Insurance Assurances

It appears Congress is again on the precipice of Obamacare repeal. Rather than debate the demerits of that legislation or its potential successor, I’ll instead address the related injuries to our collective wit.

Since health insurance falls into the broad raft of media-mandated dissembling, some terms are probably warranted. Insurance is you paying me a premium to indemnify you against the risk of loss. That is the risk of loss, not its certainty. That’s a fundamental difference for the few commenters hateful enough to acknowledge it.

A key component of the insurance industry is the act of underwriting. Underwriting is the task of evaluating and pricing risk. The best underwriters are paid handsome salaries because they perform premium non-commoditized labor. When executed capably, this labor results in cooing shareholders and fat bonuses. Here’s a very simplistic example:

If I believe there is a 10% annual chance you will cost me a million dollars in claims, then I will charge you $100,000 as a minimum premium baseline. But if I am a poor underwriter, and the risk is actually a 25% annual chance of $10 million dollars then I have cost my employer $2.4 million dollars in the first year. This providing a perfect opportunity to upgrade my resume with descriptions like “results-oriented team player.”

Underwriting risk is not just an exercise in maximizing profit, but in minimizing pain. It is as key to survival in business as it is in the jungle. Whether you are an Amazonian tribesman evaluating the risks of eating a colorful frog, or a trader at the Goldman bond desk scrutinizing mortgage derivatives, accurately assessing risk is how men remain viable and vertical.

And since underwriting–that is to say thinking, calculating, weighing, and considering–is such an innate and inseparable element of adaptive human behavior, we should not be at all surprised to learn that it was outlawed by Obamacare. In the words of its liberal authors, it barred “discrimination” against people with preexisting conditions. But the truth is Obamacare does discriminate…against people without preexisting conditions. This being a drearily familiar model to that of the US “civil rights” framework.

In any event, the Obamacare underwriting ban meant two things: insurers couldn’t a) deny coverage to people who would cost more than they could pay, or b) charge higher premiums for the sick. So the tribesmen underwriters had to eat the dull green frogs and the bright orange ones too.

But mandating coverage for a known condition with known costs isn’t actually insurance at all. It’s simply cost transference. If there’s a 100% chance you are going to cost me $100,000 year for a $10,000 premium, you’re not asking for an insurer, you’re asking for a patron. And the unwilling Obamacare patrons are the young and healthy people forced to subsidize the $90,000 difference.

Whether or not you believe this is a moral position, insurance isn’t the product being described here. And gone almost completely unremarked upon is the fact that many people are now priced out of the actual insurance market because the ban on medical underwriting does not permit them to be rewarded with lower premiums for their healthy lifestyles. An obese lifelong smoker with emphysema can’t be charged more than a lean healthy ascetic, which also means the ascetic can’t be charged less than the smoker. For some, that’s probably depressing enough to contemplate over a mouthful of Marlboros.

So if I understand correctly (and I’ll grant I may not), tonight’s latest repeal iteration would allow states to reinstate medical underwriting at their discretion. Liberals are naturally howling at the excavation of immoral states’ rights. This being a concept about which they were writing sonnets some 30 minutes ago when it involved voiding federal immigration enforcement orders.

Though the presumed reform legislation would exert an undeniable gravity. States that choose medical underwriting programs (i.e., conservative states) will heavily incentivize in-migration of healthy people for the lower rates and out-migration of the old and sick in recoil from higher rates. Thus liberal states will lose their subsidizing payers as they gain healthcare consumers.

That suggests a very poor prognosis for bruised Berkeley antifas. And I don’t know what health outcome could possibly be better.

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13 thoughts on “Insurance Assurances

  1. Pingback: Insurance Assurances | Reaction Times

  2. I pay very little attention to the Obamacare niceties. Mostly because it’s too boring and life is too short. This is a very good and readable summary of some of the issues at stake, so thank you.

    Meanwhile, when I see Globalist Pool Boy Paul Ryan galumphing around about Obamacare replacement or whatever, it does raise my hackles. Whatever his motivations, whatever his goals, I know with 100% certainty that the welfare of the white working and middle classes is the very last thing on his mind. In fact, he probably sees them as D.C. usually sees them: as a pool of money to be taken by threat of force, so that benefits and gibmedats can be provided to the parasite class, legal or illegal. After all, we are all very, very concerned about the health of squat mestizo stoop laborers and welfare grifters, since they ARE, as everyone knows, “natural conservatives” and sure to vote Republican eventually as long as Consuela can have her four little out of wedlock chubby hood rats provided with everything from soup to nuts. If this requires biting a little bit deeper — or perhaps a lot deeper — into the wallets of Marge and Homer, well those people are racists anyway and they deserve it.

    All that said, if these proposed changes really ARE going to help the people they should help, then I can only look on with suspicion. This could be the first time in 50 years that they’ve decided to cook someone else’s goose. Hard to believe.

  3. Who here feels like throwing up a little bit in their mouth?

    The US spends more on socialized medicine than any other country in the world except for Norway:

    https://en.wikipedia.org/wiki/List_of_countries_by_total_health_expenditure_per_capita#/media/File:OECD_health_expenditure_per_capita_by_country.svg

    In fact, our free market libertarian republic spends more in socialized medicine than many other socialist countries spend in total. France, the UK and Japan, for example.

    Freedom, as they say, ain’t free.

  4. Mouthful of Marlboros
    It’s too bad the Unobamacare Act of Current Year doesn’t contain a provision called “If you want to keep your obamacare, you can”. Then all the Persons Of Defect and shitlib dogooders could organize their own “exchange”, wherein they’re guaranteed to pay the same rates as their fellow defectives and Trotskitarians. I imagine the dearth of medical professionals willing to accept their bus tokens as payment would inspire the +3SD among them (triple-digit IQ, by a whisker) to tirelessly study medicine via yahootube and wikipedo, and practice on their fellow members with hilarious results.

  5. Pingback: Getting What You Pay For – Daily Pundit

  6. they way to deal with people with pre-existing conditions that they can’t afford to cover is to have a third party, the government, pay for the care directly. the VA system has hospitals, out-patient clinics, rehab facilities, etc.

    just send them there, or if there isn’t enough capacity, send a payment directly to their healthcare provider. paying cash is cheaper than using insurance (insurance is the cost of the good/service PLUS the cost of the insurance).

  7. The difference between medical insurance and fire insurance is that medical insurance is generally underwritten on a group basis, as for example an employee benefit scheme. The insurance company assumes a given risk profile, based on actuarial tables.

    This assumption only works if there is no selection against the company. That means, the actual risk profile must be representative of the population’s risk profile. Selection is what happens, for example, when healthy people decline insurance (because it’s not economically justified), and sick people sign up. The dice are loaded against the company.

    That’s why, when you get a job with a company running such a scheme, you don’t get an option. Membership of the scheme is a condition of employment.

    And that’s why you will wind up with a single payer national health system. If the insurance companies are obliged to cover everyone, then they have to be able to charge a premium for everybody, no exceptions.

  8. ObamaCare combines the colossal extravagances of traditional US health care and adds the extravagance of European style expanded coverage. Every cost saving measure–such as tort reform and negotiating with drug companies for lower prices–was taken right off the table. If the goal was to quickly bankrupt America, ObamaCare was the answer.

    The Left uttered the phrase that everyone has a right to the same high quality health care and there was no going back. Otherwise, a semi-solution would be to have a different tier of health care for those who don’t pay (staffed by all those foreign medical graduates and nurse practitioners that appeared over the past decade)
    It would also be nice to remove the ability to sue hospitals for those who don’t pay. It’s quite the unique business model when you can pay nothing for a service but have the potential to win millions if you don’t like it.
    That won’t be palatable of course. We will keep importing the 3rd world, paying for their health care, burdening health care workers with an increasingly stressful clientele (Ebola-ridden, non-English speaking etc) and piling on the regulations that force your doctor to spend 5 minutes taking care of you and 20 minutes charting about it.

    Too bad our pernicious media spends all its time on sob stories of people without coverage instead of doing a little reporting on the basic math of health care.
    A really depressing topic, but I like Porter’s succinct analysis: “You’re not asking for an insurer, you’re asking for a patron.”

    • Well said. The cost of paying the healthcare for millions of indigent squatters goes assiduously undiscussed. It’s just important that their (subsidized) premiums can never be higher than yours.

      • Which is why it would have been smart to tie healthcare to immigration. “Look, we can have mass immigration or subsidized healthcare, but not both”.

  9. Pingback: This Week In Reaction (2017/05/07) - Social Matter

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