Hacker News Reader

Comment by sandworm101 | Hacker News Reader

>> Rather, you would be cheating everyone that has purchased "insurance".

That is a very north american definition of insurance. But insurance companies are not collectives. They are for-profit corporations, probably with a PO box in Delaware. Buying an insurance plan isn't like moving into a commune. It is a risk-shifting arrangement with a corporation, a formalized financial hedge. When I buy insurance I don't much care about other customers. They aren't part of my transaction. Maybe I am the only customer for a product. That does happen. It doesn't impact the obligations of the parties.

View on HN

The point the parent is making is that if you know in advance that you, will need to use the insurance, and you decide to buy it on this basis, then the premium the insurance company charges will need to increase to account for this, or the insurance company will lose money.

Since the premium has increased, the only people who will still pay the higher premium are those that know they will need to make a claim. The premium will therefore rise to the point where _only_ the ones with that extra information will pay.

Insurance markets cannot survive with this kind of information asymmetry.

This is not a North American definition. This is what insurance is.

That's absolutely correct. It also exemplifies why the healthcare market cannot regulate itself.

> When I buy insurance I don't much care about other customers. They aren't part of my transaction. Maybe I am the only customer for a product. That does happen. It doesn't impact the obligations of the parties.

Unfortunately that's not actually how it works with shared pooling of insurance resources. You pay a monthly fee that gets bundled with the fees from other customers and paid out when there are claims against insurance.

If your care was only paid out of your pool of money you've paid into the insurance system, your first month of payment would cover essentially nothing.

That's beside the point. Insurance is basically just another way to invest wealth. An insurer simply needs to have cash somewhere safe to cover the possible payouts they might reasonably need to make. It still can be a single customer.

The "local pool" is irrelevant. The care is paid out by the insurance corporation. How and where they get the money is thier business. They could get it from selling chickens. All that matters is that they pay.

What about one-off custom policies with a "local pool" of one customer? Such products are made every day.

> How and where they get the money is thier business. > They could get it from selling chickens.

Insurance is a regulated industry and those statements would be terrifying. You have to prove to the state that your mathematics will work into a functional business and have to maintain certain liquidity requirements.

> All that matters is that they pay.

Yeah, and that's one the reasons companies don't like paying since it can dip into their liquidity.

This is a very North American discussion, dunelover, though Canadians might have a bone to pick with you concerning your categorization. While I don't imagine that insurance companies will cease to exist, I do imagine that benefits of these plans will become next to nonexistent and the cost will increase dramatically. Though it may end with differentiation and one plan might be available for traumatic injury and one for genetic disorder, exclusively. Regardless, the point stands, if the party that's supposed to pay the bill for my party has even greater incentive to litigate, then I likely will be SOL. And, you're absolutely right, it isn't very much like a commune. However, my insurance rates in North America keep going up because people are unhealthy & overweight and we've subsidized corn sugar into everything edible. For-profit insurance companies are what 'we' have and they have formalized the average cost of care into their hedges. You are not in an insurance bubble, you are in a world of statistics and actuarial science.

Reply on news.ycombinator.com