Calblog

If you count the negotiated discounts applied to bills as an "insurance benefit", it is completely possible that the vast majority of insureds (another noun) get more in benefits than they pay in premiums. Non zero sum.

My wife got a hospital bill last year listing a $50K list price, a $1500 negotiated price, and a $300 charge after PPO insurance. Now, which is the benefit? $1200 or $49,700?

And the uninsured pay full list price -- a price higher than it otherwise would be except for the need to offset the negotiated discounts. I'd be hard pressed to see how being uninsured is any kind of savings.

Yes, the discount is a benefit but since our family health insurance costs $765 a month, I daresay that many people don't offset the premium even with the discounts. I strive to actually have the insurance company pay more than the premium. I don't really strive for that, since being well a year would be a treat, but it's what we say whenever I get ill.

The idea with co-payments and deductables is that it discourages people from over-using services because they have to pay something from out-of-pocket before the insurance takes over.

As for the uninsured who need ongoing care, I doubt the number is that high. A very large proportion of the people who need ongoing care in this country are over 65. Diabetes isn't *that* expensive to take care of unless you're using that new "designer insulin," which the HMOs won't cover anyway, or unless you're a severe Type I in the latter stages of it. And I can't think of any other genetic ailments that are all that common that cost mucho money.

The very nature of insurance is that half the people get value and the other half don't (I'm simplifying of course). Insurers collect in total what they expect to pay out. People who try to make sure that the insurance company pays more than they pay in premiums ultimately lead to higher premiums as the insurance company always has to make sure that their premium is set at a point where the premiums coming in match with what's going out.

In terms of the uninsured, the problem is that many of these people don't get any care. What then happens is that problems that would be easily treatable in a doctors office, end up becoming emergency room issues. In these cases, the care is more expensive and because many of them can't afford the ER bills, the other paying customers have to foot the bill, which in turn raises the cost of health care.

There are also the uninsured who end up with some kind of expensive disease like cancer where we start to talk about much higher orders of expenses. It's like home insurance in that way, you really buy it for things like a fire or earthquake and what not.

Manish,

A lot of people just don't go to the doctor, whether or not they are insured. I haven't gone in a year and a half, and reason I went then was because I had Lyme Disease.

john..that's true, however more uninsured people postpone seeking care than insured people..41% to 20% according to the Kaiser Family Foundation.

Also according to this, the uninsured are more likely to seek care in an emergency room (19% uninsured, 3% insured) than a doctor's office (37% uninsured, 74% insured) as compared to the insured.

One thing that I've noticed in most studies is that the "uninsured" tend to be young men. That segment of the population that in general has their costs far exceed their benefits. One of the major problems with insurance (esp. Employer provided group plans) is that they don't offer the choice of "catasrophic coverage," because the goal is to force the young guys in to money wasting plans. Insurance is supposed to allow for choices (like whether I want/need 100/300 with $1000 deductible or 15/30 100 Ded. etc), but health insurance tends to be the one major insurance where consumers often don't have these choices, you get a one size fits all type situation. The only "choice" is Kaiser vs. Blue Cross (big deal). I tend to think this is so young men get systematically overcharged.

Joel,

You're partially right. Young men are also far more likely to end up in the ER because of a car accident or gang violence. I'm frankly not sure whether Manesh's claims are cause or effect.

As for catastrophic care plans, I think companies don't do it because there's less for them to make money off of. I also personally have reservations about personalizing health care plans.

The problem is that it will stop being insurance once we start having our DNA sequences on our medical records. Let's say I'm genetically predisposed to Alzheimer's. I won't be able to get insurance for that anymore. Basically, people will only be able to get insurance for ailments they are never going to get and for injuries. I could easily see the entire insurance system collapse in the next few decades as people figure out that they don't need it, and this wouldn't be a good thing.

Beyond a few basic provisions, I don't think that "personalizing" insurance is a good idea, because where do you stop? Do you jack up premiums for being, overweight or sexually active? Each of us has lots of risk factors in our lives.

Sure, it annoys me that some jerks decide to "get the most out of" their insurance, thus jacking up my premium, but I object much more strongly to making plans more "fair" because I think the kind of bureaucracy you'd have to have at the HMOs (and their bureaucracies are already huge) to do that would cost far more than it would be worth.

I really think Warren Buffett needs to take over a health care provider and do to that industry what he did with GEICO in auto insurance. Unfortunately, the number of potential lawsuits from people like John Edwards is too great a risk for someone like Buffett who really only goes into sure things.

I didn't mean to strike a nerve by saying I try to get the insurance co to pay more than I pay. If I were really doing that, I would spend December prebuying medications, getting accupuncture treatments if I hadn't used my 6 in the year and moving my doctor's visits from Jan to Dec. I don't.

The "game" of keeping track and getting ahead on the insurance is a way of minimizing the fact that I'm sick enough on a chronic basis that I have to spend so much time at the doctor's.

Which is a point well taken, in the end instead of feeling jipped when it comes to insurance, I should instead be happy that I have had little need for it. I just think it would be nice for individual who can "afford" to hold higher risk for health problems to have that option. Really, the closest there is is co-pays, but even that isn't the same as a $1000(or more) type deductible.

Joel,

The problem there is that you are most likely to need something where that becomes an issue as a young male, whereas Justene, with a few more ongoing health issues, is far less likely to need to have her spine pieced back together because she was racing against some of her buddies down some stretch of highway and the car flew out of control.

Justene, I didn't mean to imply that you were one of the people who tries to get mileage out of your insurance. But there are people who do, and that is just something one has to deal with.

John,

I don't know about that, I mean after getting married, the statistical likelihood of me doing that wild and crazy stuff supposedly dropped tremendously. Insurance is supposed to already factor that in. I mean that's why young men pay a LOT more in Car Insurance, that doesn't have to do so much with health insurance, additionally with a higher co-pay/deductible I have a far greater incentive to keep myself from harm. Basically, your proposal seems to say that I shouldn't be able to choose different coverages because although I won't go to the doctor for minor stuff there is the possibility that I'll go for the major stuff. Granted! My point is that, I should get to choose an insurance policy that reflects that choice.

If you scroll down on the link about getting care in an emergency room setting, you will see chart 8 which specifically relates to trauma-related care. Even in a trauma, the insured are 2.15 times more likely to die than the insured and are less likely to be in intensive care units, surgical procedures or physical therapy.

Joel,

The problem with the auto insurance analogy is that people buy auto insurance individually, while most health insurance plans are group plans, which means that it's harder to take into account risk-group issues. Also, there's much more of a slippery-slope issue with health insurance risk groups than there are with auto insurance risk groups.

Also, with auto insurance, you can get different kinds of coverage, but they don't typically give you that much leeway in changing your deductible. I don't know of any "catastrophic" auto insurance plans with $1500 deductibles, where you pay for small liabilities out of pocket.