[lend000]

The whole idea of health insurance is backwards and inconsistent with a free market in my opinion (fraudulent). The problem is that the government has enshrined it as the gateway to healthcare.

Insurance is a useful product for mitigating risk, so accident insurance could be a very constructive concept (protecting against accidental injuries, broken arms, falls, car crashes, etc.). However, health problems are not a risk; they are a guarantee with probability approaching one as you age. The whole point of insurance is that you mitigate risk by paying more than you take out on average, but that doesn't make sense for healthcare, where almost everyone ends up going over their limit near the end of their lives.

If we didn't have all of these subsidies everywhere and inflated demand from Medicare/Medicaid/restrictive occupational licensing/FDA-granted monopolies/ACA, then perhaps we could pay everything out of pocket, which would make a lot more sense.

[mikeash]

The basic concept of health insurance works fine. Yes, your probability of dying approaches 1 as you age, but the costs you incur along the way can vary enormously. Somebody who's wonderfully healthy until they instantly die in bed of a heart attack will cost the insurer basically nothing, while somebody with a chronic condition can easily cost millions of dollars over decades. Costs can vary enormously depending on your luck, which is just the sort of thing insurance is good for.

There are big problems with running the whole system using insurance, of course. It's fairly easy to predict future costs for a lot of people. Given free reign, insurers will charge completely unaffordable premiums to those people, effectively excluding them from the system. You see the same thing with other types of insurance: if you have a horrible driving record, or if your house is in an area that gets a devastating hurricane every ten years, your premiums will be huge. The difference is that those are optional activities, and if you can't afford the premiums then you can walk, bike, hitch a ride, buy a different house, etc. A sick person can't switch to a healthy body.

That's why the ACA has the mandate. If you require everyone to pay in, then you can also require insurers to ignore certain predictors of future risk when determining premiums.

Fundamentally, there are only two choices. One choice is to have lots of people dying of easily treated conditions because they can't afford the treatment, and the other choice is to have government step in and socialize the system to some extent. The system was already socialized before the ACA with the Emergency Medical Treatment and Labor Act, which requires hospital emergency rooms to treat all patients regardless of ability to pay. This was horribly inefficient, of course, but that's how it was.

So: choose your poison. If you think the advantages of going full free market in health care outweigh having poor people die of easily treatable diseases, then that's a valid opinion, but you should acknowledge the negative consequences. If you want poor people to be able to obtain treatment, then you'll need to accept some interference, the only question is how you'd like to have it be structured.

Edit: rather than "poor people," I really should say "people whom the hospital thinks are poor." If you get beaten up and mugged and left for dead, the ER won't know if you have money, and might decide not to take the risk. There are good reasons for even a selfish wealthy person to want some form of universal treatment.

[lend000]

> If you think the advantages of going full free market in health care outweigh having poor people die of easily treatable diseases, then that's a valid opinion, but you should acknowledge the negative consequences.

How does one lead to the other? Social safety nets are not mutually exclusive with removing a lot of other market barriers. See my prior comment on this thread -- our healthcare market is the most distorted in the world (even when compared to 'universal healthcare' countries). Freer market means 'easily treatable' conditions are cheap, as opposed to our current system where they are expensed behind oppressively occupationally licensed practitioners selling monopolized medical products, where a 10 minute checkup with a dermatologist out-of-pocket is nearly $500. But regardless, it is certainly an interesting, quantifiable argument (albeit hypothetical) that a 20% speed increase medical innovation in a free market could be measured against lives saved with today's medicine in a socialized system, assuming that system makes services as affordable/accessible as intended.

Here's the reason health insurance as an industry can be considered fraudulent, especially when it's generally the gateway to all healthcare access -- and why ACA fails to fix it. Pre-existing conditions and re-adjusted contract rates.

If there was one company and one client, they could certainly craft a perfectly sound insurance contract to pay a set rate with steady increases over X years in exchange for coverage in the event of future, currently unascertainable medical services. But if you are responsible and get insurance BEFORE you get sick (by the way, not much sympathy for those who do not and demand that insurers take them, since that's the whole point of insurance), you are effectively tied to this contract and can never again negotiate another of equal value after you have been diagnosed with a condition, even though your initial/current contract already priced in the risk of getting those conditions. In fact, the rates to cover your risk, which need to be higher on average than the amount of healthcare you actually use, become ridiculous quite quickly. This problem is amplified by the fact that the government thought it was a good idea to tie healthcare to employers, so people switch very frequently and therefore are forced to renegotiate contracts frequently, robbing them of lost value that would be acquired if they were able to ride out the original contract.

So to say health insurance is inherently fraudulent is hyperbole, but in the current setup, it functionally is, because it is non-transferrable. ACA attempts to address this problem by subsidizing those who do not make much money and forces insurers to take everyone, but this just adds artificial demand (due to the subsidies especially) up to the amount of the maximum subsidy and raises everyone's rates (although those who are subsidized will see somewhat lower rates), and does nothing to address risk renegotiation, especially since it includes people who never had a contract. Similar economic effect as student loans/student aid. Each dollar increase in student aid raises tuition by over 40 cents... the rest is probably distributed across student housing, amenities, textbook prices, concert prices in college towns, etc.

A better way to eliminate the fraud, while still limiting ourselves to an insurance-dominated system, would be to legally codify standards for contract negotiations, which would allow contracts to be traded/transferred between companies, effectively locking in your risk at the time you first get uninterrupted insurance (and perhaps some protections for temporary uninsured periods).

[mikeash]

"But if you are responsible and get insurance BEFORE you get sick (by the way, not much sympathy for those who do not and demand that insurers take them, since that's the whole point of insurance)"

So, screw people who are born with a chronic condition, or people who lose coverage due to poverty and then want to get back on later?

[lend000]

> So, screw people who are born with a chronic condition, or people who lose coverage due to poverty and then want to get back on later?

I don't think insurance is necessary in the system I propose, but to the first point, nature already screwed you, life isn't fair, etc. To the second, I actually addressed that in my comment as something that could be eligible for protection for some period.

But let me know if you take issue with the main points -- not trying to get into a battle of details.

[mikeash]

How long is that period of protection? Anything less than infinity seems deeply problematic.

I consider these questions to be among the main points. If you don't, that would explain our difference of opinion. I really can't understand shrugging off screwing over people born with chronic conditions on the basis that life is unfair anyway. I mean, you can use that argument to justify nearly anything. Why outlaw murder? Sure, it sucks to get murdered, but life is unfair.

[lend000]

> How long is that period of protection? Anything less than infinity seems deeply problematic.

Our current system of infinity is clearly problematic. But I really don't want to get into an argument of defending any implementation of health insurance (even one which I think would be better than the current) because I don't think there's a good way to do it period, as per my first comment.

> Why outlaw murder? Sure, it sucks to get murdered, but life is unfair.

Two completely separate things, not even on the same spectrum. Outlawing murder is preventing a violation of a person's rights, i.e. aggression. You maximize society's net freedom by outlawing it. Forcing society to try to make life "equal" for someone who was born with some terrible condition inherently violates freedoms through mandates, taxes, etc. And of course there's the whole thing about it not being practical. Everyone dies, and almost everyone would benefit from an extremely expensive heart transplant/frequent blood transfusions late in their life. But unfortunately, we can't give it to them (yet). However, there will always be some new and great medicine that is too scarce for everyone to have. Fortunately, private individuals are very charitable without the government and create institutions to treat and study chronic diseases.

[dllthomas]

I agree that we far too often conflate "health insurance" and "health care".

That said, while in some sense "health problems" are guaranteed, the range of costs involved is huge.