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0 pointschimeracoder9y ago0 comments

> The purpose of insurance is to protect yourself against rare, but catastrophic events: you will probably not experience a wide variety of expensive medical ailments, but if you do they will likely leave you in financial ruin if you're uninsured, so you pay an insurance company money to protect yourself against that risk.

Yes, this is what I am saying. However, that has nothing to do with the price of co-pays for routine care, which is by definition predictable.

> But no, you can explain that with regular economics too: insurance companies are incentivized to make annual physicals affordable and attractive, because they can catch potentially-expensive medical issues when they're still much less expensive, thus lowering costs for the insurance company.

See, this is another pervasive myth. For healthy individuals, the annual physical is not cost-effective - it is very unlikely to result in long-term benefits to the patient, and it is far more likely to result in unnecessary care (such as follow-up tests and differential diagnoses for false positives): https://sciencebasedmedicine.org/re-thinking-the-annual-phys...

Also, I don't know why you're drawing a dichotomy between what I'm saying and "regular market economics". Everything I have said is standard, textbook economic theory. There's nothing obscure or even controversial about it about economists.

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reissbaker9y ago· 2 in thread

Insurance companies are for-profit institutions, and there's no law compelling them to offer co-payments for preventative care. Do you believe that insurance companies are giving out charity?

> Everything I have said is standard, textbook economic theory. There's nothing obscure or even controversial about it about economists.

Claiming that "health insurance isn't really insurance, except in name - we talk about it as insurance, but in reality, it's a wealth redistribution program tacked onto a risk smoothing product" is definitely non-mainstream. An insurance company takes in payments to insure you against high-risk events, and that's exactly what a health insurance company does: you pay them a monthly fee regardless of whether you need medical care (or your employer pays them for you as part of your compensation package), and when you do need expensive medical care, they pay for it. In fact, many plans explicitly only pay for expensive medical care: anything under your deductible, aka inexpensive medical care, you're required to pay for. You might be able to make some sort of weaker claim about wealth redistribution post-ACA, but — co-payments existed pre-ACA.

chimeracoderOP9y ago

> Insurance companies are for-profit institutions

Actually, some of the largest insurance companies and the vast majority of risk-bearing providers (hospitals that act as insurers) are non-profits. Though I never said that their pricing was based on charity; I said it was based on the fact that the product they offer is not really insurance (and that it exists in a marketplace in which prices are incredibly distorted by the existence of other factors, which would have been too long to explain in that simple example).

> Claiming that "health insurance isn't really insurance, except in name"... is definitely non-mainstream

On the contrary, that's the overwhelming consensus among economists. Which isn't surprising, because the economics of insurance are generally covered even at the undergraduate level, and the ways in which health insurance differs from a true insurance program are pretty glaring.

reissbaker9y ago

The five largest health insurance providers in the U.S. by market share are UnitedHealthGroup, Kaiser, Anthem, Aetna, and Humana. Of those five, all but Kaiser are strictly for-profit, and Kaiser is a consortium of for-profit and non-profit entities.

Equating risk-bearing providers and health insurance companies for the purposes of arguing that health insurance isn't insurance might as well be tautological. Sure, blueberry pancakes aren't really pancakes if you include blueberry muffins in the category of blueberry pancakes, but who cares?

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