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Comment by tjohns | Hacker News Reader

Insurance is primarily for major events. The things at the extreme upper end of the bell curve.

For example, you've hit another car (possibly an expensive one) and caused tens of thousands of dollars in damage. Or you've inured a passenger and caused hundreds of thousands of dollars of hospital bills.

The kinds of events that would financially ruin you, or at least seriously set you back on your life goals. Or, in the case of state-mandated insurance, where there's a high likelihood you wouldn't be able to make the other party whole.

You can use it on smaller things if you insist (and your rates will go up), but that's not really what it's for.

Personally, both the events you described fall under my definition of one-off maintenance ("things that are an unpredictable yet unavoidable cost of owning a vehicle") and that I'd expect to pay for out of pocket.

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And that is one of the reasons why medical insurance is so crazy in the United States nowadays - it’s no longer used to hedge catastrophic unpredictable events (which used to be called “major medical”), but instead is used to pay for normal, minor consumption or for chronic conditions.

In other words it’s no longer like a bet, it’s like a discount plan. But the problem is that the complexity of introducing a third party payer who doesn’t want to pay, and a consumer who has no incentive to self regulate consumption, means that the costs spiral up and up.

> But the problem is that the complexity of introducing a third party payer who doesn’t want to pay, and a consumer who has no incentive to self regulate consumption, means that the costs spiral up and up.

The first part is correct but a consumer that “doesn't self regulate consumption” is not a thing in medicine. People don’t take drugs for fun. People don’t injure themselves more in public healthcare systems. In fact, a huge problem in medicine is getting men to go to the doctor before issues become critical (and more expensive).

People eating more than they should, getting diabetes, and then consuming more medical services is a form of poor regulation of consumption.

The overapplication of OxyContin is another form of unregulated consumption.

Now we have the semaglutides and will see the same effect.

The USA has a 38% obesity rate vs the UK at 29% (for men). Given both exist quite far apart on the public/private healthcare debate, I don’t see how this supports your argument at all.

Source: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7670332/

I’m not going to debate the others because I don’t know much about them and, since your argument fell apart at light prodding, I don’t think you do, either.

I was not making an argument about the public/private healthcare debate. I am objecting to the assertions 'a consumer that “doesn't self regulate consumption” is not a thing in medicine' and 'People don’t take drugs for fun.'

I was similarly convinced that moral hazard in healthcare was not a problem because consumers don't get more healthcare than they need. I know now that this is not the case.

I’m not making a public/private argument either. The full sentence was:

Obviously, people do eat to excess, engage in activities that have risk (and die as a result).

Whether you pay or someone else pays does not factor in these decisions, which is why I pointed to obesity rates in UK/USA to demonstrate this. If such moral hazard existed, you’d see lower obesity in the USA than in the UK. You don’t, ergo, it mustn’t.

EDIT: By “take drugs for fun” I’m specifically referring to medical drugs in my original message so removed it from this one (where I conflated with recreational drugs).

OxyContin is a medical drug. I have unfortunately had to assist my mother with visits to the "pain clinic" and seen firsthand many patients with a problem with self regulation of consumption.

Maybe I am interpreting your assertions too literally.

Ok but I’m guessing you’re in the USA where you’d have to pay significant sums for that in some form, as long as you can convince a doctor to sign off.

I’m not aware of a similar problem in England, where prescriptions are currently £9.90 per prescription.

This is my point: the financial cost, as with obesity, is not regulating the behaviour.

Ah, now I understand why you are confused. No, most people with health problems in the U.S. are paying, at most, only a copay for a visit. They are getting medical treatment at no cost to them directly. It is paid for by an insurer or the state or Federal government.

This moral hazard is fundamental to our problem and why many have problems regulating their consumption.

Except this simply DOESN’T HAPPEN in the most famous free healthcare system on Earth, so clearly it can’t be a moral hazard. I also know for a fact these people aren’t getting this for “free.” I just checked and copay is subject to the deductible. Also, I seriously doubt insurance companies aren’t ramping up premiums on these people once they get a chance.

Are these people seriously going “well it’s only $26 a pop so I may as well.” Do you think the (apparently) low price is what’s causing this?

I believe that you have strong opinions of the system with which I have too much experience.

Many of these people are, in the case of pain clinics, getting their pills paid for by workers’ compensation carriers.

That the UK has avoided some moral hazards does mean that they cannot exist elsewhere. Maybe the UK doesn’t incentivize doctors to hand out more pills.

No, I have a strong opinion that the moral hazard of affordable healthcare doesn’t exist based on the lack of evidence. Americans (and the hard right of British politics) are the only group that even consider such an argument.

If there were a moral hazard to affordable healthcare, I posit that you’d see lots of it in a system where healthcare is mostly free at the point of use (prescriptions aside). The fact that obesity and opioid addiction happen in the USA at far higher rates than in the UK points to a strong indicator that this moral hazard simply does not exist. The fact is that the only examples you can give point to issues unrelated to “moral hazard.”

You have failed to point to a systemic pattern of risk-taking behaviour that is higher in a system with socialised healthcare than in privatised systems to convince me otherwise. You cannot because it doesn’t happen. Human beings, on the whole, do not engage in obviously dangerous behaviour more if it’s free to get treatment because we’re simply not that stupid.

I would very much like to move to live amongst the people that are simply not that stupid.

Now I don’t know if you’re just deliberately misreading my comments. At no point do I say “people don’t engage in dangerous behaviour,” I merely point out such behaviour is UNRELATED to the cost of healthcare. You’ve yet to show me any data that shows a link between affordable healthcare and moral hazard.

On the contrary, your only examples come from within a system famed for being the opposite.

I never claimed that there is a link between affordable healthcare and moral hazard. I argued only with two of your assertions which I have found to be unfortunately untrue, in my experience with the U.S. healthcare industry.

> I was similarly convinced that moral hazard in healthcare was not a problem because consumers don't get more healthcare than they need. I know now that this is not the case.

Except for… you know, right here.

I did not claim that the moral hazard problem is linked to affordability. You seem to want to argue with things I have not said.

That’s the “moral hazard” in healthcare that’s used against affordable healthcare. It’s the only context it’s used in.

Obesity and opioid addiction aren’t “moral hazards” in healthcare, they’re literally things healthcare and society need to deal with. We’re far off the topic of insurance and I don’t even understand what you took issue with apart from nitpicking a sentence at this point.

Your assumption about context is not relevant to my argument.

You’re right, it was my mistake for assuming words mean what they’re commonly used to refer to /s

Moral hazard has a well understood meaning outside of affordability. I would very much like to see the system in the U.S. make more sense. Any time spent in an emergency room or waiting room in the U.S. makes the moral hazard obvious.

And that is why the insurance model should not be used for healthcare. For example, why should an insurance company charge you anything less than the cost of treating a chronic illness after diagnosis? Why should the minimum price of giving birth not be the exact premium you pay? None of those are surprises (after the initial diagnosis or conception, of course, and it can obviously be argued that birthing complications can be insured against too), so there is no reason to use probabilistic models to pay for them.

The problem is price fixing deals between hospitals and insurers, where the insurer pays only a tiny fraction of the retail price. It's not economically viable for consumers to not have the "discount plan" as you aptly put it. That benefits the insurance company so they like it like that.

> Insurance is primarily for major events. The things at the extreme upper end of the bell curve

That's how it should be, but isn't because all insurance contracts cap the maximum insured amount. So that's absolutely NOT the "extreme upper end of the bell", not at all.

There are unlimited umbrella policies, but practically past 1 million or <net worth> it is probably cheaper to declare bankruptcy than pay the additional premiums.

Wouldn't you rather not lose $1+ million? It costs something like $400/year per $1M coverage which is hardly breaking the bank.

$400/year is a new laptop or something, if you spend the money then the creditors can't take it.

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