What do we need health insurers for anyway? | Hacker News Reader

What do we need health insurers for anyway?

articles.latimes.com

21 pointsjamesbressi69 comments

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.)

"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.

Most of it likely goes on administration and bureaucracy.

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?

You underestimate the power of groups to convince massive numbers of people to act against their own best interests. Just look at the astroturfing going on in the "Tea Party" movement. There is so much big money and influence going on now that it is basically an official branch of the RNC.

There's also the fact that many (voters) do have insurance and don't want to pay for someone elses when 'they already got theirs'.

Once someone has their slice of the American dream, they generally fight all cost/tax increases and change.

I think it's partially that. But it's also partially fear of the unknown. Essentially, the devil you know is better than the devil you don't. Sure, my health insurance now sucks and I'm terrified they'll drop me, but who knows what would happen if the system changed.

Most people think their health insurance is great (or at least did until recently) because they've never needed it for anything large. If you're not terribly informed or introspective, and the cost to you of something is hidden (employer pays) and you got $7,500 from your insurance company the one time in 15 years you had a significant medical cost, you're going to think of it as a "benefit".

This is similar to the political syndrome where people think their representatives are great; it's all those other slimy bastards who are the problem. Thus, incumbents have a huge advantage and bad politicians rarely get fired.

The irony is that America spends so so much on military, and seems to believe that military is something extremely important and should be a public service, but doesn't seem to view basic healthcare the same. Bizarre.

Interesting side note: while one is in the military, you get damn near first-class health care for you and your family. In this way, at least the most socialistic organization in America is its military.

(I'm a U.S. military brat, and took healthcare for granted until I went to University and was no longer covered. Now I'm Canadian and while I don't take healthcare for granted, I'm so glad I don't have to scramble for it the way that too many in the U.S. do.)

The problem is a very vocal minority of people that seem to think the healthcare system will fix itself or works great as it is.

In the US, those people tend to fall into one of a few groups:

1) They're covered by a government plan already (medicare, medicaid)

2) They have a good employer-sponsored plan and don't see the costs. My own parents fall into this category, having worked for basically one company their entire lives and gaining entitlement to that plan on retirement. However, this form of entitlement is rapidly disappearing and I doubt that people entering the workforce today will have this level of benefit.

3) Cost is no object. Some people are fortunate enough to have either made or been born into enough money that a few hundred or a few thousand per month just isn't a big expense. I hope to be in this group some day, but I realize that this segment is never going to be a majority.

4) The terrified. I have a handful of friends that also fall into this group. They are told by their choice of media outlets that the socialists are going to take away their medical care and that the Democrats' bills are just the first on a "slippery slope" to take away their guns and their freedom.

Personally, I think the entire concept of employer-based healthcare is a drag on our economy. It puts a very high incentive on remaining in "safe" employment and dissuades people from starting their own ventures or joining a startup. I ran into this recently when trying to hire a developer. Unable to offer health insurance, even the potential rewards of working for a startup weren't enough to offset the risk involved in losing health coverage. This is particularly true in a system where any lapse in coverage can result in permanent ineligibility for future coverage.

The U.S. system delivers great care to those who can afford it. Perhaps the current Congressional bills aren't the right solution. But, the overall problem is strangling our competitive advantage. And America's entrepreneurs are at the forefront of this battle. I hope they don't also turn out to be its casualties.

People who think the healthcare system works great as-is are fucking morons.

This is similar to how I can respect someone who conservative on firm intellectual grounds, and who may be a Republican who voted for Bush, even though I don't agree with him; but not someone who liked and supported Bush.

Our healthcare industry isn't 'wildly dysfunctional'. I knew an illegal immigrant with metastasized cancer, who had multiple surgeries and whose lifetime was extended by at least five years (vs. what he would have gotten in Ukraine with their 'nationalized' healthcare). He polished shoes for a living and had no health insurance. I believe he paid about $20/month for hospital bills in order to avoid bankruptcy (I'm not sure how the loan process works).

I've lived here for thirteen years and haven't heard a single redditesque 'horror' story from anyone I know. If you want/need insurance you can find a way to get it cheaply. If you need medical care, you'll have access to better doctors, better drugs, and better equipment than just about anywhere in the world (not counting EU, as I don't know how your system works in practice). Yeah, our system could use an overhaul, but it is far, far from being 'wildly dysfunctional'.

I dunno man. When my mom got breast cancer, her health insurance went from $300/mo to $3,000/mo in 30 days! My dad, 10 years her elder came out of retirement at age 70 and went to work for the state of Georgia so that she could get on his insurance plan at work. Thank god my Dad was still alive, and capable of working otherwise she'd be dead.

But the point is: That $300/mo wasn't insurance it was a joke. And that $3000/mo wasn't insurance it was extortion.

If you think our healthcare industry is fine, well, god bless you. I hope you never have to go what my family went through.

I find that most people who think the US health system is fine are those who've been lucky enough to either never actually use it, or pay for it.

Ask Non-Americans: Are you aware that agreeing that something is broken is different from agreeing on how to fix it? Do you not have disagreements in your countries?

No major American political party (okay, there are only two of them) will even entertain the obvious solution that everyone else has settled on, albeit via a variety of paths.

Say what you want about reasonable people disagreeing with each other; the absence of any institutional support for universal health care is a big red flag that your system is broken.

And somehow, it's Americans who get a bad rap for thinking their own solutions should be applied everywhere else.

Please define "wildly dysfunctional".

How abvout this graph: http://www.fivethirtyeight.com/2010/01/healthcare-spending-a...

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.

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.

I recently had a physical therapist look at my 6 month old daughter at G'town hospital in DC for a routine checkup. Before I could see the therapist for a half-hour session I had to interact with 4 different people and sign so much paperwork that I felt like I was buying a house.

The system is broken.

People call it "dysfunctional" because they conflate the "insurance industry" with the "healthcare indsutry". What exists in the American private sector is not, by any means, a healthcare industry. It is merely an insurance industry. By insurance industry standards, it functions well. By healthcare standards, it's terrifically broken.

The way we use health insurance nowadays is akin to using your car insurance for oil changes and checkups.

Bollocks. I use my health insurance (publicly funded - I'm Canadian) for oil changes and checkups, and Canada still manages to spend about half, per capita, on health coverage as the US.

Not only that, but most employers offer supplementary insurance of one form or another to provide for the things not covered by public insurance. Because they don't have to worry about most of the Big Things (except dental and usually optometric), it's far easier and cheaper for them to offer some of the smaller things (massage, orthotics, etc.).

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?

The problem is that it is no longer an "insurance" system. Insurance should be for an out-of-band emergency illness/treatment, which cannot be handled via out of pocket expenses. In the US, insurance companies have become payment gateways since people tend to use it for every silly thing like minor illnesses.

The only way in which ANY insurance business can be profitable is if the circumstance that is insurance is random and un-predictable (think auto-accidents, earthquake, flood, fire). If there is any way to predict the incident, the insurance company will do everything to game the system and optimize their profits, as will the patients.

"...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.

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.

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.

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.

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!).

Actually, I seem to recall reading somewhere that after the US, Switzerland pays the most for healthcare. That said, I doubt we'll be able to remove profit from health insurance companies in the near future, so it's kind of a moot point. :-)

Wow, according to some quick googling that's true. I didn't expect that at all, as everyone here is paying very little for their health insurance. A basic one with no frills costs you about 250 CHF =~ 250 USD per month, and that's with some of the highest salaries in Europe. So the rest of the spending must be government subsidies for people with low income and the hospital funding, which the government partly pays. With taxes being lower than in most Western European countries, it's still surprising.

> For health insurers to be profitable, they need young healthy people to have policies and pilfer elderly sick people.

That's not true. To be profitable, they need the same thing that every biz needs - more revenues than expenses.

You can be profitable insuring any group - you just need to charge members of that group more than it costs to cover them.

If you think that any group is being hosed, set up an insurance company that covers them and no one else. Charge them what you think they cost (plus a bit so you're profitable) and steal customers from companies that charge more. If you're right, both you and your customers will benefit significantly.

Insurance is a way to reduce variance. However, the value of reducing variance has limits. If price charged to a group significantly exceeds their perceived average costs, they won't pay and will go bare.

How much are you willing to subsidize someone else's costs?

People complain about the you-must-buy-insurance provisions of the of the proposed health insurance reform, but there’s no way around it.

The vast majority of Americans seem to agree that it’s morally obnoxious to charge people higher premiums just because they have a pre-existing health condition that makes them more likely to require care. So, under the proposal, insurers are restrained from doing that.

Under that kind of pricing system, healthy people have an incentive to put off buying insurance until right before they really need it, and if everyone does that, then the premiums for folks who have no choice will really go through the roof. So there’s the requirement for everyone to buy insurance.

If the premiums are oppressively high, then people at the lower (and even the lower-middle) end of the income scale will still have an incentive to just go without insurance and pay the penalty for non-compliance. So there are subsidies to make it easier for households in those income brackets to buy insurance.

For health insurers to be profitable, they need young healthy people to have policies and pilfer elderly sick people.

Same as any other business. If banks want to make loans, they have to have deposits that people don't want to touch. If you want to make money on the stock market, someone has to make the opposite bet against you. If you want to make money selling airline seats, you have to assume that you'll sell every one.

Assuming other people will do something (or are wrong about something) is the basis of a lot of businesses. Nearly all of them, in fact.

The difference is that banks provide economic incentives for people to deposit money. What incentive is there for a 20-something to spend $200/month for something they will probably never need?

The incentive, for me anyway, is that I can afford $200, and now I never have to worry about "what if I get cancer" or "what if I'm in a bicycle accident and need major surgery and months of physical therapy". I mean, both situations are bad, but I won't have to worry about "how will I pay for this" in addition to "how much longer am I going to be on Earth". IMO, it's money well spent. So far, my insurance company has won in terms of dollars made, but I've won in terms of peace of mind.

Not everything is zero-sum.

The incentive is that they will have coverage when they need it. Everyone will need coverage eventually because everyone gets old.

That incentive can't exist as long as insurance companies exclude people for pre-existing conditions, change rates, etc. Noone wants to pay into the system that they know is setup to not pay out.

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.

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.

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.

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.

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.

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. :)

> 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.

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).

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 fked.

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.

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).

"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..??"

s/health care/fire departments/ s/medical care/fire departments/

To me, if you do the above, the argument loses no logical soundness. So then, do you advocate doing away with fire departments?

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.

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.

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

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.

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.

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).

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.

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.

Also, I am pretty sure there is a standard period "look-back" So unless you can do the transfer and then wait the subsequent time period before declaring bankruptcy, you are sol.

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.

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

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.

"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)

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.

Reply on news.ycombinator.com