RoR: Forum

Did anyone catch that last line? "...our rulers..."!

If we allow the government to enact health care "reform", I'm afraid they will take one more giant step towards becoming our "rulers" instead of our "representatives", as I believe they are meant to be.

Post 2

Friday, July 24, 2009 - 3:56pm

One of the best articles Stossel's ever written.

Post 3

Friday, July 24, 2009 - 4:07pm

Excellent article. Right on about Lasik. Had that done last year, completely differenent experience than going to see an "insurance" doctor. I've found PPO is better than the HMO plans. They seem to know you're spending a little more of your own money to be more selective.

Post 4

Friday, July 24, 2009 - 4:20pm

Great article. The following is an excerpt:

When politicians interfere with free markets, unintended consequences harm everyone, except the companies that lobby hard enough to protect themselves.

The American Hospital Association (AHA) and the American Medical Association both largely support the reforms advocated by Obama and most Democrats.
http://www.aha.org/aha/advocacy/index.html
http://www.ama-assn.org/ama/pub/advocacy/health-system-reform.shtml

Hmm, I wonder why. Can you say "more money"?

The AHA doesn't like the "public option", however. "The AHA has serious concerns, however, about establishing a new public plan that could exacerbate the underpayment of providers by paying rates at Medicare or Medicaid levels."

No need to wonder why here. "Less money" is crystal clear.

Did you know that The American Recovery and Reinvestment Act, signed into law by Barack Obama on February 17, provides $17 billion in incentive payments to encourage hospitals and doctors to adopt electronic health records?
http://en.wikipedia.org/wiki/American_Recovery_and_Reinvestment_Act_of_2009

(Edited by Merlin Jetton on 7/25, 7:14am)

Post 5

Friday, July 24, 2009 - 4:44pm

I'm reminded of Frank Knight's own work on the two kinds of risk that exist in economics; insurable and uninsurable risks. Insurable risks are those which have regularity and certainty that can be found like the probabilities of certain kinds of weather within a short span of time. Uninsurable risks are those which could be considered acts of Nature beyond current understanding (like volcanism, earthquakes, and etc). If one considers health insurance, then one realizes that what it covers isn't the uninsurable, or more commonly called disastrous misfortune. Health insurance covers purely those risks that are well known among a population, that's why one never assumes a pre-existent condition like diabetes or astigmatism as these can be considered per a population (in terms of age, sex, ethnicity, geography, work-ethic, and many other vectors to correlation upon). Thus, these pre-existent conditions can be insured against per their risks.

The problem is that individuals may be good at considering their own risks, but when an agency like the State comes into the picture, it can act as a means to screen out significant factors in terms of the calculation of those given risks. Whether by subsidy or outright omission of certain kinds of information, the calculation by individuals gets skewed in favor of further intervention (thus further restriction of economic calculation of insurable risks, which makes it easier for uninsurable risks to sneak into the costs of health insurance or other similar insurances).

Post 6

Friday, July 24, 2009 - 10:53pm

Bridget -- as a former health insurance underwriter, I must disagree with the notion that there are uninsurable risks. There are risks where the premiums are so high that nobody will pay them, but in theory any risk can be insured. To be a bit wry, it might take a monthly premium exceeding the maximum possible payout of the policy, but ANY risk can be underwritten.

The problem with a government insurance program is that due to political pressures, it is essentially impossible to have the people running it act as responsible fiduciaries -- they will be forced to act in ways that harm the people shouldering the risk (in this case the taxpayers). It is frickin' HARD to keep an insurance pool solvent, since the people applying for coverage are better able to assess their individual risk than the underwriter. Throw in clueless politicians intervening who don't understand the business, and you have a recipe for disaster.
(Edited by Jim Henshaw on 7/24, 10:59pm)

Post 7

Saturday, July 25, 2009 - 5:29am

When I did a search in Frank Knight's Risk, Uncertainty and Profit for "insurable" here, there were very few hits. A paragraph here says Knight is noted for his distinction between "risk" (randomness with knowable probabilities) and "uncertainty" (randomness with unknowable probabilities). My guess, supported by one of the above hits, is Knight's main point is that entrepreneurship falls in the latter category.

Some insurance risks are far more predictable than others (the probabilities and amounts are more knowable). Auto insurance claims are quite predictable (in aggregate). Catastrophic property claims, e.g. from floods and big storms like hurricanes Katrina and Hugo, are quite unpredictable.

A big problem with current health insurance is that most policies offer comprehensive coverage, as opposed to catastrophic coverage. It's often legally required. In other words it's designed and/or required to cover frequent, inexpensive, and predictable claims like regular visits to the doctor's office. These are a big administrative burden for both insurers and health care providers. They significantly raise premiums. They are better budgeted by the insured and paid out-of-pocket. Since all or most insureds have them, there is no spreading of risk, which is the main value of insurance.

(Edited by Merlin Jetton on 7/25, 5:32am)

Post 8

Thursday, August 6, 2009 - 6:41am