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Comment by socrates1998 | Hacker News Reader

socrates1998

The biggest problem I have with insurance is the inherent disproportionate power relationship between the company and their customer.

Essentially, the moment a customer becomes more trouble than they are worth, they are dropped. This is true with other types of industries, but if your health insurance drops you when you get cancer, you can't get more health insurance, and you die.

Same with house insurance, car insurance, ect...

And it causes death or financial disaster all too often.

Some would argue that "this doesn't happen" or "it's illegal".

1) It happens ALL THE TIME.

2) It's illegal, but if you don't have the means or education to fight it. You are pretty much done.

It's the fundamental nature of insurance companies to milk healthy customers while dropping unhealthy customers. It's just too tempting and they are too protected by our legal system for them to not do it.

I know this is pessimistic, but as long as you realize this fundamental imbalance in the relationship with you and your insurance companies, you can mitigate it to a certain extent.

But, really, the only way to completely mitigate it is to be so rich that you don't even need insurance.

View on HN

Or to be socially-connected to organizations that the health insurance company doesn't want to piss off. My family wasn't rich at all growing up, but we never had a problem with health insurance, because my mother worked for the government. The one organization that insurers will never piss off is the federal or state government, because then they will lose the right to do business in that state.

I do think that this increasing preference for the rule of power over the rule of law is pretty disturbing, and makes a mockery out of the claim that we live in a democracy. Sure we do...if you have leverage over the companies that would violate your rights. But that's the very definition of corruption, when you need to rely on inside information, relationships, or other proprietary tools to get people to do what you want, rather than your rights as a citizen.

yes, insurance companies are very corrupt. I would say they are inherently corrupt given their place and power in our system.

I don't have a solution other than don't get sick or have a car accident.

I'll take advantage of us having the top commentthread to pose a question to the HN audience:

Would you rather live in a society where everyone has a right to medical care regardless of their social standing or financial wherewithal, but some people will die because of bureaucratic incompetence or because the person who could've saved them has no incentive to? Or would you rather live in a society where medicine can work miracles, even the most debilitating ailments can be cured, but only if you happen to be rich?

The former is (to a first approximation) what you get with European-style single payer. The latter seems to be where American health care is headed. There's no situation where everybody can be saved, simply because we're all going to die in the end anyway, but the distribution of who dies and from what can be changed by different policies.

> The former is (to a first approximation) what you get with European-style single payer

Aside from the fact that most European countries - even those with government-mandated healthcare - do not have single-payer insurance, this is a false dichotomy that ignores the global market dynamics.

Just as Medicare in the US could not operate in its current form without the existence of the private market to implicitly subsidize the public system, European countries would have a very different healthcare story in the absence of the US market.

Nobody likes to admit it, but there's a reason that the US is the source of over half of all direct biomedical and pharmaceutical research worldwide, including research conducted by European pharmaceutical companies. These companies use sales on the US market as the source of funds for the research that all countries benefit from, and in the absence of the US market, either those costs would be borne by Europe, or that research would simply not happen[0]. They also pull funding from the US market via other, less direct means.

Yes, the US system has massive problems, and yes, it could and should be cheaper. But you can't analyze these as binary options in isolation, because they're not binary[1], and they're not operating in isolation either.

[0] If you want to make the argument that Europe could come up with a system that pays for this research in the absence of the US market, fine, but then you have to explain both why that would not simply recreate the same expenses, and explain the fact that, so far, that system has not been created even by the European pharmaceutical and biomedical companies.

[1] The UK has four main payers; the Netherlands doesn't even have single-payer at all, and so forth.

So assume that the U.S. health system goes away and that no further medical research is ever conducted; we're left with whatever the state of knowledge is now, and it'll never get better. This is what I was somewhat obliquely referring to as "some people will die because the person who could've saved them has no incentive to".

The question still stands - would you rather live in the world where everyone has access to medical care but it isn't cutting-edge, or one where the very best in care and the very best in research techniques are available, but only for a price? I'm honestly curious about peoples' answers, because it is a dichotomy. Not necessarily a sharp one - you could imagine several intermediate systems in between - but there's a tradeoff between universal access vs. incentivizing further research and new techniques.

> So assume that the U.S. health system goes away and that no further medical research is ever conducted; we're left with whatever the state of knowledge is now, and it'll never get better. This is what I was somewhat obliquely referring to as "some people will die because the person who could've saved them has no incentive to".

Again, there is no "would you rather". You can't treat these as binary options, and you can't treat these as operating in isolation. They're an array of systems that mutually operate within a global context. There is no answer to that question, because the dichotomy assumes both a binary and isolation.

There is indeed a tradeoff between quality and access, and there's a worthwhile and necessary conversation to be had around that. But that's not the same as the difference between the US and the multitudinous systems within Europe (most of which are not single-payer). And it's not the same as the question you opened with.

Why would there be a dichotomy? Both space travel and the internet come to mind as government funded projects moved the United States into lucrative markets with cutting edge technology.

There is no dichotomy between universal coverage and cutting edge technology.

>> no incentive

If I see someone drowning, I have no financial incentive to go save them. But I will go save them. Financial incentives aren't the only incentives. They aren't even the best incentives.

Why might someone go into medicine and/or research if it didn't pay huge salaries? Maybe because it's meaningful work. Maybe because it brings prestige. Maybe because they enjoy it. Maybe because they care for people.

I contribute to open source software and have never been paid a dime, yet you can hardly say that open source software is inferior to proprietary/for-profit software.

I'd be okay with less innovation if it meant that everybody got decent medical care. Statistically speaking, most people don't die from exotic conditions but rather from mundane things that just need treatment.

The US payers don't subsidise medical research for the rest of the world; they pay for the vast amounts of advertising that the US companies do to doctors and consumers.

"Would you rather live in a society where everyone has a right to medical care regardless of their social standing or financial wherewithal, but some people will die because of bureaucratic incompetence or because the person who could've saved them has no incentive to? Or would you rather live in a society where medicine can work miracles, even the most debilitating ailments can be cured, but only if you happen to be rich?"

Is this honestly a question?

There are way more non-rich people who need health insurance than there are people who may die because of "bureaucratic incompetence" or lack of incentive(what? do people really need money to not let someone die?).

The way you phased it the former is obviously(to me at least) better than the latter one.

It also sounds like you think medical research advances only in countries with the latter style of health insurance. Do you really think medical advances happen only in America?

I'd love to see you and chimeracoder (sibling comment) fight it out, because his comment was exactly that medical advances happen because of freeriding off the American system, and without the American system, those advances would not happen.

The idea that the American system is pulling the rest of the world up by its bootstraps is in my belief absurd.

Copied from earlier comments by me:

let's go through a quick run-down of the 'major' pharmaceutical companies of the world, and where they are headquartered.

Company Revenue (USD) Headquarters

Novartis 53.6 Bn Switzerland

Roche 47.8 Bn Switzerland

Sanofi 36.9 Bn France

GSK 34.9 Bn UK

AstraZeneca 26 Bn UK/Sweden

Bayer 43.4 bn Germany

Baxter 15.3bn US

Pfizer 49 Bn US

Merck 42.23 Bn US

BMS 18.8 bn US

So, 4 of the top 10 pharmaceutical companies by revenue are headquartered in the US. By Revenue, those 4 account for 125.3 Bn out of a pie of 367.9 Bn; or 34%.

It is not easy to get a list of the number of drugs under clinical trial, or the number of drugs that were recently brought to market by various manufacturers; and, as a side matter, a number of the more innovative drugs brought to market recently were all developed by small pharmaceutical companies (Boceprevir, Telaprevir, Imatinib, Ipilumimab) that were later acquired by the big boys.

So a small pharma company did the innovating, usually funded by a university or the product of particuarly profound insights by PhD students; turned into successful drugs; run through to the stage 3 trial stage and then, once all the development costs are done and dusted, acquired for a discount price of the predicted future revenue stream So tell me, where are all the drugs being developed by america? I would say the rest of the world is more than pulling it's weight.

In fact, given rough population parity between the European first world and the United states, it could in fact be argued that the United states is not pulling it's weight.

> So tell me, where are all the drugs being developed by america? I would say the rest of the world is more than pulling it's weight.

Going by where the companies are headquartered is meaningless, because these are all multinational conglomerates. The question is where they procure the funds for their R&D.

As it turns out, not only is 50% of the entire world's medical research actually conducted in the US, but even for research developed outside the US, the US market still serves as the primary driver for the funding, which is pretty easy to see if you bother to dig into their public financial disclosures.

From the 2016 ITA Pharmaceuticals Top Markets Report:

>"In addition to a favorable IP and regulatory environment, U.S. laws allowing direct-to-consumer advertising creates immense demand for specific patented drugs. More importantly, the United States is the world’s largest free-pricing market for pharmaceuticals. As a result, prices are comparatively high to make up for lower profits in other countries and to cover R&D costs.

The United States also has high per capita incomes, unmatched access to healthcare, a large elderly population, a culture of end-of-life prolongation, high rates of chronic diseases and drug consumption and a strong consumer preference for innovative drugs.

All of these factors contribute to it being, by far, the world’s largest pharmaceutical market with $333 billion in sales in 2015, about triple the size of its nearest rival, China.

The United States will remain the world’s most important market for the foreseeable future with healthy growth expected across all product sectors."

<trade.gov/topmarkets/pdf/Pharmaceuticals_Executive_Summary.pdf>

I support a single-payer approach, largely simply because the biggest risk pool spreads the risk most evenly, but I think we have to be very careful with the word "right". I agree that basic medical care can be considered a right, in the sense that a wealthy society, which we are, is morally obliged to provide it to its least fortunate. But there has to be a limit to what counts as "basic"; if we don't impose one, we're going to wind up with even worse cost inflation than we have now.

The rich will have better health care even in a single-payer system, and I'm fine with that.

The thing I really don't want is the pre-ACA system, where only people with good jobs can get access to health care.

BTW I saw a great Yonatan Zunger blog post on this a while back... ah, here it is: https://healthcareinamerica.us/how-to-ask-good-questions-abo...

You hit the nail on the head with what counts as "basic" - as long as politicians can win elections by giving a benefit to people that they don't have to pay for/or collectively can't afford, I'm not sure how you ever contain this problem...

Neither. Why not dream bigger than that?

We have unprecedented means to distribute information for "free" (or at least cheaply enough that even homeless people can access insane amounts of information, unlike in the past when a lot of stuff was only accessible to the elite) and diet and lifestyle are cited over and over and over as contributing to deadly conditions. There is lots of room here to do good things for everyone, quite cheaply.

Though I am for the U.S. transitioning to universal basic health coverage for its citizens. The current situation is terribly broken.

I'm European so maybe I'm just proving your point , but I think you're severely overestimating modern medicine.

Most ailments get 'treated' alright, but the actual help you get isnt statistically better than placebos would've been.

Often, you get better despite of the treatment, not because of it.

Even something as basic as a broken bone just boils down to 'force patient to keep still while nobody does anything for weeks'.

.. heck, the biggest impact on healthcare continues to be personal hygiene. Most of the life expectancy improvements within the last 200 years can be attributed to that.

This is demonstrably false on a huge number of conditions: type 1 diabetes, arthritis (knee and hip replacements), childhood vaccinations, antibiotics- you are being disingenuous to the advances over even the last 50 years here.

ah, I did not mean to imply that modern medicine is useless. I'm sorry if that sounded like that.

there are absolutely examples of its success, as you've correctly pointed out! It's still not nearly as amazing as the grand-grandparent made it sound. and my previous statement still stands: personal hygiene continues to save more people than any other treatment. this includes vaccinations and antibiotics (they're both wonderful discoveries that help save a lot of people).

The US isn't heading toward "miracle treatments for the rich", it's heading towards "over testing, over diagnosis, and over treatment for the rich", all of which are linked to harm.

And single payer systems mostly don't prevent private treatment - you don't need it because the single payer is good quality and the only benefit you get from private treatment is access to ineffective experimental very expensive treatments and nicer hospital rooms.

>'Would you rather live in a society where everyone has a right to medical care regardless of their social standing or financial wherewithal, but some people will die because of bureaucratic incompetence or because the person who could've saved them has no incentive to?'

That is delusional. As a doctor in a single payer country, I can categorically say that the quality of living of myself and my colleagues is excellent. In fact, for those not from privileged backgrounds (many, as we have relatively affordable tertiary education) not having a quarter to a half a million of debt" graduation actually means we are better off.

So there's that, then there's the fact that I aggregate, the level of care in Australia, or the uk, or Japan, or Germany, is actually substantially better than that I the US.

Inform yourself sir.

Put another way: "Oh no! I'm rich and so can pay for whatever infinite quality, resource wasting healthcare and so I'm scared I might have to endure poor people's healthcare".

Rest easy - you can still buy your way to better care.

Fwiw there is an "Intellectual Care Advantage" in that someone who is articulate and educated (aka well off) has a much better chance of getting good care, through their ability to navigate system, communicate with healthcare professionals, do their own research, be the squeaky wheel. But in my experience that advantage exists equally in both the US private system and in the European socialized system.

I want everyone to have the same system, so that rich people are forced to expend their influence on trying to improve the system for everyone.

Give them the option, and they'll just make the best walled garden they can and fuck everyone else.

I do! End health insurance companies as we know them. Institute universal coverage, mandated by law. It doesn't have to be single payer or free at point of care, but it has to be universal coverage.

It's not a trivial problem, but it's also largely a solved one. The US just hasn't implemented any of the models that work elsewhere.

That addresses healthcare, but health insurance is just one slice of the insurance market.

I'm not aware of a general solution that covers all cases, but in auto insurance we found that the model of replacing underwriters with crowdfunded groups works.

Here in BC only the province is allowed to provide primary car insurance. Our current provincial government is incredibly corrupt and incompetent, including with regards to the provincial insurer specifically, but I'll still take it over private insurers I've had to deal with before.

The solution is AI. Self-driving cars and AI healthcare has the potential to make the insurance industries associated with both. I only recently learnt about the horrific healthcare in the US, and am doubling down on developing AI for healthcare. If I replace one doctor's job with an AI, I've probably saved 10s of lives.

How do you intend to ensure the fruits of your research will be used to benefit people rather than the large organizations who will (at least initially) control healthcare AI?

Doctors per se are not the most critical problem in US healthcare. Premature optimization is the root of all evil. Find the real tentpoles and start there.

Insurance company executives pull the political marionette strings via campaign finance (in the U.S.). I would surmise the worry of "pissing someone off" dynamic is exactly the reverse.

Possibly at the federal level. At the Massachusetts state level, the teacher's union (which my mother was part of) pulled the marionette strings; basically all local politicians were in the pocket of the MTA.

Don't forget the police union.

> Or to be socially-connected to organizations that the health insurance company doesn't want to piss off.

This is definitely true, and it seems like social media and sites like this or Reddit have the potential to bring this power to many more people. Companies behaving badly stokes online lynch mobs like nothing else, just look any recent stories of Uber on HN or United on Reddit.

The challenge is that these mobs are essentially random, and the public's attention span is short. So if your company does something evil, there's basically a 1% chance that you will face a company-ending event, and a 99% chance that it will never come to light. And even if your company doesn't do something evil, there's still maybe a 0.25% chance that you will face a company-ending event, because online lynch mobs don't really care about facts. So it doesn't act very well as an incentive.

Just look at the recent Monsanto news, where they knew that Roundup causes cancer, sold it anyway, and paid off the EPA to bury the investigation. There've been news stories, but no major social media outrage. Probably we've just been conditioned to expect no better of Monsanto.

The advantage of a real legal system that's accessible to all is that there're procedures for finding out the truth of any accusation, and then if it is true, there's enforcement teeth behind it. (Or used to be, at least; I think many companies are now using the bankruptcy/reorg shield to avoid court judgments.) Mobs are a poor substitute for that.

Some more info about the Monsanto thing, which I hadn't heard about; I believe this is what the parent is mentioning:

https://mobile.nytimes.com/2017/03/14/business/monsanto-roun...

The other challenge here is that it's hard to vote with your feet in insurance because you might have employer provided insurance that gives a specific company a monopoly, have fewer options for other reasons, or face turning a condition acquired while insured into a pre-existing condition (might be relevant under Trump's attempt at reform).

I think you're confusing "health insurance" which has a strong social redistribution component, with pure insurance, which is a business transaction to pay off on the chance something happens.

Pure insurance is when a consumer buys a Playstation for $300, and then pays $5 for an extended warranty, or when a company insures their office building against a fire. I don't think your arguments apply to that. In such a case, is there unacceptable social harm if a insurance company determines I'm really bad at taking care of my Playstation, and refuses to insure me? Is a company that badly off if they need to write down the cost of a building if it gets burned down?

Is all insurance a social right? I feel that health insurance has the strongest claim to this, because it's not a pure business transaction and it's about who we're letting die in society.

> Is a company that badly off if they need to write down the cost of a building if it gets burned down?

That means a company has to always keep cash in reserve against the off-chance of its building burning down just because insurance can't be trusted. That's money that can't go into expanding the business and creating additional jobs. Imagine the overhead of this parked money across thousands of businesses. Not to mention a lot of startups or young businesses can't have that sort of cash position, which means it becomes another barrier to starting businesses. It would be a major impediment to the economy.

Even worse, if you have to account for that possibility, why buy insurance in the first place?

I think fair and transparent business contracts are a consumer right.

Insurance is statistical in nature, and contracts should be required to explicitly outline the scope of coverage. If I’m paying $5/m for coverage of manufacturing issues with my Playstation, I expect any manufacturing issues to be covered. I would also expect an extremely unlucky customer to receive multiple device replacements without any change of premium - because the contract and price should reflect the expected failure rate of the device (plus overhead + profit).

In that example, it should be illegal to boot an honest customer after the first failure… the only reason to do so would be because the insurance company set an artificially low rate that doesn’t reflect the ammortized rate of manufacturing issues. In other words: the business is breaching contract by charging me for a different service than I’m getting.

Although, given the clear scope of coverage, proof of malfeasance is justification to both refuse payout and ban the customer.

However, if I’m paying $5/m for unlimited coverage, I expect unlimited coverage. That rate is expected to cover idiots that keep their Playstation on a fireplace, and perfect people that never move the device from a cool location away from vibrations and interference. Again - if I get kicked after the first failure, that’s failse advertising. Of course there are people that will microwave their device for fun and demand a replacement - the rate should include those people, or the contract should not offer unlimited coverage.

Businesses are free to not offer unprofitable coverage, but consumers have an economic right to demand that businesses honor contracts. I’d argue that consumers also have a right to accurate advertising - if the “unlimited coverage” plan has fine text that says “manufacturing issues only”, well, that’s not really above-board.

Totally agree; the problem of insurance is one of contract law. Most people denied claims are denied legitimately based on the contract they signed. However, there is the perception that claims are denied unfairly because there is a disconnect between what you thought you signed with what you actually signed.

I saw this every day when I was a catastrophe claims adjuster with Farmers Insurance during Hurricane Ike that demolished a good part of the Texas/Louisiana coast. I actually had a customer threaten to shoot me because I couldn’t write a check for a water damaged wood floor despite writing a big check to replace the roof. The actual source of the water damage wasn’t the roof, it was the floodwater. So while the walls from the roof downward were covered because that damage was from the seepage from the damaged roof, the floor damage was entirely from the flood. (It was a two story house so the water from the roof seeped through the walls from the attic and leached downward into the drywall, while the floor downstairs was covered in a pool of water from the floor.

The point is the homeowner thought he was covered despite there being an extremely clear flood exclusion for that particular policy. I could have been really strict and only covered the walls down to the flood line, but since the walls were a total loss either way, I had the flexibility to cover the walls all the way to the floor.

I saw this misunderstanding again and again when it came to roofs. A 20 year roof that is 10 years old is only covered at a fraction of replacement cost because it only had 10 years of value remaining. Those were uncomfortable situations for me however, the homeowner, when buying them policy could have bought a replacement cost add-on, but they wanted to save money so they got burned when they needed the coverage.

Insurance agents are a HUGE part of the problem – is claims adjusters had to be the “bad guy” and break the news that their policy didn’t cover what they thought it did. I was the one getting harrassee when all I was doing was following the contract. I did my best to lean on the side of the homeowner, but all of my payouts had to be supported by detailed measurements, photographs and Xactimate estimates.

A nasty business that was. I barely lasted a year before I burned out.

I think it is these "pick and choose" exclusions that have no actual sense to them. Of course a homeowner's insurance policy should cover flood damage to a floor. The floor is part of the home, isn't it? But no, the company decides to pick and choose, and they never really call attention to it.

This is why the ACA came up with the "Essential Health Benefits" list. There were so many things that, common sense would tell you should be covered, but insurance companies would exclude for no viable reason (making more money or not having to pay out claims are not things I consider "viable reasons" in this context). You'd buy insurance, only to find out it wouldn't actually cover things that people would want to use it for.

Insurance doesn't generally cover flood damage for structures in flood zones, or does so at a much higher price.

The point of briandear's example was that wind had damaged the roof and walls, and wind storms were covered by the insurance; whereas flooding had damaged the floors, and flooding was not covered by the insurance.

When you get insurance, it doesn't necessarily cover everything. You might have insurance that will pay for your home if it catches fire and is destroyed accidentally, but will not pay if a person deliberately commits arson. Insurance might pay of your home is destroyed by a storm, but not by a landslide, and so on.

The main problem I heard with briandear's example is that people apparently didn't understand the coverage they had purchased. If I operated an insurance company, I would consider summarizing the policy that people were about to purchase with a simple form showing the most common hazards. Maybe even show them with simple glyphs depicting fire, floods, storms, etc., and indicating whether their plan covers that scenario or not. Ask them to sign or initial that form. It's not a legal form, but you'd present it to them and ask them to confirm they understand it along with the contract text version.

Then, when an event happens and they're asking for an insurance payment, you show them the form that they had initialized, and explain how things were covered or not covered.

I would also want to explain to people that multiple disasters can happen at once, and explain how the insurance company will reason about what's covered, based on the cause of each thing that was damaged or destroyed.

I wonder how much extra insurance companies are able to charge consumers because it is so complex for most people. There is massive information asymmetry there in favor of the insurance company which almost certainly is reflected in higher margins than they'd otherwise have if they had an educated customer able to properly assess the offering.

> The main problem I heard with briandear's example is that people apparently didn't understand the coverage they had purchased.

While that's true, a part of the reason is the complexity of policies, and exclusions for situations which people consider "common sense" to be covered. Situations which are medium risk, but part of people's everyday lives.

For example, my travel insurance does not cover accidents which are "a result of drug or alcohol influence". My laptop loss insurance does not cover theft if it is "left unattended in a room with public access".

It might make sense to exclude getting high on unknown drugs in Thailand and stabbing yourself, or leaving your laptop on a truck stop cafe table while going to the toilet.

But at the same time, having a few beers while on holiday, and leaving your laptop on your desk at a startup office are both things which reasonable, responsible people still often do. And would not expect to invalidate their insurance cover.

Unfortunately nobody could explain to me the precise details of these clauses - what counts as a "result of" or "public access".

Living on a floodplain is like smoking two packs of cigarettes a day. You'll be fine for a while, and then you won't be. If the house isn't on stilts, you'll have to fix the flood damage eventually. Insurance companies know this, so they'll charge enough for flood coverage to cover the inevitable losses.

As I understand it, in the US, flood damage is almost never covered by homeowner's insurance. It is covered by flood insurance from the US government.

The reason for this is because most human settlements are near water. It is not only essential to life, it is a good means of transportation and has been for a long time. So most human settlements are built in flood plains. Thus, sooner or later, most homes will be at risk of flood damage.

Insurance is about risk management. There is no risk to manage here in terms of taking a financial bet. It is all downside for the insurance company. The question is not IF the house will be in danger of flood so much as WHEN. Insurance companies try to avoid such bets, for the most part. (Not counting life insurance.)

If and when are the same from a risk management perspective... Have you heard of life insurance? 100% of customers will die, the bet is whether they die before the collected premiums exceed payout.

No, actually, a lot of term policies basically bet that you die after the policy expires.

Whole life policies make the bet you are describing. They are a lot more expensive than term policies and you can borrow against them because you are basically putting money into a fund in some sense.

The vast majority of life insurance is absolutely a bet. Many, many life insurance policies are only good if you die on this flight to New Zealand or if you die in a car wreck or if you die in the next five years while still quite young. People buy these things because they are cheap as all fuck because they are long shot bets. Most people won't die on their plane flight or in the next five years while in their 20s or 30s.

And the last line in the comment to which you are replying makes it crystal clear that I have, in fact, heard of life insurance.

Every time I have ever purchased any insurance policy, I have read it. All of it. Then I pick out sentences or paragraphs and ask my agent to explain what they mean. The agent never knows. Their boss never knows.

I'm a fairly educated person. I understand a lot of complicated things. I can read and comprehend legal statutes, building codes, lease agreements, historical documents, Shakespeare, transcripts of legal proceedings, and lots of hiphop. But I have never been given a policy statement from my insurance agent that was coherent. Or even complete.

> Of course there are people that will microwave their device for fun and demand a replacement

This is known as insurance fraud.

The example offered "unlimited coverage" - I hoped to point out that making unrealistic offers is also a problem on the business side.

All insurance companies have the temptation to disqualify claims to improve profits. The nature of the problem is that when you buy insurance, you are disconnected in time from the point where you might need to make a claim against that policy. And it is only when you make the claim that you find out how nice or terrible that company is at actually delivering the product you've been buying.

There is a better way than just purchasing a policy and hoping. E.g. in CA, you can inform yourself about various home insurance companies before you buy. By looking at the data the CA Dept of Insurance publishes, you can see the ratio of claim complaints to policies.

In some lines of insurance like healthcare via employee benefits, you aren't the person deciding on the insurance company - and that definitely leads to problems...

The easiest way to see that health insurance is not pure insurance is to notice that if your auto insurance behaved like health your gas, oil and windshield wiper replacements would be reimbursed also.

The biggest reason for the social redistribution component is the pesky issue of age. Old people seem to consume a lot more health services. People when born also do but are taught to consume less. Somehow they forget when they get older...

The problem would not exist to this extent if there were lifelong contracts. Even in places where they are common the premiums are not reflecting the cost of the age cohort but have some actuary life insurance component to them. Eventually one has to pay in what one is statistically likely to consume and that is easier when younger. So even in a totally capitalistic system while earning one pays for ones future old age risk. The US system is an outlier as the old age risk is socialized.

> the moment a customer becomes more trouble than they are worth, they are dropped.

Insurance is a business. I don't think any business would want customers that are more trouble than they are worth.

> they are too protected by our legal system for them to not do it.

Solving the risk issue with patients who will never be able to afford their healthcare is not an insurance problem. These people are uninsurable. There's a known cost to pharmaceuticals associated with being a hemophiliac. There's a known cost to the outpatient care associated with kidney disease. There's no "risk" associated with those costs.

We need to re-frame the discussion around socialized healthcare, not health insurance. Health insurance, apart from high-deductible, low-cost plans, doesn't exist. The US already has socialized healthcare, the problem is that it is a split private/public model.

> Insurance is a business. I don't think any business would want customers that are more trouble than they are worth.

But insurance is precisely the business of taking money from everyone that's exposed to a potential loss (namely the expected value of that loss, plus some more to cover administration cost and profit), and then distributing it to those actually suffering the loss.

If the insurance then turns around and kicks those affected out, it is reneging not only on the spirit of the contract, but on its entire raison d'être.

Agreed, though, on your later point that in the health domain, certain risks, once they've occurred, are so massive that traditional (private market) insurance structures might not be really suited to them, which is why nearly the entire developed world has some sort of public health insurance, fortunately.

> which is why nearly the entire developed world has some sort of public health insurance, fortunately.

"That 'nearly' is a real killer" - Somebody from the "nearly"

Yep, but as long as they're for-profit and the people making decisions there are allowed to prioritize increasing shareholder value above minimizing human suffering, I don't think it'll change.

> If the insurance then turns around and kicks those affected out, it is reneging not only on the spirit of the contract, but on its entire raison d'être.

It's not reneging, assuming they make you whole on the loss.

If I wreck my car, and I have insurance, I will be reimbursed for my loss. There's no expectation at that point that I will necessarily keep my coverage, or keep it at the same premium, now that I have demonstrated that I am a higher risk.

For health insurance, it's a bit different because some diseases can't be cured, and it's harder to put a dollar amount on the "loss" incurred. For example, if I develop diabetes, that may be something that has to be managed for the rest of my life, and has various other side effects such as circulatory problems. But, we have data; there are lifetime averages for this sort of thing, and they can be computed into the actuarial risk profile. As long as you acquire the insurance before you incur the loss, the model works.

> nearly the entire developed world has some sort of public health insurance

We should not call it insurance when that's not what it is, though. If you have a disease (preexisting) the insurance model doesn't work, any more than it would work to sell homeowners insurance to people whose houses are currently on fire. The risk of loss to the insurer goes from "actuarial probability" to "100%"

The solution to preexisting conditions is usually mandated coverage. This way, since you always have insurance, you can't be blamed for only getting insurance when you need it.

This still doesn't allow people who get a condition to upgrade their insurance. Allowing this amounts to socialized health-care. An alternative is to make such coverage part of the mandatory package. This way, it is still insurance. This is only as socialist as insurance inherently is (i.e. the unlucky being covered by the lucky).

The big issue here is 'liberty', but if you hold that no-one should die because they cant access health care, and don't want to make healthcare free, mandated insurance is the only option.

Re: health – that's because what you really want is a single-payer health care system funded through taxes, not commercial health insurance, but your country's ideology does not allow for that.

I think you are making some big assumptions about what Socrates wants. There are other possibilities. I live in Australia where there is a dual system, I'm from Canada which has public health care.

Limiting your thoughts to make assumptions about the original poster is limiting your potential to see opportunities.

I am not making assumptions. I'm providing my own opinion that the problems he mentions are best addressed by funding healthcare with taxes instead of having an insurance system.

> is the inherent disproportionate power relationship between the company and their customer.

And the principle of "utmost good faith", which insurance companies abuse to remove cover after a claim, unfairly disadvantages many people.

https://en.wikipedia.org/wiki/Insurance_law#Utmost_good_fait...

https://en.wikipedia.org/wiki/Uberrima_fides

Given that insurers so far have been unsuccessful in legislating requirement for a customer to hand over any DNA test they have performed, it seems quite sensible solution that customer gets dropped, as otherwise they could exercise information asymmetry to their benefit, and great peril of insurance provider.

Of course this is sarcastic, but argument about information asymmetry, created by DNA testing, that supposedly threatens the existence of insurance business is quite real.

> "Essentially, the moment a customer becomes more trouble than they are worth, they are dropped [by the insurance company]."

In healthcare there are many different models, but one popular one is the concept of an ASO. This is the case where a healthcare insurance company (think Anthem) will provide administrative services only (ASO) and not (ultimately) be financially responsible for paying claims. The group responsible, in this ASO relationship, is generally an employer.

This is actually fairly common and in it the insurance company has no incentive to drop a "customer" (member), even if/when they legally could.

There is a lot of "bad" in the health insurance industry, but there is also a lot of "good" - people working from the inside who are trying to make things better for members/individuals. Things like improving quality of care, managing coordinated care models, identifying medical risk (eg. opioid abuse), etc.

I think first people need to better educate themselves on how the industry currently works, where the problems are (there are many), and where the more positive efforts are being made in the industry. Bottom-line - don't write it off, but get better informed and try to contribute.

What you are proposing,"get better informed and contribute", doesn't many any sense.

"get better informed" about what? How insurance companies take advantage of poor people? Even if I know all the laws and regulations and details of my policy, if I don't have the money (hire a lawyer) to fight it, then I am screwed.

And this has happened to me. I was in the right, but my insurance company ruled against me, I complained and they basically told me to hire a lawyer if I didn't like it.

And "contribute"? what is that? Contribute money?

You still don't have a solution for the problem, insurance companies having asymmetric power (via information and money and legal influence) in the customer relationship.

They collude with other insurance companies to create complicated policies that you can't negotiate or understand, but are forced to have legally.

It's billion dollar powerful and well connected corporations vs. one person. Not exactly a fair fight.

My point being that you can contribute by demanding your state or federal government officials write or support laws that change how health insurance companies are allow to operate - or - by joining the industry and fixing it from the inside.

Your argument is an emotional one, and that is fine, but it does not help to _realistically_ approach this problem.

I realize my argument is pessimistic, but it's much more realistic than calling "my" senator.

Our system is broken. Calling or contacting our representatives is essentially futile.

Honestly, the best way to change anything, would be to get rich and try to buy some influence. Which is exactly what got us here in the first place, rich people buying influence.

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