"If there were no limits on health insurance there would be little backpressure to ..."
Also, it wouldn't be insurance.
People think that insurance is "something that I want that does nice things for me". It's not.
Insurance is a math problem and it has a precise answer. If you go beyond that answer it doesn't work. Either you're getting screwed or the (hapless) insurance company goes out of business.
The math problem is tricky in a lot of ways though. For example, the rate the insurance company pays doctors is different than the retail rate. Lots of people don't realize this. It also brings up two pretty interesting questions. One, could the patient have covered the last session at the price insurance companies pay? And two, does the insurance company run down that upper limit based on the amount they're billed, or the amount they pay?
There's another interesting policy question. Insurance, flat out, can't pay for everything. So, given that they have a pool of money, do you allocate that toward the least sick people? That's probably a better approach to more total years of survival. ensure the healthiest 50% (or whatever) get excellent care, and let the rest go. Alternatively, do you triage and spend the the money on people who have a slim chance of survival, making the heroic rescue day after day?
I find that policy decision horrifying. I honestly have no idea how they pick. But it's pretty obvious, somebody getting chemo means 100 other people aren't getting, for example, cholesterol medication.
I'll agree it's just an equation. but man, i'd love to see those tables showing years of human life saved based on condition and treatment. Just to add a touch more cynicism, should those years be weighted based on economic productivity? Would we be better off with 10 more years of Steve Jobs or 10 more years of Grandma? My gut says Grandma, but... it's just an equation.
huh. that's weird. it seems like all the customers throw in their money every month. some percentage of that must go to overhead and profits, the rest would go into a pool for medical care. Each month the insurance company would pay whatever is required for specific obligations, with any extra carried over to the next month. From time to time there would be random fluctuations, unusually high numbers of heart attacks for example, and they'd run at a loss. I thought insurance companies work just like casinos with harder to estimate probabilities of having to pay out. The thing that's really cool about being an insurance company, you don't have perfectly clear obligations. With a casino, they land on double zero at roulette, the casino has to pay. With insurance, the insurance company gets to decide the worthiness of paying out. Oh yes, this person has cancer, but the chance of survival is quite low, so we're not paying for chemo.
But, clearly, i'm mistaken. Could you elaborate on how the insurance business really works?
> could the patient have covered the last session at the price insurance companies pay?
No, cash payers pay less, not more.[1] But even "less" is financially devastating for most people in the context of chemotherapy.
> does the insurance company run down that upper limit
based on the amount they're billed, or the amount they pay?
The amount they pay; the former would be fraud.
> given that they have a pool of money, do you allocate that toward the least sick people?
> you don't have perfectly clear obligations
> the insurance company gets to decide the worthiness of paying out
Insurance companies do not operate for charity; if they have extra money, it goes to shareholders. Outside of a few publicity stunts, companies have clear obligations as specified by copay, deductible, maximum limits, and covered providers/procedures, and people who pay more for better coverage get better coverage (so poor people have a bad time). But insurance generally doesn't have robust margins--many earn their profits purely on float.[2]
You are of course right that questions of allocation always involves questions of values. But these questions are decided by the political process, in battles over healthcare regulation in areas such as minimum coverage requirements, excessive rates, and preexisting conditions.
Cash payers may pay less, if they have the opportunity and sense to negotiate the prompt-pay discount. I was a freelancer before ACA and paid more than i should have out of pocket, because i was dumb. But yes, if you're savvy, you have a chance.
Getting medical care out of insurance's prying eyes may have some weird consequences, payer-provider agreements might prohibit direct interaction [1]. Seems unlikely they'd drop you, but weird things might happen if it turns out you get a CT scan from X that doesn't know you have insurance from Y, and X has another agreement not to take cash payments from Y's customers.
I'm not saying you're wrong, i'm saying just like everything else in health care it's really fucking complicated.
> The amount they pay; the former would be fraud.
The ACA specifically calls out 'dollar value'. AFAICT, it varies from state to state. If you hit me with your car, and the court decides you have to pay my medical bills, North Carolina limits it to just the actual amount paid. Wisconsin says it's up to the court to decide what 'dollar value' means, and they can take into account billed and paid (and anything else they want). That's all personal injury stuff though, there might be special definitions for ACA.
> Insurance companies do not operate for charity;
Yeah. I'm not claiming they should. I'm not a fan of the system, but it's the system we have. As with all things, the way I think it should work, and the way it actually works are very different things. Mostly, i was trying to call out how ridiculously complicated it is. The OP's assertion:
> Insurance is a math problem and it has a precise answer.
may be true. But that math problem is way beyond the 3 body problem. I don't think we can really find a precise answer for any real world case.
> With insurance, the insurance company gets to decide the worthiness of paying out. Oh yes, this person has cancer, but the chance of survival is quite low, so we're not paying for chemo.
I don't know about US, but it seems like normal people would have laws and regulations to govern that kind of decisions.
In theory, you do. Lots of companies sell insurance and you can buy the coverage you want. In a single payer system, you are stuck with what the government gives you and that is where the "death panel" talk comes from.
> it seems like normal people would have laws and regulations to govern that kind of decisions.
Of course there are laws and regulations. In practice, a patient that will cost millions of dollars probably won't live that long. So it's advantageous to simply delay a decision. Deny coverage, get sued, go to court. If the process takes 6 months the patient will just die and the problem goes away. How do you prove someone is acting in bad faith? Short of an email that says, "Let's fuck this guy over and save 5 million dollars" it's not going to happen.
I'm sure the vast majority of people in insurance are honest, hard working, ethical, respectable people. But the system is inherently corrosive to those qualities. Saying "no" to a marginal case can save the company millions. Health insurance in critical cases is pretty much the definition of perverse incentives.
edit
so, appending crazy rant. sorry.
Healthcare in the US is insane. Something like 60% of people are already covered by a single payer system with medicare, medicaide and the VA systems. it's pretty much just 20ish year olds to 65 year olds who aren't poor and weren't in the military that are out on their own. I find it baffling that medicare, which takes care of retirees, wasn't just extended to cover everyone. Old people get sick. we already handle the really expensive part of health care via socialized medicine. Are there horror stories? yes, absolutely, but 200 million people are handled by those systems. For what they are, they work pretty well.
There are literally books with lists of all the things we know that can go wrong with people, and protocols for how to resolve those problems. I really wish there was a minimum floor for people. You break your arm, we follow protocol A. It's a compound fracture? Protocol B. Paid for by everyone's taxes (bigger pool of money is more resistant to random fluctuations) perhaps we can't afford to treat non-life threatening conditions quickly. That is indeed a risk, and the major complaint about socialized medicine.
However, that can be mitigated by supplemental insurance or out of pocket payments. Not many 40 year olds get cancer. it seems like we can spring for some basic coverage. If wealthy people want more, they can pay the difference one way or the other.
The current state of affairs is shameful. People who ought to be at their peak of earning potential are most at risk for being destroyed by illness. We, collectively have invested vast resources so those people at their peak can earn a living, raise a family, and generally make the world a better place by their labor. It's a rare event to be knocked out by illness, we ought to get those people back to health as quickly as possible. But, we don't. But hey, on the upside, CI is at 137 a share. so that's good, i guess.
In that case, health insurance is largely bunk. Major medical insurance is insurance. The rest of it, regular doctor visits, copays, eye exams, dental exams, is a payment plan.
Minimum Essential Coverage eliminates major medical only plans for people over a certain age, somewhere around 25 or 30 years old. So I end up paying what I think is an obscene $260 a month for the cheapest plan in my state, a Bronze plan with a $5000 deductible and only pays out 60%. My insurance is triple what it was with a major medical plan that paid out 80%. I do not consider this an improvement. Going back to bartering chickens and services would be an improvement. Destroying the perversion that is health care as a financial product to single payer would be an improvement.
Also, it wouldn't be insurance.
People think that insurance is "something that I want that does nice things for me". It's not.
Insurance is a math problem and it has a precise answer. If you go beyond that answer it doesn't work. Either you're getting screwed or the (hapless) insurance company goes out of business.