Q&A highlight
Posted23 days ago
Key Takeaways
Until we can admit where there are problems, there will never be a solution.
Can you explain what's happened?
As usual, actual studies are all over the map on this. The white house said it was successful at that. NBER said it wasn't, but rates didn't double for a long time. We know rates of large increases went down for a few years, but small increases became nearly universal to compensate.
Insurance companies wrote for, edited, and lobbied around most of the bill as it was passed.
I'm not trying to say this isn't a big problem or that it won't cause tremendous hardship to the ~15M people projected to lose health insurance as a result of this, but obviously 5.5% of the population being hit with a doubling of insurance costs is much less of a problem than a doubling for 50% of the population.
Most recently, in 2024, I had medical and dental coverage for my family of 6 for around $1,200/mo - roughly half what's quoted but again, family of 6. Wasn't the greatest insurance but it would have kept us from financial ruin in case of a catastrophic event which is all I expect from insurance anyways.
Market forces naturally create low rates for those who don't need insurance and unaffordable rates for those who do. But over time, everyone gravitates from the former to the latter.
The "free market" does not offer a practical solution to every problem. Tariffs are an open admission of this basic fact.
The result is what any arbitrary textbook about economy will tell you: if there are large barriers to entry into a market (i.e. the opposite of "free market"), the customer won't get the positive consequences of a free market, but instead oligopolies will form - with their negative consequences.
All these companies follow suit with the market forces described above. They all want to insure young healthy people and deny old sick people --- because they make more money by doing so.
Over time, everyone (including you) will naturally gravitate from young and healthy to old and sick --- aka uninsurable.
Are you content to be uninsured when you need it most? This is what private, for-profit health insurance manifests.
This is not due to "red tape" or lack of competition but is a fundamental characteristics of the market itself.
A private health insurance company is based on the idea that if you are young, you pay a lot more so that an actuarial reserve is built, which is then reduced again when you age. This means that if you want fair premiums when you are old, you will have to pay a lot larger premium in the young age.
Concerning your claim:
"They all want to insure young healthy people and deny old sick people --- simply because they make more money by doing so."
Insurance companies don't make more money when they insure young vs old people - but they will just calculate risk-appropriate premiums for each group. If you start your insurance coverage at a health insurance company when you are already old, no actuarial reserve has been built up (during the years when you were young), so the premiums will of course be much larger.
This is laughable.
Insurance companies don't have no steenkin "actuarial reserve". Inventing one is an act of rhetorical desperation on your part.
They only thing these companies consider or respond to is next quarter's profits
This is how private health insurance companies work in Germany and many other countries. Facts:
- I have already worked with certified actuaries, and I am thus very certain that building an actuarial reserve (which is then phased out when you get older) [in German: Auf- und Abbau der Deckungsrückstellung (life insurance) und Altersrückstellung (health insurance) (in English, the term "actuarial reserve" is used for both kinds of reserves)]) is how the mathematics of life and private health insurance companies works
- if you still don't believe my claims, just read a good textbook about insurance of persons
I think it exists in the same way social security does: money from people who pay in but don’t withdraw goes to people who do withdraw. There’s probably some reserve, but I’d guess it’s thin because withdrawals should be fairly predictable for large insurers.
At least in the EU, by Solvency II, insurance companies are obliged to fulfill prescribed solvency ratios (i.e. have sufficient capital resources available). I would strongly assume that there exist similar regulations in the USA.
My guess would be there's a healthy dollop of regulation pushing the German insurance market into that shape, otherwise you would probably see short-term insurers outcompeting long-term insurers since they wouldn't have to do old-age reserves and could therefore charge lower premiums. Consumers tend not to be nearly as good at rationally planning for long term expenditures as are actuaries.
"Krankenversicherung nach Art der Lebensversicherung" (health insurance in the form of life insurance) and "Krankenversicherung nach Art der Schadenversicherung" (health insurance in the form of indemnity insurance).
The first one is basically an alternative to the state-mandated health insurance, while the latter one is mostly intended for more specialized health services like for example dental replacement.
There is a regulation that once you are in a "Krankenversicherung nach Art der Lebensversicherung", the health insurance company is not allowed to cancel the contract with you, but on the other hand for this restriction the health insurance company is allowed to "adjust" premiums (nearly always that means "increase premiums") if the medical costs for the agreed treatments rise (which they commonly do).
Thus having a (near-certain) cashflow over the lifetime of the whole insured person (who can only under very special circumstances get out of the insurance treaty) is quite attractive for the insurance company.
> otherwise you would probably see short-term insurers outcompeting long-term insurers since they wouldn't have to do old-age reserves and could therefore charge lower premiums
You must not compare the current premiums, but the amount of premiums that you will pay over the whole lifetime. Here, the situation is completely different.
I think considering the huge amount of money (for premiums and medical costs) that is involved here, it can only be explained with stupidity to just compare current premiums in the young age: it is very well-known that the whole actuarial reserve that the insurance company built up from the premiums of a huge part of your lifetime will be spent for medical costs in just the last few years of your life.
It is thus a really macabre truth that if we would just let patients with cancer or another expensive disease die instead of giving them expensive treatments for just few additional years it would save an insane amount of money in the health system.
It sounds like you either had junk insurance or you’re exaggerating things to score points.
The question isn’t whether the ACA raised costs—those were always going to go up. The question is whether a the ACA made them go up less than not having it. For me, the before and after trend was remarkable. And I had higher quality insurance without lifetime maximums or arbitrary exclusions.
Republicans did their level best to neuter the bill and prevent Democrats from having a “win,” and for the most part, I’d say they succeeded. The lack of a public option and the removal of mandatory coverage were both important parts of making it work well. But in the first 5 years or so, it was definitely an improvement. I think it could be again… if Republicans cared more about serving the country than pandering to their base.
No. That wasn't the promise. Obama said that his plan was going to cut a family's bills by $2500.
Now you may say that inflation has to creep in and I think that's fair. If oil rises in price, that affects everything. But the premise was always that the magic of the ACA would lower premiums.
My impression was it would be painful in a lot of ways but we need better competition and better protection in order to have the private insurance industry actually work for people instead of abuse them and health insurance is too important (and complicated, and too much history of dishonesty) for laissez faire.
I've seen attorneys, professors traders, plumbers, programmers, accounting, all go through demand cycles.
But never MDs
It is my dream that before I die I see a bust cycle on MDs where the supply doesn't meet the demand.
Uber or Airbnb for medical care is so needed, why not break some laws to reveal how protectionist the whole industry is?
I'd gladly book a "Parody Doctor" or whatever it takes if it cost 2/5ths the price.
Since the majority of people don't run into those issues, they are blissfully unaware that if/when they have a major medical event they are under-insured.
Maybe yours dropped immediately, but I'm sure it's up quite a bit since then. You may say that's just inflation and that's part of it, but I think the deeper point is that the ACA is not containing the inflation. And that was one of the promises.
After ACA went into effect, I got insurance and it was reasonable - I didn't even need to claim a subsidy for first few years, until I lost my job.
People with lower incomes pay proportionately less, government employees and high earners can also switch to private insurance where they get much better service but for non-government employees this comes with risks and has to be done at a younger age.
OK, if its for a whole family, then yes: Germany is more expensive, I can see now - 27000 USD for a 4-head family is acutally quite cheep, if i add up those numbers?
Do you mean some more numbers or the link to a healthcare-cost-calculator?
But is it productive growth?
Perhaps we should increase GDP by employing people to smash windows and burn down houses?
Proper healthcare is needed, because this one is unfair and too expensive compared to everywhere else with worse outcomes.
(Here's a hint, it's actually quite affordable right now if you go to a GP out of pocket).
You're wrong and you're conflating your myopic perspective with the experiences of everyone else in the world in other countries. It's only "cheap" where you live. Here where I live, it's insanely expensive with (very expensive) insurance or without insurance (bankruptcy risk) and the average care is shit too.
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