Comment by simulate | Hacker News Reader

Comment by simulate | Hacker News Reader

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The NIH estimates that the average person uses $316k ($419k in 2018 dollars) in health care spending over an 80 year life.[1][2]. That puts the value of health insurance at $5,237 per person per year.

The average health insurance deductible is $4,358 and the average premium is $321 per month.[3] That means that on average US citizens pay $321 per month for (5237-4358) / 12 = $73.25 of expected value. That's a 4X markup over the expected value of insurance.

Health insurance companies might be reporting single digit overheads but they are providing $1 of value for $4 and are inefficient.

[1] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1361028/

[2] https://www.mrmoneymustache.com/2017/11/05/when-your-shitty-...

[3] https://www.cnbc.com/amp/2017/06/23/heres-how-much-the-avera...

> The average health insurance deductible is $4,358 and the average premium is $321 per month.[3] That means that on average US citizens pay $321 per month for (5237-4358) / 12 = $73.25 of expected value.

Your calculation makes no sense. Healthcare insurance pays out for catastrophic events, hence the deductible, not evenly every year. You need to know the distribution of payouts to get a meaningful result.

Families in [3] are doing better than the individuals you use to calculate the multiple.

I guess it's still a whole number factor sort of thing.

I also wonder if those numbers are accounting for Medicare and Medicaid (which add costs to the private insurance system).

Costs in the last 80 years are not representative of costs today or in the next 80 years.

The NIH numbers quoted above didn't use costs over the past 80 years. They instead estimated current costs based on current demographics.

>> To estimate lifetime health care costs, we employ a method based on a current life table, also known as a period life table model.

Thus, these costs are representative of recent costs.

In the next 80 years, both the expected value of insurance and the cost of insurance will change. Health insurance premiums are expected to increase by double-digits in 2019.

https://www.fool.com/investing/2018/05/26/whos-ready-for-a-1...

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