CDR: Re: why should it be trusted?

[Steve Furlong]

Nathan Saper wrote:
> On Thu, Oct 19, 2000 at 01:02:44AM -0400, Steve Furlong wrote:
> > Nathan Saper wrote:
> >
> > <<Nathan seems to be arguing that insurance companies should be forced
> > to cover people at a rate to be set by someone other than the insurance
> > company. Tim May objects to this plan.>>
> 
> Close.  I am arguing that insurance companies shouldn't be allowed to
> deny coverage based upon factors that the insuree does not have
> control over.  For example, I smoke, so I really can't blame an
> insurance company for charging me extra, because that's a factor I
> have control over.

Most of the genetic factors against which insurance companies _might_
discriminate are predispositions. The factors _tend_ to make one _more
susceptible_ to heart blow-outs, for instance.

Where do you draw the line between factors which the prospective insured
can control and those he cannot? If all of your grandparents died of
lung cancer, was it because they had a genetic flaw, because they smoked
three packs a day, because they lived near a coal mine, or some
combination of the above? How much responsibility for their deaths
should they shoulder?


> Fine.  I'll try to find some numbers.  I don't have any off the top of
> my head, though.  It just seems that because A) the insurance
> companies make good profits and B) the number of people denied
> coverage based upon genetic abnormalities is fairly small, it wouldn't
> affect them too much.

I'm strongly suspicious of any statement that contains "It just seems
that". Every discipline from engineering to economics shows time and
again that the "obvious" conclusions are often wrong. Usually wrong, I
suspect, but I don't have numbers to back that up. <g>


> > > Also, people cannot simply create insurance companies.  Breaking into
> > > the healthcare business is damn near impossible
> > <snip the rest of the sentence>
> >
> > This is the only thing you've written with which I agree. But it's an
> > argument for _less_ government intervention rather than more.
> 
> I don't really see it as an argument for either side.  Breaking into
> the medical industry is so difficult because there is an entire
> infrastructure that is developed around the established corporations,
> and this infrastructure isn't very flexible.

In the absense of regulation, an insurance company could form by putting
a pile of money in escrow and getting some customers. Yes, the practical
need for a pile of money would shut out most people, but it would be a
lower barrier than the current regulatory mess. In a free market the
encrusting infrastructure could be blown away in one step by a single
insurer.



> Coverage is most often less expensive than care.  Therefore, one may
> be able to afford the coverage, but not afford the care, if it ends up
> being required.
...
> Isn't this the whole idea of insurance?  You pay them x dollars, and
> if you end up getting sick, they most likely have to pay more than x
> dollars to treat you.  The insurers are banking on the fact that the
> majority of the people who have insurance don't get sick.
> 
> So, yes, the whole idea of insurance is to get out more than you put in.

The individual purchasing insurance is (a) betting that he'll have needs
which cause him to draw out more than he put in, (b) concealing
information from the insurer such that he _knows_ he'll be drawing out
more than he put it, or (c) wanting or needing catastrophic coverage
even though he expects to put in more than he takes out.

Company-provided plans are a whole 'nother matter; ignore them for now.

coverage for a given malady times the expected likelihood of that
malady) had better be lower than the sum of the premiums paid, or they
won't stay in business long. Forcing an insurer to accept an
expected-high-cost customer at an "affordable" premium either drives up
the premiums for everyone, causes a reduction in services for everyone
(or a particular subgroup, but that would probably cause more trouble in
the long run), or eats into insurer's bottom line. One
expected-high-cost customer wouldn't break the insurer, but there's
never just one.


By the way, you don't need to email a private copy of messages you send
to a mailing list. This isn't Usenet. The private copy and the list copy
usually arrive within minutes of each other.

-- 
Steve Furlong, Computer Condottiere     Have GNU, will travel
   518-374-4720     sfurlong at acmenet.net