Comment by lotsofpulp
1 day ago
If an insurer is able to reduce (or recoup) costs from likelier risks, then the remaining insureds benefit from lower premiums.
If the goal is providing subsidies (i.e. wealth transfers), then insurance is not the way to do it. That is the government’s role.
Insurance that is maximally responsive to patient health changes in terms of cost (ie making healthier people pay less) ends up being an inefficient way of just having people pay for their healthcare directly.
And it naturally means the people with highest premiums are the least likely to be able to afford it (the elderly, the disabled, those with chronic conditions that make them less likely to maintain high earning jobs steadily, etc)
The obvious retort to this is:
"If I focused on my health, ate clean and exercised daily, why should I also be subsidizing Billy "video-games-are-my-exercise" fatass's chronic health conditions?"
This is why there is a hyperfixation on shifting blame away from (failing) individuals. The logic breaks when Billy has to admit he just hates exercising.
And yes, before you comment, I know "maybe Billy has (condition outside all control) so it's not on him". Please, see what I just said in the previous statement.
In some respects, the ideal world is one in which everyone’s premiums are tied to a free and easy Apple Watch-like device that silently tracks exercise, blood sugar at a frequency that can tell when you ate a big dessert, air quality (and the presence of smoke or pollution), blood alcohol content, whether you are in speeding cars, whether you are participating in dangerous sports, etc. Such a system would directly confront individuals with the cost of their behaviors in an economic way, probably leading many or even most people to improve their habits in the aggregate.
But such a system comes at other costs that most people intuitively feel infringes on core values they have.
Edit to add: this system would actually have some great advantages over an “existing conditions” tax in that now you pay low rates until you have diabetes, all during the time you are leading the unhealthy lifestyle. But once you have it you are not rewarded for starting to exercise and eat healthy and get it under control. In the hypothetical scenario above, you’d be punished economically during the period you were building bad habits and you would be able to restore sane costs after course correction
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It also fails to take into account the fact that eating clean and exercising daily doesn't eliminate your risk of getting cancer at age 40 or having your car's brakes fail randomly.
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Is the obvious retort to this:
I don't think we should play arbiter for who has and hasn't lived a healthy enough life to still believe they should get healthcare?
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The entire purpose of health insurance is spreading risk across a wide and diverse risk pool.
> why should I also be subsidizing Billy "video-games-are-my-exercise" fatass's chronic health conditions?"
Nobody is asking you to: enrolling in insurance is a choice in the USA.
Also, replace "chronic health conditions" with "unavoidable inherited genetic risk factors". We don't want Billy to be screwed for life just because he was born to a suboptimal combination of parents.
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> "If I focused on my health, ate clean and exercised daily, why should I also be subsidizing Billy "video-games-are-my-exercise" fatass's chronic health conditions?"
Then why are you not asking your insurer why they cover a lot less preventative health or other options. For example, Kaiser flat out refuses to prescribe GLP-1s for weight loss, others insurers are the same with gym subsidies or not covering nutritionists.
But they'll happily pay for your gastric bypass.
> Insurance that is maximally responsive to patient health changes in terms of cost (ie making healthier people pay less) ends up being an inefficient way of just having people pay for their healthcare directly.
That's true for predictable costs, but not true for unpredictable ones - which is the point of most insurance (housing, car, etc). The point and use of insurance is to move risk to entities that can bear it.
Utility is non-linear with money, and so you easily have situations where spending X times more on something "costs" you more than X times if measured in how useful the money is to you.
Typically, as you have more money, each further dollar doesn't provide as much benefit as the last (sometimes things are lumpy, the difference between "not quite enough to pay rent" and "just enough to pay rent" is huge, but broadly this is true). Going from $1000 to $10000 is more impactful than $1001000 to $1010000.
That means that moving the other way, each additional dollar spent has a greater personal cost to you.
Therefore, sharing unlikely but high expenses can mean that your expected cost is the same (if there's no profit/middleman) or a bit higher, but your expected personal cost is lower.
Not a US citizen, so a genuine question: do US health insurance companies have a track record of passing on such savings to consumers?
That has not been my impression as an outside observer.
"passing on such savings to consumers"
Absolutely not. They inflate prices by 200% and then give you 20% "savings" back. The whole idea of a health insurance company as publicly traded corporation is totally insane. They are designed to extract maximum profit from wherever they can get. The is no incentive to save money for patients. Any savings go to shareholders.
There are plenty of health insurers that are not publicly traded, and in fact are non profit, and yet they have the same premiums as the publicly traded ones. See Kaiser, Providence, Cambia, Regence, and the dozens of other BCBS affiliated plans.
If your claims were true, then the publicly traded businesses would have no customers.
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Ostensibly, the Affordable Care Act was supposed to reduce the average family's premiums by $2,500 a year.
When that didn't happen, the story changed to that number being how much more premiums would have risen.
Insurance premiums have only gone up as far as I can remember, though there's a ton of variables at play here. Inflation is an obvious one, plus continual introduction of more and more costly treatments- biologic injections, cancer therapies and so forth. The unfortunate increase in obesity rates in my lifetime (along with all the health complications) has been a significant contributor as well.
It all adds up.
> Insurance premiums have only gone up as far as I can remember, though there's a ton of variables at play here.
An interesting thing about rising health costs is that it has happened at roughly similar rates in most first world countries for the last 50+ years.
For example in 1990 the UK, FR, and US were paying 2.0, 2.2, and 2.6 times their 1980 costs per capita. By 2000 that was 4.1, 4.1, and 4.2. By 2018 (the last year I had data for when I calculated this a few years ago) it was 10.6, 7.5, and 10.2.
Here's the 2000 to 2018 increase for those and some others: DE, FR, CA, IT, JP, UK, US were 2.1, 1.8, 2.0, 1.7, 2.6, 2.6, 2.3.
When politicians in the US talk about rising health care costs they usually put the blame on recent policies from opposing politicians. That so many first world countries with so many different health care systems all have seen similar increases for the last 50+ years suggests that it is due to something they all have in common and that government policy doesn't affect it much.
The individual mandate part of the ACA was the part designed to reduce premiums. You need healthy participants in any health insurance scheme to subsidize unhealthy people.
That was eliminated by a Republican bill, the Tax Cuts and Jobs Act of 2017.
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In 2010, it was already known the proportion of old to young was increasing, and the proportion of doctors was decreasing.
Prices were always going to increase.
you're correct. UHC is so hated because they're a "pharmacy benefits manager." - an organization that exists soley to make your life so miserable you give up on getting your medication.
Aetna has their own scumminess. Want the convenience of 90 day refills? Have to use their mail order service. They'll refuse to authorize >30 day supplies of medication through any other pharmacy.
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Health insurance companies in the US are not allowed to deny coverage, and can only price premiums based on age (highest premium capped at 3x lowest premium, location, and tobacco use.
https://www.healthcare.gov/coverage/pre-existing-conditions/
https://www.healthcare.gov/how-plans-set-your-premiums/
Health insurance premiums in the US are more tax than insurance. They also have low single digit profit margins with less than desirable shareholder returns (many are non profit in the first place), so they don’t have much room to lower premiums without also reducing healthcare expenses.
The insurance business in general is very competitive and not very profitable, so an insurer that tries to collect outsized premiums will usually suffer a loss of business.
> The insurance business in general is very competitive and not very profitable...
Knowing several Americans, and how much they pay for health insurance (and are still required to pay for some things "out of pocket"), this is incredible to me. And that's before you even get to the process of making a claim.
Such a broken system.
We agree that insurance is not the right way to handle health as a product, since some people predictably need much more medical treatment than others. But it’s how the US has chosen to do it, so we have to do it in a way that works. Correctly identifying a systemic issue won’t pay your medical bills.
That is not how the US has chosen to do it. The ACA prohibits using anything other than age, location, and tobacco use for premium pricing, and the ACA prohibits denying coverage (resulting in a wealth transfer from healthy to sick).
Even the age rating factor is capped at 3, so there are also massive wealth transfers from young to old.
Mathematically, health insurance premiums in the US are more tax than insurance premium.
The ACA doesn't prevent some magical fairy-dust AI from pricing premiums, though, which is currently all the rage amongst insurers. (Not because AI will be accurate or anything, but because it offers a completely opaque pricing process.)
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