/healthcare-spending-and-
life-expectancy.html)

Just about every other rich country spends less per person on healthcare than
the USA (typically about half), and the people live longer. The Japanese, the
longest-lived large country in the world, spend about a third per person of
what the USA does.

Clearly dysfunctional. "Wildly"? That's a matter for debate.

~~~
zargon
Graphs like that might actually say something if they included a "lifestyle"
axis and a "uses car insurance for oil changes" axis, as munctional puts it.

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jamesbressi
Unemployment+more_elderly+healthy_young_uninsured=non-sustainable-business

There are many young entrepreneurs in this community. With youth we feel
invincible and aren't typically "unhealthy".

So, do you insure yourself? Many 20 somethings I know do not. This LA Times
article discusses if we even need "health insurers" and explains what we all
know: For health insurers to be profitable, they need young healthy people to
have policies and pilfer elderly sick people.

Now that the baby boomers are here and for the first time in history we have
more people that are near/over the age of retirement than under the age of 5,
how can insurers make money without having premiums go through the roof?

~~~
lambda
"...how can insurers make money without having premiums go through the roof?"

Easy. By getting health insurance "reform" passed in congress that requires by
law that all those young people get health insurance as well, without actually
substantially changing anything else.

~~~
j_baker
Making young people get healthcare is what the system needs. Health insurance
companies can't make a profit (or break even) if they only insure the sick
people.

In all honesty though, I think health insurance companies should all be
required to be not-for-profit. That's how Germany and japan's systems work.
They have their own problems, but they're vastly better than ours.

~~~
thomas11
Switzerland's system is for-profit, but otherwise pretty-much the same than
Germany's or Japan's, and it works just as well. The two crucial points are
that everyone in the country is required by law to have health insurance (thus
distributing the cost), and that if a company offers health insurance, they
have to accept anyone who wants it (thus preventing cheap plans for the
healthy and outrageously expensive ones for the sick). IMO, these two
provisions make the system work well. And even though it's government
intervention, it actually makes the market more competitive by leveling the
playing field: all insurance companies have to compete with each other.

~~~
sethg
IIRC the Swiss government requires all insurers to offer plans with a certain
baseline level of coverage, and the insurers aren’t allowed to make a profit
_on those plans_. The profit comes from plans that offer goodies above and
beyond the baseline.

~~~
thomas11
I think they are allowed to make a profit on the baseline insurance, they just
usually don't in order to attract people with low rates. On the website of the
Bundesamt fuer Gesundheit and on Wikipedia I couldn't find any mention of such
a regulation. It wouldn't make a big difference anyway, as you say, the profit
comes from the extras (and from having an efficient administration!).

------
patrickgzill
Next time you have some kind of operation, ask for the precise billing code
for that, e.g. "49585" is "repair umbilical hernia" IIRC.

Then, look up what the government pays under Medicare/caid for the various
pieces of the operation. Compare with what you paid.

In the case of the above operation, I was quoted $7-12K from the various local
hospitals that are always running ads about how much they "care". The "cash
price" they offer to Amish and Old Order Mennonites is $3500. Price under
Medicare/caid was even less than that.

What we NEED is price transparency and the ability to shop around.

~~~
moe
When I need a critical surgery to, say, survive the next year then I'm not
sure I'd really want (or be able) to "shop around" in that situation.

I'm all for free markets, perhaps even all the way down to flu medics and
such. But please, when life is at stake, can't we find a way to use some of
our excessive wealth to provide basic help to _everyone_ who needs it?

And with "excessive wealth" I'm looking specifically at the health insurance
industry that is making billions in profit every year. If there is a symptom
pointing at the fundamental flaw in our system then it would be this.

------
davidw
This isn't asking if people here have health insurance, but is linking to an
opinion piece about the US health insurance industry. (Title has subsequently
changed - article is still off topic in that it's essentially about politics.
IMO).

Yes, by the way, I have health insurance: I live in Italy and it's provided by
the government, and is pretty good, although it has problems of its own. In a
way, my favorite aspect of it is that it's one less hassle in my life: I
simply don't have to worry about it.

~~~
va_coder
I think a good argument can be made that the US health system deters
entrepreneurship because many people don't branch off and do their own thing
because they are worried about finding affordable health insurance as a sole
proprietor.

~~~
dtegart
As a young company you also don't have to supply health insurance to
employees, which can make it easier to convince them to come work for you.

------
shrnky
Insurance companies may be expensive, but at least you have some choice when
it comes to picking a provider; we would have even more choice if the
government would allow competition.

When the government takes over you effectively have no choice and in the case
of health care they decide who lives and who dies.

FYI: If your a staunch republican for government health care(i know not
likely); one day a democrat will be deciding your fate. If your a staunch
democrat for government health care; one day a republican will be deciding
your fate.

As expensive as today's health care is, I'd rather decide my own fate by
having more choice of insurance providers.

Oh and for anyone out there who thinks, "but the government works for the
people." If your a democrat "how were the bush years for ya" If your a
republican "how's the obama administration working out so far"

Less government is all I'm saying. :)

~~~
eru
> FYI: If your a staunch republican for government health care(i know not
> likely); one day a democrat will be deciding your fate. If your a staunch
> democrat for government health care; one day a republican will be deciding
> your fate.

Oh, the lovely American political dualism. I hope you will find a way to bring
back more biodiversity to your political ecosystem some day.

------
mattwdelong
I live in Canada, and I still have health insurance. For a couple reasons; I
play rugby and hockey, thus I like the little extra assurance that if
something catastrophic were to happen, I am protected (or should an even worse
situation happen my family is protected).

Secondly, Canadian Medicare does not cover eyes and mouth, and I love to see
my computer screen and eat big juicy steaks so I want to keep maintenance
costs associated with those two functions as cheap as possible. I pay about
$30-40/month for that plan which if you add up is only $360-480, and otherwise
if I did not have insurance I would spend more money than that at the
dentist/optometrist so to me, its a good deal.

However, I am moving to the US within the next couple of months. I won't be
THAT from from the Canadian border that if something small happens and I don't
need immediate care, I could easily hop the border for some cheap health care
but I will definitely be looking into Health plans as soon as I arrive (if not
before hand).

~~~
tjstankus
You may be in for a rude awakening. I have health insurance for my young,
healthy family of 3. (Two 30-somethings and a healthy 4-year-old. No
prescriptions, etc.) I pay $700/mo., have a $50 copay for pretty much
anything, and no vision or dental. It's consistently gone up 20% a year for
the past few years. I keep getting less coverage, they keep raising rates. I
keep paying my premium and rarely going to the doctor. The whole system in the
U.S. is thoroughly f __ked.

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shrnky
Playing devil's advocate; If the government takes over health care, they
effectively set the terms. Just to be sure we are all on the same page here;
we all know that this is where it's ultimately going right..??

Ok if you are a startup, there is much less incentive to invest your time and
energy into anything health care related as your return is noticeably
less.(they set the terms)

Thus any advancements in medical care will ultimately be funded by the
government via. you rather than the market. Will it be cheaper in the long
run?

I think the fundamental difference is that some people personalize everything
related to the health care system; understandably; and cannot/will not look at
it from a completely logical standpoint.

We hate paying high insurance premiums, but time is the most valuable asset.

~~~
richieb
A lot the research that goes into truly innovative treatments is already
funded by the government. See what NIH pays for. The big companies look for
stuff that they can market and sell fast (eg. Viagra in new rainbow color). In
a lot of the pharmaceutical companies spent more on marketing than research.

Especially for things that are not profitable (eg. flu shots, or malaria
vaccine).

------
sethg
A friend of mine once remarked that what consumers really want is health
_maintenance_ , not health _insurance_.

With my car _insurance_ policy, if, say, someone dings my bumper, I can decide
whether it’s really worth pursuing a claim through the insurer or whether I
should just settle with the other guy for a smaller amount of cash.

Some people in the health _insurance_ industry, thinking along the same lines,
seem to believe that if I have a funny feeling in my chest, I should be making
a judgement call about whether I should go to the emergency room (and suffer a
copay if it turns out to not be an emergency after all) or take some aspirin
and see if it gets better by itself. I think this is fundamentally the wrong
approach.

~~~
DanielBMarkham
It's the wrong approach why? Because you are supposed to decide whether or not
to pursue medical treatment? How else could it work? Would you want a system
where somebody else made that choice for you? Or one where you always went to
the doctor? Both of those options don't sound so good to me.

------
jrockway
Sure. Healthcare is quite affordable for healthy 24-year-olds with no
dependents.

------
nazgulnarsil
no, health insurance is of negative expected utility. if it was of positive
expected utility insurance would have to run at a loss.

on top of being young and healthy with a fantastic family history of health
and longevity, I am highly risk averse. If anything happens to me it will much
more likely be due to someone else's negligence, not mine. in addition I am
poor and the state of CA allows you to retroactively sign up for medicare if
you were qualified at the time the injury occurred. my cost benefit analysis
will change I'm sure when I start making more money.

~~~
gjm11
Negative expected dollar value is not the same as negative expected utility.
Buying any sort of insurance has the former property (subject to some
assumptions that may not actually be true, such as unlimited credit); it need
not have the latter.

Suppose, for instance, your total assets are $1M, and that you are extremely
healthy but have a 0.1% chance each year of contracting a condition that will
kill you rapidly (and agonizingly) unless it is treated, which can be done
reliably and safely but costs $2M. (Yes, this is an artificial example.) Then
the naive expected cost of your health situation is $2k/year. But if (a) you
value your life at a lot more than $1M and (b) raising the money to pay for
the treatment would impose a lifetime cost on you that's a lot more than $1M,
then in terms of expected utility you would do better to pay for insurance
against that condition, even if it costs you (say) $3k/year.

~~~
nazgulnarsil
I am aware of that. I factor in non-dollar benefits such as the peace of mind
and the ability to engage in riskier behavior (which insurance companies hate
but can't stop).

------
pw0ncakes
I don't have health insurance. I'm 26 and healthy. I could probably get
insurance that I can afford, but with 4-digit deductibles, co-pays,
rescissions and lifetime maximums in the mix, there's absolutely no point as I
see it. If I get sick, I'll move everything important into someone else's name
and declare bankruptcy... and if someone refuses to treat me because I can't
pay, I have a "medical second" (this will be a booming business if we don't
fix our healthcare mess) who will be healthy and able take care of the
situation. The reason to buy insurance is not to have to worry about
something, but insurance doesn't provide that because health insurers only pay
out _if they feel like it_ (e.g. if the future stream of premiums exceeds the
cost of the claim).

Our grandchildren are going to think of our times as barbaric. _People had to
buy insurance policies on their own bodies?_ It will sound to them like
96-hour workweeks for coal miners sound to us.

~~~
j_baker
This is off the topic, but putting things in someone else's name before
declaring bankruptcy is illegal. If you do so, you'd better hope your
creditors don't find out.

~~~
pw0ncakes
If the law permits the murder of tens of thousands every year by health
insurers, then what is wrong (morally speaking) with breaking it, so long as
one doesn't get caught? Law that allows such configurations as we have now has
no moral authority.

That doesn't mean I advocate most crimes. I wouldn't kill or rob someone
except under extreme and highly improbable circumstances, but that's because
those actions are _wrong_ , not because they're illegal.

~~~
kreneskyp
he didn't mention anything about the morals of it. Just that your plan is
likely to backfire.

~~~
pw0ncakes
My net worth is less than $10,000. I live in New York, so I neither own nor
need a car. I think I could pull it off. I buy about $1000 of computer science
textbooks that I've been meaning to buy, take a nice vacation, then put the
rest into physical gold and hide it. It would be a huge hassle, but less life-
ruining than medical debt is for people who are older and more established.

99% of what I own is the knowledge and skill I've gained over the years, and
that can't be taken in BK.

If my net worth were greater than $50,000, or if I had a wife and children to
protect, I would have to buy health insurance.

Realistically, if I thought I were about to get sick, I'd get on a health
insurance plan as easily as I could. It'd be easier to bribe a doctor
sufficient to hide a pre-X (post-date the intake forms) than to pull off
bankruptcy fraud.

~~~
j_baker
"My net worth is less than $10,000."

I doubt you'd even have to worry about it then. Chances are good you'd be able
to keep most (if not all) of your stuff.

(Insert standard IANAL disclaimers here)

~~~
pw0ncakes
Right. If I had substantial net worth and owned a home, then I'd want to buy
health insurance in order to protect those assets.

I think this, more than that we're healthier, is one of the reasons people in
their 20s opt out. Health insurance is useful in the semi-bad cases (e.g. a
$25,000 one-off expenditure) but has plenty of mechanisms (life caps,
rescissions) that enable it to abandon you anyway in event of catastrophe. We
(young people) are as vulnerable as anyone else to catastrophes-- and if
health insurance was any good during those, I might consider buying a plan--
but the mid-sized stuff rolls off of us because we're young and don't have
much (materially) to lose. So why buy health insurance? I know my chance of
preventable death is slightly higher, but not monstrously so.

