[ModernMech]

Is it really hard to believe though? The ones who are lucky and have the money are fine with the situation. The unlucky ones with no money are too busy fighting diseases, insurance companies, and bill collectors, they don't have time to change the system. Dealing with insurance when you have a serious illness is a full time job. The people who need change most are literally fighting for their lives. Meanwhile, healthy people in America think "Gee, why should I have to use my money to pay for someone else's healthcare? What do I get out of it? I'm rich and lucky after all".

The richest don't even understand what health insurance is as a concept. I mean, just look at what our own President Billionaire has to say: "Because you are basically saying from the moment the insurance, you're 21 years old, you start working and you're paying $12 a year for insurance, and by the time you're 70, you get a nice plan." [1] What does that even mean? Or our Speaker of the House: "The whole idea of Obamacare is...the people who are healthy pay for the...sick. It's not working, & that's why it's in a death spiral" [2]. That's literally the entire point of health insurance. This is what we're dealing with here.

[1] https://www.cnbc.com/2017/07/20/trump-thinks-young-people-pa... [2] https://www.washingtonpost.com/news/politics/wp/2017/03/09/e...

[maxxxxx]

"The whole idea of Obamacare is...the people who are healthy pay for the...sick"

This is the whole point of health insurance! What a stupid idiot (I am overly nice to Paul Ryan. His budget plan was the most ridiculous thing I have ever read).

[curun1r]

I'm sick of people making this comment because it's flat out wrong.

Insurance is about lowering variance, not about subsidizing high risk. The ACA tries to make insurance affordable for everyone, and in the process, some people pay less than their actuarial cost and others pay more. That is not just insurance, it's forcing people with a lower actuarial risk to subsidize those with a higher risk.

Insurance is about taking the chance element out of something that is inherently probablistic because the rare event would be catastrophic. By pooling risk, you make things more predictable. But everyone is still paying for their own, individual share of the risk pool.

I'm not arguing that we shouldnt, as a society, ensure that everyone can afford health insurance, but we shouldn't pretend that "it's just insurance" because it's something entirely different.

[b1daly]

You seem to be making an argument based on “semantics” here?

The idea of extending an insurance program into a mechanism for subsidizing those who can’t pay the premium does not mean it magically transforms the program into a totally different thing.

In the limited definition, it is still the case that the healthy pay the cost of sick.

The extension of the concept of insurance fits semantically, because it is based on the idea that there is an element of chance inherent in who gets sick; getting sick includes many factors that are outside the source of an individual’s contol (as well as factors that are within an individual’s control).

The ACA included a “tax,” among other methods to socialize the cost of covering the “premiums” for those that couldn’t cover them on their own.

The whole system relied on the same actuarial principles as the previous system to smooth out variance in costs to individuals.

Paul Ryan sounds like an idiot here, because he is a mealy mouthed politician, who doesn’t have the courage of his convictions.

Ryan is libertarian minded tool, whose real opposition to the ACA is not that the healthy pay for the costs of the sick. His opposition is to the elements of the program that force wealthier members of society to cover the medical costs of the poorer members.

[curun1r]

Yes, it's semantics...no quotes needed, that's what it is. But it's also people trying to make other people look stupid by being wrong, and they deserve to be called out for their improper semantics.

It's not "just insurance." That's not "what insurance is." We're talking about a form of socialized medicine, not insurance. That's the correct terminology. Anyone arguing for anything between Obamacare and Medicare For All (which includes me, BTW) needs to own up to that terminology or something to that effect and stop selling the notion that what they're arguing for is just insurance.

Insurance, as a concept, doesn't shift the burden for risk from people who can't afford to pay to people who can. It's something different and you don't get to alter definition of insurance just because the correct terminology has a stigma. So when the comment I replied to says,

> This is the whole point of health insurance!

No, it's not. That's the whole point of socialized medicine. Words have meaning and we should be using the correct ones.

[b1daly]

It’s true “Obamacare” is a form of socialized health care. But the bottom line is that it chose to implement the subsidization of poor peoples’ health care through the mechanism of health insurance. It’s simply not the case that poor people included into the plans are having their care covered through the mechanism of increasing the premiums of the healthy, which is what Paul Ryan is implying.

Poorer members of the insurance pool have their premiums subsidized. From the insurance companies point of view, they are (theoretically) managing the pool and premiums using the same actuarial tools they used previously.

The rules about not being able to reject people for pre-existing conditions force them to broaden the set of (heterogeneous) members included.

The plans are provided by “health insurance companies.” The product you buy from them is called “health insurance.” The imaginary, purist notion of what you are declaring to be “insurance” is like a simplified model of economic theory you might find in a textbook. It’s used to gain insight about how an insurance product works. There are no real world example of “health insurance” that conform to your simplified definition.

Health insurance in the US has long included coverage for routine care, which already falls outside of your model.

I’m of the theory that the meaning of words is defined by how they are used in everyday language, not how I think they should be defined.

[bzbarsky]

> because it is based on the idea that there is an element of chance inherent in who gets sick

That statement is true, but health "insurance" covers lots of non-chance things, because it covers lots of things that are not a result of "getting sick". Some examples:

* Birth control.

* Basic childhood vaccination.

* Well-child checkups.

* Annual health checkups for adults.

* Basic screening tests for adults (mammograms, colon cancer screens, that sort of thing).

All these things should be provided, imo; insurance is the wrong vehicle for providing them. Politically, I _think_ (hope?) there would be a lot more support for "provide all children with basic health checkups" than there is for the ACA. Of course there would be less support for the "birth control" item, which is why people like to bundle these all together, and with things like emergency medicine and end-of-life medicine. Which are _also_ quite different in terms of their risk profiles, tradeoffs, and elements of chance.

It also covers some things that in an ideal world would not be chance but are in practie (e.g. routine births with no complications; they are more chance than they should be because as a society we suck at birth control, on both the organizational and personal level).

I really wish we separated our "health care" a bit more along some of these axes, because I suspect that the "right" answer is to have single-payer for some aspects of it, an insurance scheme (private or public or both) for other aspects, and "you're on your own" for still others, with expensive and invasive end-of-life interventions heading this last list.

[powera]

That is the whole point of socialized medicine. The point of insurance is that you pay slightly more than the expected value of your claims. So if you know you need $5000 worth of medical treatment for asthma, your insurance premium should be definitely more than $5000.

This bizarre obsession with using the phrase "insurance" and insisting on a product that is not at all insurance is probably why the US health-care system is so fucked.

[ModernMech]

> That is the whole point of socialized medicine. The point of insurance is that you pay slightly more than the expected value of your claims. So if you know you need $5000 worth of medical treatment for asthma, your insurance premium should be definitely more than $5000.

How does that make sense? If I knew I needed $5000 worth of medical treatment for asthma, and I pay an appropriate premium based on that, but then I get cancer..... well then someone else is going to have to pay for that, because my premiums certainly won't cover the cost of cancer treatment.

[twoodfin]

You’d pay the 99% chance of asthma * $5,000 + 1% chance of cancer * $50,000 (or whatever the probability you get cancer * the estimate of cancer treatment costs).

If you do get cancer, the other 99% of folks who didn’t get it are covering your costs.

[ModernMech]

> If you do get cancer, the other 99% of folks who didn’t get it are covering your costs.

This is exactly my point, but it's this mechanism Paul Ryan said wasn't working. @powera claimed this is not the point of insurance. These things seem like exactly the same thing to me, so help me understand the nuance.

[twoodfin]

It’s the asthma for which you are near-guaranteed to need $5,000 worth of treatment for that’s the issue, not the small chance you get cancer.

You’re not looking to insure against the chance you get asthma: You have asthma, and you’re looking for someone healthy to help pay for it. If too few healthy people sign up for Obamacare relative to the sick (and remember, all else equal, they have to be charged the same regardless of their health) those healthy folks will get an increasingly bad deal as their premiums are covering the costs of more and more sick enrollees and more and more healthy folk drop out of the exchanges. That’s the “death spiral”.

[pjdemers]

The probability of getting cancer over a lifetime is more like 40%. https://www.cancer.gov/about-cancer/understanding/statistics Some people with cancer die quickly, but most live with it for years of expensive treatments.

[maxerickson]

The known cost isn't really insurable. A premium based on expected costs would include the full amount of the known future costs and also some amount for less predictable costs.

[ModernMech]

Okay, now we're getting somewhere. Let's stay with the example of asthma. I pay a premium based on that condition, and the expectation that maybe one day I'll get cancer. Sure, I can understand that.

So then I get cancer, and the bill is more than I can afford. Where does the money come from? Not my premiums, because I've only been a subscriber for 3 months, and my premiums won't even cover the cost of treatment for a week of cancer treatment. If someone else isn't paying for me, and I'm not paying for me, who is paying for my treatment?

[maxerickson]

Other people do pay for the cancer treatment. Make up a pool of, say, 1000 people. Make up a cancer rate of say, 5/1000. Make up an asthma rate of say, 50/1000.

The people that are going to get cancer are unknown, but the whole group is willing to pay 0.5% of the cost of cancer treatment for a contract that covers 100% of the cost.

The 950 people that know they don't need expensive asthma treatment don't really want to pay for contracts that will cover expensive asthma treatment, so (in a pure insurance market) either the cost has to be included in the contracts for the 50 that do have it or the treatment can be excluded from the contracts.

[maxxxxx]

" The point of insurance is that you pay slightly more than the expected value of your claims. "

Not true. Car liability insurance is very similar to health insurance. A lot of people never get anything out of it.

[owyn]

You don't have to own a car. Everyone gets sick at some point, and everybody dies of something. Whether that's cripplingly bankruptingly expensive or not is partly the point.

Although I suppose if the singularity happens, that will also solve the health care crisis in this country. (sarcasm)

[wyager]

Your EV from holding a car insurance plan is slightly lower than if you’d put that money in bonds. The benefit is that you can spread your risk across multiple parties. It’s entirely different from medical insurance, where your EV depends strongly on individual circumstances (and can be very negative). Medical insurance providers aren’t allowed to give accurate pricing, so you basically end up with a really complicated subsidy program.

[maxxxxx]

" Medical insurance providers aren’t allowed to give accurate pricing, "

Why are they not allowed to do so? I think it's more likely that they don't want to so they can make up prices as they wish.

"Your EV from holding a car insurance plan is slightly lower than if you’d put that money in bonds. The benefit is that you can spread your risk across multiple parties. It’s entirely different from medical insurance, where your EV depends strongly on individual circumstances (and can be very negative)."

This is exactly the same as health insurance. Spread risk over many people. EV depends on individual circumstances (driving skills or health). If health insurance is healthy people subsidizing sick people, then car insurance is good drivers subsidizing bad drivers. I don't see the difference.

[Fins]

But with auto insurance, if you're a bad driver, or even a driver with perceived higher risk (teen, unmarried, driving a little red sports car) your rates will be quite a bit higher. If you're a low risk driver, your rates are low. With ACA, if you are low risk (young and healthy) you are paying more than you would have otherwise.

[maxerickson]

They are using expected value in a technical sense.

In a pure contract between equally informed parties, it's exactly how insurance would be priced.

[wyager]

> This is the whole point of health insurance!

This is a serious misunderstanding of what insurance is. Insurance is a net benefit for society because it linearizes individual risk curves even if you have to pay in proportionally to your expected costs, not because it makes less risky people subsidize more risky people. Perhaps you should avoid calling people “stupid” for misunderstanding insurance.

[ModernMech]

And by what mechanism does insurance linearize individual risk? The fact that if I get cancer, it's less likely to bankrupt me. But if it's not bankrupting me, someone else is paying for it. Who's paying for it? Someone who didn't get caner. So how is this not "less risky people subsidizing more risky people"?

[wyager]

It’s not healthy people paying for your treatment - it’s the underwriter. There don’t need to be any other people with different health outcomes involved. The only thing happening here is you’re outsourcing some risk to someone who has a lot more capital and therefore a more linear risk curve.

[curun1r]

Let's say your odds of getting that cancer are 5% and you know that ahead of time. So, knowing that it would bankrupt you, you gather 20 other people who are also at a 5% risk of getting cancer to form a group where you all chip in no matter who gets sick. You've now spread the risk out across a pool of people and, yet, everyone is still paying their fair share because no one knows who will be the unfortunate cancer patient at the time the agreement is made.

But in your little group, there's still a 36% that no one will get cancer and that's offset by a small chance that multiple members of you group will get the disease. If even 4/20 members get cancer, that would now come pretty close to bankrupting everyone in the group. So what do you do? You increase the size of the group and lower the chances that no one will get cancer while also increasing the chances that only a proportional number of people (5%) in the group get the disease.

But then along comes Danny. We also know that Danny has a 10% chance of getting cancer. He also wants to join our group. If we just let him join, it won't be fair...after all he's twice as likely to need us all to pay for him. So we can either tell him to get lost, or we can just make sure that when the bills for someone's cancer show up, he pays twice as much as any other member. He's bringing twice the risk with him so he pays twice as much.

In poker, players learn to avoid being outcome-oriented when evaluating their decision making. Rather than looking at a decision they made and seeing whether they won or lost, it's more important to look at the decision and ask themselves if they'd made the same decision a million times, how many times would it lose and how many times would it win. Because any individual hand where a correct decision is made can still lose due to variance.

Insurance is the same concept. Actuaries use statistical analysis to determine an individual's risk so insurance companies can price that risk accordingly. Over a million lifetimes, your insurance premiums (less the insurance company's profits) would come very close to the overall insurance payouts. But since you've only got the one life, you'll be under- or over-paying. But you're still only paying for your own risk, you're not paying for anyone else's risk.

Where the ACA comes in is when Danny can't really afford the double stake. It forces us to let him join the group and pay less than double whenever someone gets cancer. That's a bad deal for all of us 5%ers, despite the fact that there's still a 90% chance that Danny doesn't get sick.

Now try to answer your question...do you see the difference between paying for your own portion of the risk pool vs lower risk individuals subsidizing higher risk individuals? If you were in one of those groups of 5%ers, would you just let Danny join without adjusting for his added risk or would you be looking for more 5%ers like yourself?

[b1daly]

I’m repeating myself, but you are wrong in at least two ways.

Health insurance in the US is not conducted in any way like the over simplified, text book example you provide. There exists no real world example of health insurance that functions as you describe.

There is the obvious problem that there is nowhere near that level of precision in anticipating the given level of risk for any individual getting a certain disease, especially as most populations are fairly heterogeneous when it comes to health risk profile.

The insurance companies use statistical tools to estimate the average risk of insuring a pool of people with some element of similarity, like a pre existing conditions. This is a far cry from being able to evaluate the risk profile of a given individual.

The complaints people have about being rejected for coverage based on a pre-exsisting condition, when they think that condition doesn’t really make them that risky reflect the imprecision of the actual tools.

This is also illustrated by these blanket denials: insurance companies are rejecting populations that the feel cannot be adequately evaluated for risk.

There is another aspect of such complaints (about blanket denial of coverage) which come from the issue that some people simply do have a health condition that they cannot cover the expected cost of.

This is a societal issue, and different socities deal with it differently. It inevitably involves some sharp elbows between the various interests involved.

In the US, for historical reasons, a big method of covering the costs of those who can’t afford the full premium was through the patchwork system of employee health plans, complementing government run plans like social security, Medicare, Medicade, local government programs, and charitable programs.

As imperfect as the system is, it remains the case that the health care coverage of high risk individuals, meaning those who can’t cover the full cost of a risk based premium, relies on what is known as “health insurance.”

[wyager]

> There is the obvious problem that there is nowhere near that level of precision in anticipating the given level of risk for any individual getting a certain disease

This doesn’t matter at all, on account of the way variances from independent RVs add up. Look up the Bates distribution as an example. Variance over mean goes down as the square root of the number of independent RVs (insurees). That’s like half the point of insurance.

> was through the patchwork system of employee health plans,

These were the result of highly nonlinear tax policy during WWII, not the reasons you’re claiming.

[dboreham]

I have much more money than most people but I'm not fine with it. I pay more than a mortgage payment every month for insurance that pays for almost nothing.

[twoodfin]

Ryan’s point was that Obamacare’s guaranteed-issue requirement means that exchange plans can only be viable if they attract enough healthy people to cover the costs of the currently or chronically ill. Both groups must be offered the same rates.

Surely you can see how that is different from (say) fire or auto insurance, where no one would expect to pay the same to insure two houses, only one of which is actually burning at the moment.

[charleslmunger]

Isn't that why the individual mandate and the minimum coverage standard existed?

[twoodfin]

Yes. But the mandate was always pretty toothless and has now been completely defanged.

Regardless, the idea that under ACA “the healthy pay for the sick” as expressed by Ryan was certainly not an oblivious truism about the nature of insurance as it is being portrayed.

[oh_sigh]

Why should young people subsidize the health care of old people who almost certainly have a higher net worth than the young people?

Remember with Obamacare about how there was a huge push to get young people to sign up for it, because without healthy young people paying too high premiums, the system would fall over with the costs of the elderly? Maybe that is why young people didn't want to sign up for the ACA, and they needed to enforce 'penalties' for not having health care.

If young people were actually charged a fair market rate for their health insurance, they would sign up in droves because it would be dirt cheap. But when you make them pay far more than is reasonable, because old people need health insurance too, then that is how you get a system where no one wants to sign up for it until they are legally forced to.

The ACA in this sense completely subverted the point of insurance. So, maybe the right doesn't understand insurance, but neither does the left.

[robbiep]

You realise that is literally how insurance works though, right? If you tranched age groups or risk profiles then you would have those needing to use insurance unable to afford coverage. Which defeats the purpose

[oh_sigh]

No, that is not how insurance works. Insurance works well when you group people with similar risk profiles together, not by grouping people with dissimilar risk profiles together.

Imagine a world where a 20 year old would be able to buy a 10-year term life insurance policy for the same amount that a 90 year old can. That is essentially what the ACA attempted to provide.

[maxxxxx]

Young people also will get old and not all of them will be multimillionaires so it makes sense that one generation pays for the previous because one day they will be in the same place.

[oh_sigh]

How well does that system work for a generation that produces fewer adults than are present in the generation?

Instead of paying for other peoples health insurance and then other people pay for mine, why can't I just save the money that I would be paying in premiums above and beyond what the rational amount would be and then pay for my own health care when I get older(or, pay for the higher premiums when I get older)?

[mindslight]

It's ridiculously amazing that you're getting downvoted for your general point. Wishful thinking won't change market incentives, although it will help make some profiteers rich.

The young (and healthy) paying for the old (and sick) is a function that can only be provided by government, or bona fide charity. It's impossible for this to be provided by private companies because, in line with the denial behavior we're seeing, it's rational for any company to take on the overpaying low-cost customers, tell the underpaying high-cost customers to go elsewhere, and then pocket the surplus.

Having said that, I'm not personally a believer in single payer fixing everything. It certainly should be possible for routine care for financially able people to be provided completely on the open market. Immediate common-sense based reforms would go a long way. For example, hospitals/providers should be required to have one and only one price list for all payers, published months in advance. And the bundling of "insurance" with employment should be outright prohibited

[maxxxxx]

Are you willing to forego medical care if you have an accident tomorrow and your savings account isn't big enough?

[oh_sigh]

I'm not arguing against insurance - I'm arguing against the government forcing insurance upon groups of people with extremely dissimilar risk profiles and forcing the younger, poorer group to pay to subsidize the older, richer group.

[knieveltech]

Ultimately, there is no point to insurance beyond generating profit for someone.