On Monday, July 7, 2003, at 05:53 PM, Stormwalker wrote:

On Mon, 7 Jul 2003, Tim May wrote:

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I have to disagree here. Medical insurance is not the same as life or car insurance. It was all supposed to be a big pool that we would draw on when needed. By skimmimng the cream, infant mortality rates rise, along with a host of other problems. No, it was NOT "all supposed to be a big pool that we would draw on when needed." You seem to be confusing medical insurance with nationalized social medicine.

No, I am not confusing medical insurance with socialized medicine or anything else. I mentioned life insurance on purpose. That is a bet on when I will die, they bet later, I bet earlier. Money can be made - although never by me unless I cheat.

Medical insurance is about maintenence of our lives. You do not need to participate, but I'll bet if you get hurt, you'll head to the nearest emergency room. The pool I speak of is simply that I may need the services now and you may need some later. We all have shared types of services and very specific service. I will most likely never need medical services for AIDS, but I have used them for broken bones. I will never need them for gyno or for giving birth services, but I may need them for prostrate problems. We all use them when we are born.

Medical insurance, car insurance, life insurance, home insurance, boat insurance, etc., are all just variations on a theme. When AAA Insurance meets with Joe Sixpack to discuss his health or life or earthquake insurance, they seek to collect enough information to have a reasonable chance of turning a profit on the deal. Else why would they exist as a business? They likely never have complete information, about fault lines, or fire hazards, or unhealthy behavior, but they can manage their risks reasonably well by standard statistical sampling and actuarial data methods. I won't waste my time further arguing your "medial insurance is different" point until you show you have some basic grounding in how the real economy works and can explain why you think medical insurance is somehow exempt from the normal profit/loss considerations. Saying that health care is important is not enough. It's just another purchased service, after all.

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Do I really need to explain this concept here, to subscribers here?

Well, you probably don't need to explain the problems of socialized medicine, but I would like to hear about how you will do your own X-Rays or chemotherapy.

First, I pay for my own such needs out of my own pocket. Many firms and well-off individuals are "self-insured." Insurance is not something magical, it's just a set of tradeoffs of risk and ability to pay. For those who cannot possibly raise the $100K for a seldom-needed operation, paying $5000 a year in premiums _may_ make sense. Because they perceive the consequences of not having the money to buy the operation, despite its unlikelihood, to be worth the payment each year. And so on, for a range of scenarios. Second, if I wished to have insurance I would buy it. That's how I would get x-rays or chemotherapy. Saying that because I do not share your views about socialized insurance I must plan on making my own x-ray machine or brewing my own cancer chemicals is not only silly, it is disingenuous.

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Medical insurance is a risk arbitrage betting scheme just like all other insurance: the actor selling a policy (a contract) is making the bet that he will make more money than he pays out. If he finds out something that alters the expectation of some illness or disease or hazardous activity, then he adjusts the policy premiums accordingly (or even refuses to sell a policy at any price, for understandable reasons).

Not any more. See life insurance. Also, please keep in mind that insurance compnaies do not make their money from premiums, but from investments of all the premiums they collect and hold. Your model is not correct.

You're further gone than I thought. --Tim May "The State is the great fiction by which everyone seeks to live at the expense of everyone else." --Frederic Bastiat