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> 1. Deregulate the health insurance market so you can sell across state lines.

I've always found this suggestion a bit disingenuous.

First, there is no federal law that bans insurance from being sold across state lines. What they really mean (but can't say because it is not politically appealing) is "Don't allow states to regulate insurance sold in their state."

State boards regulate insurance. They seem to do it well. No insurance companies failed during the 2009 financial crisis and the ones that came close (looking at you AIG) did so because of their activities and investments that fell outside of the state regulations.

Not allowing states to regulate insurance would reduce costs, but not for the reason you think. The cost of getting a product approved in a given market is predictable and a very small part of the cost of doing business.

By taking this right away from the individual states, we could see a race to the bottom where all insurance companies would incorporate in whatever state offered the lowest reserve requirements and loosest oversight. This would decrease the cost of policies and increase the profitability of the insurance companies.

It would be great until there was a hard year and the insurance companies would have the be bailed out by the taxpayers.

State regulation of insurance companies is a great thing. The states keep each other in line and they keep the industry solvent.

Edit: BTW, auto insurance is also regulated on the state-level.




I don't live in America, but having strong opinions is fun so I'll wade in anyway :D

The things you are talking about are regulatory standards. I've not seen anyone really suggesting that regulatory standards are a problem in the Americas (on the contrary, everything I've read suggests if you have in insurance the whole process can be pretty comfortable).

gp's post is, in my eyes, clearly going towards the point that people should be choosing their own insurers, rather than their employers choosing insurers (on employees behalf). It seems like common sense to me that an individual will be better at choosing a healthcare provider than their employer.

The idea that healthcare benefits are a factor to consider when choosing an employer is bizarre. The only reason to link the two is because Americans enjoy being different. And strangely anti-individual-choice in this instance. That dynamic is an obvious perversion of the market to deregulate.


> It seems like common sense to me that an individual will be better at choosing a healthcare provider than their employer.

I have picked insurance as an individual and as an employer, and that is 100% wrong.

Any kind of insurance is difficult to shop for, because it's for something you'll only really need if you're unlucky; that means it's hard to tell whether the choice you make is a good one. Health insurance is worse, because it's an extremely complicated product.

A company, on the other hand, gets to amortize the cost of figuring out the right options across all of the employees, meaning they can do a better job. They will often have a professional doing it, which helps more. They also get to gather statistical data on how well the insurance performs. And they have have much more negotiating power than individuals.

One way to think of it is that markets work best when you have actors a) of approximately equal power, b) making frequent choices, c) where the products can be easily evaluated, and d) where experience with the product happens quickly, so that the feedback loops are short. Health insurance is exactly none of those things. Markets are tools, not magic wands.

> but having strong opinions is fun so I'll wade in anyway :D

Note that this is literally a life or death question for people in the US. You might think it's fun/funny. Having watched both my parents deal with cancer, that comes across poorly to me.

> The only reason to link the two is because Americans enjoy being different.

No. The American system grew up as it did for particular local reasons, not just a random desire to be contrary on some imagined global stage. It was in retrospect an obviously bad choice given that we spend way more than others while getting worse results. But it made sense at the time.


You might like to read up on the Dutch system. Everyone is compelled to have private insurance, but insurance is tightly regulated so that the basic level is more or less comprehensive. Insurers compete on the perks...specific hospital compatibility, vision, physical therapy, etc; you can buy nicer perks, but the basics are always covered.

Sometimes employers reimburse employees for health coverage, and sometimes they negotiate a nicer rate package that any employee is free to use; but it’s not tied to employment like it is in the US.

If you’re under 18 it doesn’t cost anything. If you can’t afford it you receive a government subsidy. GP visits are part of the basic insurance, and the system functions with the GP as a gatekeeper.

It’s certainly not a perfect system...for example, a non-urgent surgery might take months to be scheduled if demand is high.

But, overall, I’m convinced this is a vastly better system for society than what exists in America.

Edit: it’s funded through taxes, insurance premiums that are about €110-130 per month, and deductibles which are at least €385 per year


> I have picked insurance as an individual and as an employer, and that is 100% wrong.

Wha..? So, are you in favor of your employer picking out your car insurance or your home owners insurance? Sure, health insurance is complicated, but have you read your car insurance policy? I don't see the two as being FUNDAMENTALLY more or less complicated. Further, I will probably blame any irreducible complications you may quote as vestiges of a product that is primarily sold to... corporate specialists. I think these things would change if we got our employers out of the loop.


Life-long medical care is vastly more complicated than dealing with a car accident. It's true that the American system piles additional complexity on top of that. But the worst case in car repair is buying a new car. Medical care is so complex we can't even pick a worst case, but the many, many terrible cases can last years, cost millions of dollars, and have no clear answers from beginning to end.


> Health insurance is worse, because it's an extremely complicated product.

Get sick, go to hospital, insurer covers. There is a shortlist of things the insurer won't cover. You pay the insurer each month.

Insurance isn't complicated. It is a complicated by bad regulation that mean insurers aren't trying to sell to individuals.

> A company, on the other hand, gets to amortize the cost of figuring out the right options...

That sounds like a pretty decent argument until the implications are examined. An identical argument could be made for:

* Food

* Housing

* Schooling

* Entertainment

The truth is that the amortization of figuring out what people want is best done by the insurer, and then people just buy whatever their friends have. Like everything else.

> You might think it's fun/funny.

I think it is funny that I'm commenting on a system more than an ocean away, I'm not laughing at sick people. That would be a bit weird.

> No. The American system grew up as it did for particular local reasons...

The reasons are, in hindsight, stupid. They should switch to using a system that makes sense. Either the capitalist way or the socialist way. The crazy hybrid that is used in practice is crazy.

Just because there is a stupid system in place today is not a reason to stick to it, and everyone agrees with that idea.


> Get sick, go to hospital, insurer covers. There is a shortlist of things the insurer won't cover. You pay the insurer each month.

It is extraordinarily clear that you've never had to do this. And apparently never had to deal with a serious illness in your family. Which is great for you, but please understand that's not the case for others.

> An identical argument could be made for [...]

No, not at all. The only one of those that might meet the four factors I describe is schooling, which is also a highly fraught choice, but it's still not as bad on dimensions B, C, and D. Individual educational needs are also less varied and more predictable than medical care needs. And for choosing education, society puts extensive effort into helping people make those choices well: school rankings, guidance counselors, oceans of books and articles, school accreditation, etc, etc. Until the ACA, there was basically no assistance for picking an individual care plan. ACA marketplaces help a bit, but it's still an extremely difficult choice.


> Get sick, go to hospital, insurer covers. There is a shortlist of things the insurer won't cover. You pay the insurer each month.

> Insurance isn't complicated. It is a complicated by bad regulation that mean insurers aren't trying to sell to individuals.

It's complicated in America because the right wing in America's position is not "if everyone buys private insurance it'll be good," but rather is "I have good cheap-to-me insurance through my job that I like, and I'll be damned if i contribute a penny to those who don't, and you shouldn't force them to buy it, even if that means that only the unhealthy people will be in the private market."

When Republicans complain about the ACA's health insurance regulations they're talking about regulations that mean "people should be required to have coverage to keep the market healthy" and "that coverage shouldn't be practically-useless bullshit"


> Get sick, go to hospital, insurer covers. There is a shortlist of things the insurer won't cover. You pay the insurer each month. > Insurance isn't complicated.

But for things they do cover, what price do they pay? That seems to be the crux here.

Something like travel insurance is simpler, because when they buy you a hotel room / a new suitcase, most of the other buyers are not insurance, and so there's a market price they can refer to. But healthcare isn't like that, and it seems the the prices of many procedures vary wildly, like 100x between different hospitals. Nobody can afford a 100x increase in premiums.

From what I understand about better-functioning health insurance systems, there's usually also a pricelist written up by the government. That seems like the crucial foundation for a useful health insurance market. Much as I wish there was a nice market mechanism for this, I have yet to see one.


> Get sick, go to hospital, insurer covers. There is a shortlist of things the insurer won't cover. You pay the insurer each month.

> Insurance isn't complicated. It is a complicated by bad regulation that mean insurers aren't trying to sell to individuals.

I live in a country with public healthcare and even there, private medical insurance is ridiculously complicated. I'd wager insurance in general is in top 3 of the most complicated products available for regular people. Nowhere else I had to read and sign a TOS the size of a long novel. I imagine that for Americans, it's only worse.

And as for the book-length TOS, almost nothing in there seemed to me like regulatory requirements - it all read like the usual "try to exploit the customer as much as possible while making sure the customer can't exploit us" terms.


> I've not seen anyone really suggesting that regulatory standards are a problem in the Americas

This was a major component of Trump's platform, and where the "selling insurance across state lines" thing comes from.


Excuse me, but I've been saying this for a lot longer than Trump has been President. Not everything is about him, you know. Perhaps it is, in fact, a problem that needs to be addressed, regardless of who is in office.


This is a great comment - I'll just make one minor but important correction. Reserve requirements are fairly uniform across states (see [0] for a list of differences), so they likely wouldn't be a major driver of health insurers' decisions about where to incorporate.

The reality would be worse than you describe - rather than being driven by reserve requirements, the race to the bottom would be based on differences in the level of coverage that insurers are required to provide. Healthy people would buy coverage from states with lax requirements to reduce their premiums, while less healthy people would buy coverage from states with more stringent requirements to ensure their treatment would be covered. Premiums in states with stringent coverage requirements would increase, pushing more and more healthy people to cheaper alternatives, and eventually making coverage in those states unaffordable for the people who need it.

[0] (PDF) https://www.naic.org/prod_serv/SPD-OPS-19.pdf


>It would be great until there was a hard year and the insurance companies would have the be bailed out by the taxpayers.

Surely that wouldn't be the case? They wouldn't have to be bailed out; If a company hadn't planned ahead well enough to survive a bad year then they deserve to go under. In an unregulated economy, bailing out failed companies shouldn't be an option.


except all those people who's supposed to have been insured will now no longer be (but would've paid their premium, at least partially). So what happens then? Either those people lose their money, or the state bails them out.

If the gov't forces an insurer to keep a reserve (for such an occasion), then it becomes regulation!


Those people lose their money. I can't think of a good reason why they'd expect to get that money back, they were paying for a service that was being provided up until the company could no longer provide it.

Losing your money to a failed company is a cost of doing business sometimes, it's a risk everybody takes when they purchase things in advance. The company/owner would owe a refund for the service not provided due to company collapse, whether or not they can pay that is another matter and should be accepted as part of the risk. There's no such thing as risk free business and attempts to remove the risk inevitably remove part of the value too.


> Those people lose their money. I can't think of a good reason why they'd expect to get that money back, they were paying for a service that was being provided up until the company could no longer provide it.

> Losing your money to a failed company is a cost of doing business sometimes, it's a risk everybody takes when they purchase things in advance. The company/owner would owe a refund for the service not provided due to company collapse, whether or not they can pay that is another matter and should be accepted as part of the risk. There's no such thing as risk free business and attempts to remove the risk inevitably remove part of the value too.

I think we as a society have deemed it unacceptable to hold consumers accountable for company selection in some specific industries. Banking and healthcare come to mind. We certainly don't think it's okay for depositors to lose their shirts over a banker's risk taking and we hold that value to such a degree that in America at least it has been codified into law.

I know at least NJ mandates a separate fund that insurers must pay into to protect against this instance.


I don't agree that that is unacceptable, regardless of what "we as a society" have deemed. The consumers being held to account for their own business dealing is the reality of the situation, they're giving their money over to the business and in doing so accept the risk. Taking that risk and putting it on everyone who didn't take that risk through bailouts using tax money is unacceptable. Analogizing to a more personal scenario to highlight the moral wrong: It's as unacceptable to me as it would be if I had an accident in my car and forced everybody in the nearby vicinity who wasn't involved to pay for the repairs.

Businesses having separate funds to protect against it is a good idea but it shouldn't be mandatory to have one, only to tell the consumer whether there is one. I imagine most consumers would happily pay a little more and choose the company with one than the one without.


For businesses that provide somewhat of an essential service, the 'buyer beware' mantra does not result in societally good outcomes.

For example, healthcare services should be considered essential, and therefore, should not be left up to the market forces, as these forces would mean that some part of the population who is not profitable to serve will not get served.

in such cases, the best option is a socialized mechanism (such as universal healthcare, paid for by taxation). For some reason, the US of A is very much against this idea. It's as if these ideas have been tainted with the smear campaign of communism and red-scare.


This is likely the core of our disagreement; Healthcare is not essential, it's a luxury that has been afforded to us by those who were willing to study and learn how to do it in an advanced manner. No one has a 'right' to a healthcare professionals time and effort, same as no one has a right to my programming ability or an uber drivers driving capabilities. To phrase that in the positive light, everyone has the right to the product of their own labour, including healthcare professionals, regardless of the social cost that brings.

Leaving healthcare to 'market forces' is nothing more than leaving doctors alone to do healthcare as they please and for a profit that they earn, rather than using government to force prices down and make them work for less than they're worth.

I'm not opposed to a health care option provided by government, but it has to be optional both to pay in and use in order to be a morally sound imo.


While I agree in part, somehow society has deemed it so that I have a right to have electricity provided to my house and a number of other services (to the point that it is illegal to cut off heat in the winter, etc). Arguably, healthcare has existed longer than electricity, so how do you reconcile the seemingly arbitrary distinction? In truth, I have a right to the power company supplying me power, and the government seems to have indifference to the how of that execution (which means I have a "right" to the electrical lineman's work, in a sense).

On the other hand, I would concede that one would ask, "But where do you draw the line?" And I would answer, "Society collectively draws the line." Which is evidenced by our collective evolution of social programs provided by the government (which tend to be more expansive rather than less so).

Fwiw I am not in disagreement about market forces being particularly maladapted in dictating the pay of specialists (especially considering that many laypeople can't even accurately price nonspecialist time let alone a specialist's time or actual value)


I don't reconcile that distinction, it's based on the false premise that you do have the right to the provision of electricity. I don't agree with that on the same premise as healthcare, even if 'society' has agreed.

I think we may have a different conception of what is determined as a right: I tend to conceptualise rights as inherent, things required to allow a human to live to the best of their ability. When we think of rights in this way, they aren't things that can be given; they can only be taken away or protected. If I build a hut when I'm stranded on a desert island, that's my hut and I shouldn't be forced out of it and no one else stranded on the island has a "right" to the product of my labour. If I spend time and effort gathering food, the other people on the island who haven't put that effort in don't deserve some of that food just because they're hungry. Now if I give them some out of pity or for the benefits of keeping a group around me, that's a different story than if they take it by force. If they take it by force, they've committed a moral wrong and violated the right required to live for me.

My approach is unforgiving but its from the perspective of individuals and their property rights. It doesnt exclude empathy and willing charity, just excludes forced empathy and charity.


> If a company hadn't planned ahead well enough to survive a bad year then they deserve to go under.

Maybe, but we don't deserve to have them take the rest of the economy with them.

It's hard to overstate how much of the economy depends on insurance. If an insurance company becomes insolvent and can no longer cover it's long term liabilities, elderly people who were counting on life insurance or annuities will starve and the newly uninsured in need of operations will die.

If the human toll does not impress you, consider that the entire economy would freeze up without insurance. Residential and commercial building, freight shipment, construction, and most sizable loans all require insurance coverage.

The insurance industry is not like a banana stand. We need to (and do) strictly regulate and audit these companies.


The idea that all the insurance companies would go bust at the same time is laughable, it's a hypothetical with no basis. Even taking your hypothetical though, my opinion remains unchanged, people reaping the rewards, or in this case punishments, of their reliance on others is just. Granted, I'm not saying you shouldn't be relying on others, just that you understand exactly who you're relying on and the consequences of that should they let you down.

The pragmatic argument you're making saying the economy would freeze up isn't really relevant. You can only be pragmatic within a moral framework, with a value that you're aiming at and I'm speaking to that underlying moral framework. I would rather live in a moral, failing world than an immoral and thriving one.

That's all accepting your premise that regulation helps the economy though, I think the reality is that an unregulated (and therefore more moral by my estimation) economy would come back and be stronger having learnt not to rely on insurance so much.


>> Surely that wouldn't be the case?

That literally was the case in 2008 with AIG


Parent mentioned it would have to be the case, it doesn't have to. If it makes you feel any better replace it with "shouldn't" in your head.


The McCarran-Ferguson Act which is a law at the Federal Level enacted in 1945 is what gives states the the authority to regulate insurance offerings within their borders and what helped create the mess and inability to shop across borders. So yeah, its a Federal Law that screwed this up.

Just because it does not prohibit cross state sales is just mincing words. It gave states the ability to make it near impossible to do so. Without consistent requirements how would one expect to have a viable product?

There was an attempt to repeal it but that apparently did not get past the Senate, it was again pushed in 2017 through another act. There are attempts in the Senate as of 2019 to do it.


Give me a better way to express this idea, then: How do we create a REAL market for health insurance, so we can buy it like EVERY OTHER KIND OF INSURANCE?


It's not like every other kind of insurance, though. Health "insurance" covers many expected and predictable costs, which isn't what insurance is about in any industry.

What we call health "insurance" is really just access to health care with expenses adequately covered, with only the portion of that covering unexpected or unlikely risks properly falling under the heading of insurance.

Additionally, even the true insurance piece is one of the only kinds of insurance where it's a societal imperative (in most people's opinions) for everyone to get the insured benefits they need, regardless of ability to pay. Even car insurance isn't required for people who rely on mass transit.

Health insurance policymaking needs to differ from most other kinds of insurance policymaking for these reasons.


That is an awesome answer, but pedantic. The real question is, again: how do we express the idea to create a REAL market for health "insurance"? It's not about the difference between health "insurance" and other kinds of "insurance." The question is how to express how to create a market for it.


Yeah, I am disagreeing with the choice of a market solution for something which we want to make available to people who can't afford it.

That's not what markets are meant for or good at, especially not the deregulated free market that is often meant by questions like yours. As for a tightly regulated market with lots of requirements about coverage and price, some states already have that, and it's exactly those tightly regulated markets which the "let insurance sell across state lines" proposals want to disrupt.




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