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Comment by MrBrobot | Hacker News Reader

Whether you agree with the Affordable Healthcare Act or not, I feel like nobody remembers “lifetime maximums.” I have some relatively minor (but massively impactful) pre-existing conditions, and I would have exceeded my lifetime maximum by age 30 due to testing, procedures, hospital stays, etc. I have family members that would have exceeded theirs before age 1.

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How does the concept of health insurance, risk pooling, etc., make sense if there are no lifetime maximums…?

Eventually 100% of the population will need healthcare of some type.

And without maximums to plan and set prices against, wouldn’t it just be a wealth transfer scheme from the relatively young and healthy to the particularly old and sick…? (With those in the middle roughly neutral)

At least I can’t see any credible way to insure against something 100% of all possible customers will need.

Health insurance is already a huge transfer to older generations (not that that's a bad thing). Medicare pays for older folks but it doesn't pay anywhere near the cost of the services that older folks receive. Prices are higher for everyone else to fill the gap at health care providers.

Health insurance is in many ways not even insurance, it's in many ways a price negotiation mechanism.

Anyway the whole system is overly complex, based off a tax credit from the 1950s, but the transition to a new scheme is nearly impossible while one political party is dead set against any improvement, especially if it might be perceived as a positive for the other political party, and also they have become so hyper partisan that they are not allowed to work with the other party in a bipartisan manner.

Huh I didn’t know that. I thought those on Medicare only got the bare minimum service that stayed within cost.

In that case, the upstream sources of why Americans accept this huge charade is going to keep on messing with even the best laid plans.

It isn’t a simple money in, money out system. You’re taking higher value money in one year, and paying out some money that’s worth less later (inflation)… while at the same time, you’re investing the pool of money you collected, and earning returns on that before you pay out claims - claims that you’ve already negotiated down in price. But by the time the healthier customers need to start making large claims, they’ve already both subsidized the claims of other customers, and made the insurance company more money than they’ll draw in claims.

It's a simple money in, money out system. Health insurance isn't like homeowner's insurance where the insurer accumulates and invests a pool of money in anticipation of occasional rare events like natural disasters that cause a spike in claims. Medical expenses across a large patient population are very predictable and there is no significant carry over of premiums from year to year. In fact, under the Affordable Care Act (Obamacare), it is actually illegal for most health insurers to do that. Any excess premiums collected must be returned to customers at the end of the year.

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