Private Healthcare? Why Not?

[Renegade]

Ha Ha thats funny when you are 72 will you still be working, well I do work I grow a lot of my own food and still make a lot of my own clothes. Will you do that at my age.

It is a pity your self-sufficiency does not extend to providing enough to cover for your own healthcare. As to what I will do at 72, I have no idea. I expect I will be working at something not necessarily because I need to but because it may be something I want to do.

[Riverwind]

It is a pity your self-sufficiency does not extend to providing enough to cover for your own healthcare.

Healthcare insurance is only cost effective when a group of people are forced to pay for it because they belong to the group. The US has arbitrarily decided to group most people according to their employer. In Canada we have one group for everyone. It makes no sense to talk about self-sufficiency when talking about insurance - sharing risk is the entire point of insurance.

[Renegade]

Healthcare insurance is only cost effective when a group of people are forced to pay for it because they belong to the group. The US has arbitrarily decided to group most people according to their employer. In Canada we have one group for everyone. It makes no sense to talk about self-sufficiency when talking about insurance - sharing risk is the entire point of insurance.

Of course sharing risk is the point of insurance. Self-sufficiency comes about when the cost of contribution to the shared pool is commensurate to the risk that individual introduces of making a claim from the pool. I would consider a homeowner who pays his house insurance premium self-sufficient. I would consider a homeowner who needs someone else to pay their home insurance premium not self-sufficient.

If the individual contribution is commensurate with the risk, then there is no need to force an individual to part of the insurance scheme so long as the pool is large enough. If the indivdual contribution is not commensurate with the risk, then those whos risk is low relative to the contribution will look to opt out if allowed.

[Riverwind]

I would consider a homeowner who pays his house insurance premium self-sufficient. I would consider a homeowner who needs someone else to pay their home insurance premium not self-sufficient.

Home insurance is very different from health insurance because the majority of payers will never make a claim on home insurance. With health insurance almost everyone makes claims over time. This makes health insurance too expensive for many individuals to pay the true cost even if they are 'low risk'. This is why all countries have systems where people are forced to contribute towards health insurance because they are part of a group even if they don't want it. In these situtations risk is assessed for the entire group and premiums set accordingly. This system benefits low risks members as a well as high risk members because the average cost per person is much lower than what it would be if the low risk member purchased their own insurance a la home insurance.

Self-sufficiency is not a concept that does not make any sense when it comes to health insurance.

[Renegade]

Home insurance is very different from health insurance because the majority of payers will never make a claim on home insurance. With health insurance almost everyone makes claims over time.

No it is not really that different. Insurance is insurance. The fact that there is a higher risk of claim is simply reflected in higher premium cost. Almost everyone makes an auto insurance claim at some point and the premiums paid reflect that.

This makes health insurance too expensive for many individuals to pay the true cost even if they are 'low risk'.

This makes no sense mathmatically. If your contention is that even "low risk" individuals do not cover their own true cost (relative to risk), then who does? The insurance pool is fixed. For some of the individuals not to cover the cost of the risk means that others in the pool must. It makes no sense to assert that no-one in the pool covers their cost.

This is why all countries have systems where people are forced to contribute towards health insurance because they are part of a group even if they don't want it.

Not at all. The reason people are forced to contribute is because a politicial decision is made that it is deemed unacceptable to withold medical services from someone in need of such services, even if they of their own volition they opted out of the system. To prevent people people from abusing this tolerance, people are not allowed to opt out.

This system benefits low risks members as a well as high risk members because the average cost per person is much lower than what it would be if the low risk member purchased their own insurance a la home insurance.

It benefits some but not all. One reason for the savings it eliminates the cost of assessing risk individually, however those who pay high premiums and have low risk are unfairly penalize in such a system. A healthy individual earning a high income would be better off purchasing individual health insurance even when the cost of assessing risk are factored in.

Self-sufficiency is not a concept that makes any sense when it comes to health insurance.

I've stated what I mean by self-sufficiency. To me it means covering the cost relative to risk, and it makes sense in health insurance just as much as in any other insurrance. If you have a preference for another term for the same concept, I'll happly use that instead.

[Riverwind]

This makes no sense mathmatically. If your contention is that even "low risk" individuals do not cover their own true cost (relative to risk), then who does? The insurance pool is fixed. For some of the individuals not to cover the cost of the risk means that others in the pool must. It makes no sense to assert that no-one in the pool covers their cost.

The extra money comes from the tax system via subsidises to corporations or direct payment of services.

Not at all. The reason people are forced to contribute is because a politicial decision

It is a purely economic decision based on the average cost per insured person. Employers in the US could allow employees to opt out of a health plan but they usually do not because it would increase the cost of their plans if they let the low risk people opt out.

It benefits some but not all. One reason for the savings it eliminates the cost of assessing risk individually, however those who pay high premiums and have low risk are unfairly penalize in such a system.

Insurance companies don't work that way. Anyone who chooses to purchase an individual policy is automatically a higher risk because they want to purchase one (i.e. the insurance company assumes that the individual believes that they are likely to make a claim) . IOW - being part of a group that has mandatory contributions is a factor that lowers your risk in the eyes of the insurance company. This effect means that low risk members of a group plan often get a better deal than they would on their own.

[Renegade]

The extra money comes from the tax system via subsidises to corporations or direct payment of services.

Can you be more specific on what you mean by "subsidises to corporations" or "direct payment of services"? As far as I know payment for medical services by the government comes from general revenues.

It is a purely economic decision based on the average cost per insured person. Employers in the US could allow employees to opt out of a health plan but they usually do not because it would increase the cost of their plans if they let the low risk people opt out.

Exactly! That reinforces my contention tht low risk people subsidize high risk people in group coverage. If, as you contend that in group coverage that even low-risk people are better off, then it would not be rational for them to opt out even if allowed to do so. Employers, and government, force coverage in cases where they need the low-risk individuals to subsidize the high-risk ones.

Insurance companies don't work that way. Anyone who chooses to purchase an individual policy is automatically a higher risk because they want to purchase one (i.e. the insurance company assumes that the individual believes that they are likely to make a claim) . IOW - being part of a group that has mandatory contributions is a factor that lowers your risk in the eyes of the insurance company. This effect means that low risk members of a group plan often get a better deal than they would on their own.

I didn't necessarily mean an indivdual purchasing insurance would do so without any group affiliaton at all. Group membership aligns the individual's profile to the group. Individuals generally belong to a variety o groups and, will choose the group wihch give them the most enconomic advantage in coverage. An example of this is home and auto insurance. There is a variety of groups I belong to, (for example through my employer, through my Univeristy Alumini, through my profesional association, etc). No group forces me to take home and or auto through them, but each has an affiliation with an insurance company which provides preferential rates based upon the risk profile assigned to the group. I choose the policy based upon the group which gives me the best rates. There is no doubt that this gives me better rates than if my only group affiliation was with the population at large and the coverage was mandatory.

[Riverwind]

Can you be more specific on what you mean by "subsidises to corporations" or "direct payment of services"? As far as I know payment for medical services by the government comes from general revenues.

Employee health insurance plans in the US are non-taxable benefits. This amounts to a huge subsidy. Anybody who buys auto or home insurance must pay with after tax dollars.

No group forces me to take home and or auto through them, but each has an affiliation with an insurance company which provides preferential rates based upon the risk profile assigned to the group.

Your are missing the key point: groups which require mandatory participation always get much lower rates on health insurance than voluntary groups. These rules are driven by the acutaries at the insurance companies who have concluded that mandatory group policies represent a reduced risk and that is reflected in the premiums.

This means that low risk group members are _not_ subsidizing high risk members because mandatory membership in the group actually lowers their cost. Health insurance is a very different product from life, auto and home insurance. The factors that affect risk in a health insurance policy are very different.

I am saying that economics of health insurance forces people into groups that require mandatory participation. This means you will never be able to shop around and get the best deal among the groups that you belong to. You will be forced into a mandatory plan whether you like it or not.

[guyser]

I am saying that economics of health insurance forces people into groups that require mandatory participation.

I am pretty sure one can opt out. For instance in NY you can. Say a spouse has a better plan, the other spouse can opt out and go on the others plan.

[Riverwind]

I am saying that economics of health insurance forces people into groups that require mandatory participation.

I am pretty sure one can opt out. For instance in NY you can. Say a spouse has a better plan, the other spouse can opt out and go on the others plan.

Is that really opting out of the basic coverage or it opting out of an optional extended plan that requires additional payment by the employee? The company may still be paying something for coverage that this person does not use.

[Mad_Michael]

oh man..

Your analagy is SO weak.

The CSA (Canadian Standards association) says that you can sell toilets in Canada if they meet certain safety standards.

They DO NOT say you can only get the government toilet that the government manufactuted.

Right. You can only buy a toilet in Canada if it meets government regulatory standards. Just like healthcare (or houses, or cars, or educations, etc.).

And like healthcare, you buy your 'government approved' toilet from whomever you choose. Same game in healthcare. You 'buy' your healthcare from any 'government approved' doctor you like. Indeed, you can buy your healthcare from a non-government approved source, but you can't get the government to pay for it on your behalf.

Are you arguing that the government must pay for your choice of toilets?

Bottom line is that the consumer is not sovereign.

The opening argument in this thread proclaims that since the consumer is sovereign in all things, the consumer ought to be sovereign in healthcare. That is absurd, as I've shown that the consumer is not sovereign, and thus, cannot claim the right to sovereignty over healthcare (or much anything else).

And, for your information, I am a 100% supporter of allowing private healthcare options in Canada. But the reasons I have for holding this have nothing to do with any silly assertion that the consumer is 'sovereign'.

Regulation limits choice, it does not ELIMINATE choice.

Your knowledge of actual government regulatory behaviour seems remiss.

Government regulation regularly and routinely bans or eliminates choices.

[Mad_Michael]

I didn't call you dumb, I called your weak analogy dumb, which it was.

Your noted reputation for throwing around insults makes your claim ring hollow.

And it devalues your credibility. I don't normally bother to reply to your kind.

[Renegade]

Employee health insurance plans in the US are non-taxable benefits. This amounts to a huge subsidy. Anybody who buys auto or home insurance must pay with after tax dollars.

I wasn't referring to the US system I was referring to the Canadian one. In our system the cost of the medical system comes from general revenues which for the most part come from taxes.

Your are missing the key point: groups which require mandatory participation always get much lower rates on health insurance than voluntary groups. These rules are driven by the acutaries at the insurance companies who have concluded that mandatory group policies represent a reduced risk and that is reflected in the premiums.

This means that low risk group members are _not_ subsidizing high risk members because mandatory membership in the group actually lowers their cost. Health insurance is a very different product from life, auto and home insurance. The factors that affect risk in a health insurance policy are very different.

I am saying that economics of health insurance forces people into groups that require mandatory participation. This means you will never be able to shop around and get the best deal among the groups that you belong to. You will be forced into a mandatory plan whether you like it or not.

Yes, I missed that point as the hub of your argument. I makes no sense to me that mandatory group policies would somehow lower the risk of the group and thus result in reduced cost. Please explain why this woudl be so, and do you have any evidience that this is true?

I am not at this point disputing your assertion, I just don't see any evidence of it nor do I see how you've come to that conclusion.

[bush_cheney2004]

Yes, I missed that point as the hub of your argument. I makes no sense to me that mandatory group policies would somehow lower the risk of the group and thus result in reduced cost. Please explain why this woudl be so, and do you have any evidience that this is true?

I am not at this point disputing your assertion, I just don't see any evidence of it nor do I see how you've come to that conclusion.

Agreed...there is no evidence to support the assertion. Health insurance products delivered via group risk pools do not have to be mandatory to reduce costs. In the USA, eligibility periods, capitation, co-pays, co-insurance, deductibles, exclusions, lifetime maximums, defined provider networks, and coordination of benefits are but a few of the actual methods used to manage risk and costs far beyond actuarial analysis of the risk pool.

Lacking such methods, a mandatory risk pool alone would expose the underwriters to far greater costs (liability).

[Riverwind]

I am not at this point disputing your assertion, I just don't see any evidence of it nor do I see how you've come to that conclusion.

I come to this conclusion because of what I was told by insurance companies when I tried to set up a group insurance plan for my company.

To understand what is going on you need to consider what the insurance company would charge rather than what it costs the insurance company.

Consider three scenarios where you pruchase insurance:

1) You are forced to participate in a group plan

2) You choose to participate in a group plan.

3) You purchase an individual plan.

From the insurance company's perspective scenario 1) makes you lower risk and therefore entitled to lower premiums. Scenario 2) and 3) are basically the same risk.

IOW - being part of a mandatory group plan reduces your risk.

You would be correct to say that insurance companies would need to balance costs across all of their clients and that they would likely have to adjust their premiums up if everyone was part of a mandatory program or down if everyone was applying as in individual. However, in real world, people that are part of a mandatory program would end up with lower premiums than they could possibly get if they applied as individuals - even if they are otherwise low risk.

[Renegade]

I come to this conclusion because of what I was told by insurance companies when I tried to set up a group insurance plan for my company.

Personally, I wouldn't take an insurance companies statement as evidence without some justification as to the reason why

IOW - being part of a mandatory group plan reduces your risk.

Again we have nothing but your conclusioon of the insurance company's statement as evidence that this is true. Given that an inurance company has a vested interest in generating as much premium revenue as possible, and a mandatory plan helps insure that, I find it hard to take the insurance companies statement at face value.

[Riverwind]

Given that an inurance company has a vested interest in generating as much premium revenue as possible, and a mandatory plan helps insure that, I find it hard to take the insurance companies statement at face value.

The numbers speak for themselves. The price per person for a 10 person group plan is less than the price per person for 10 individual policies - even though the risk profile for the individuals involved does not change. Maybe this is driven by insurance companies trying to maximize revenue but that does not change the fact that mandatory group plans are cheaper.

[Renegade]

The numbers speak for themselves. The price per person for a 10 person group plan is less than the price per person for 10 individual policies - even though the risk profile for the individuals involved does not change. Maybe this is driven by insurance companies trying to maximize revenue but that does not change the fact that mandatory group plans are cheaper.

The numbers don't show that it is the manditoryness of the plan that results in reduced risks. How do you know for example it is simply not a volume discount? How do you know that rather than the risk actually being reduced, the insurance company simply has cost savings based upon the fact that they don't have to assess risk individually?

Let's take your example of 10 individuals. Presumably their behaviuour and health do not change based upon their membership in the group or not. Thus their claims to the insurance company will be the same regardless of if they belong to the group or are simply individualls. The net cost to the insurance company is the same in either case regardless of if it collects higher premiums from individual policies or lower premiums based upon group coverage. If the net cost is the same, how can an insurance company legimitately claim that mandatory group coverage lowers risk and thus costs?

[Riverwind]

The numbers don't show that it is the manditoryness of the plan that results in reduced risks. How do you know it is simply not a volume discount?

No - but the explaination makes sense: if you seek to purchase insurance on your own then you must percieve yourself to have some risk. This perception increases your risk profile in the eyes of the company.

In addition, even if it is a 'volume discount' that does not change my argument that there is an economic incentive to create mandatory plans.

[Renegade]

No - but the explaination makes sense: if you seek to purchase insurance on your own then you must percieve yourself to have some risk. This perception increases your risk profile in the eyes of the company.

No there are many other reasons you would seek to purchase insurance outside a specific group context. For example the group you may be associated with may have a particularly high risk profile, however you may not individually share that risk profile. Further you also may be part of a group which has a far lower risk profile. The generalization you assert that the only reason you purchase insurance outside a group context is if you have elevated risk, makes no sense to me.

In addition, even if it is a 'volume discount' that does not change my argument that there is an economic incentive to create mandatory plans.

Yes, I agree that there is economic incentive to create mandatory plans. I never disputed that. That justification can be used pretty much everwhere. No doubt the unit cost of a TV can be reduced if we forced everyone to buy one and exactly the same model.

[Riverwind]

No there are many other reasons you would seek to purchase insurance outside a specific group context. For example the group you may be associated with may have a particularly high risk profile, however you may not individually share that risk profile.

The insurance companies don't care. If you want to buy health or diability insurance as an individual your are considered higher risk. Your real motivations are irrevelant to the insurance company because you cannot prove them. As a result, the insurance company presumes the worst case scenario and charges your accordingly.

Yes, I agree that there is economic incentive to create mandatory plans. I never disputed that. That justification can be used pretty much everwhere. No doubt the unit cost of a TV can be reduced if we forced everyone to buy one and exactly the same model.

The difference is healthcare coverage is essential which means people have to buy and will create groups with mandatory participation to reduce their costs.

[Renegade]

The insurance companies don't care. If you want to buy health or diability insurance as an individual your are considered higher risk. Your real motivations are irrevelant to the insurance company because you cannot prove them. As a result, the insurance company presumes the worst case scenario and charges your accordingly.

If an insurance company charged me higher rates as an individual, I would simply buy under a group umbrella. You seem to assert that healthcare is a special case. I don't see why. I buy P&C insurance through the insurer associated with my professional association. It is not mandatory that I purchase through them, yet I do because I get preferrential rates over what I could get as an individual. It has nothing to do with the mandtoryness of the coverage.

The difference is healthcare coverage is essential which means the political support for mandatory plans will always be high.

Well you are finally zeroing in for the reason for the mandatory participation. It is due to political support so that one segment (the majority) can impose its will on the other. The cost savings are not simply because of the volume that a mandatory plan implies, but because one segment subsidizes the other. As long as the subsidized segment has enough political clout, mandatory plans will be in place to prevent the other segments from opting out.

[guyser]

Is that really opting out of the basic coverage or it opting out of an optional extended plan that requires additional payment by the employee? The company may still be paying something for coverage that this person does not use.

Here in Ont, one can opt out entirely. Or they can opt out for part of the plan, such as LTD or STD etc.

IN the states, or rather NY, opting out means nothing is paid once out. My referral is a mechanic and his teacher wife. His plan was better than hers (no Teachers Fed fantabulous plan for her) so she opted out. Now he is a contractor and so she opted back in with him named on it. Good timing too, their 12 yr old son just found out he has type 1 diabetes.

[Riverwind]

It is not mandatory that I purchase through them, yet I do because I get prefrential rates over what I could get as an individual. It has nothing to do with the mandtoryness of the coverage.

The rates for voluntary plans are not much better than individual plans. If you want to save money in a group plan you must be part of a mandatory plan.

Well you are finally zeroing in for the reason for th mandatory participation. It is due to political support so that one segment (the majority) can impose its will on the other.

This 'minority' you speak of is a myth. It does not really exist because everyone needs healthcare coverage. Individuals who are healthy today will eventually get sick and benefit from the mandatory coverage. It is short sighted to assume that individuals that are 'low risk' today will always be 'low risk' and that they will never benefit from the system.

[bush_cheney2004]

No there are many other reasons you would seek to purchase insurance outside a specific group context. For example the group you may be associated with may have a particularly high risk profile, however you may not individually share that risk profile. Further you also may be part of a group which has a far lower risk profile. The generalization you assert that the only reason you purchase insurance outside a group context is if you have elevated risk, makes no sense to me.

Very true...health and dental insurance products are sold to defined risk groups and sub groups based on profiles for education, higher risk habits (e.g. smoking), etc.