“Thanks for the comment, Kady. Can you please elaborate on your last point: “…I trust my health insurers more than I trust the government and the politicians.””


The insurers are all operating against one another in a level playing field defined by (a) their own patient base, (b) the existing government regulations and (c ) industry best practices. The need to turn the highest profit possible whilst pricing their product competitively means I’m getting the best price they’re able to provide for insurance.

If the government takes over the management and the pricing of health insurance, I no longer have confidence that they will manage according to industry best practices and am getting the lowest cost possible.

Here’s an example from the ACA: The cost of providing insurance to a patient a few years short of Medicare is 8–10x the cost of providing it to somebody 35-under. When they put the ACA together, this metric (which is determined by actuarial science) was ignored because the *politicians* didn’t want to hit near-seniors with a large bill; so, they legislated that the cost of insuring the oldsters could be no more than 3X that of the youngsters.

So, the insurers had no choice other than to jack up the cost of the insurance to the youngsters, which is why so many youngsters have decided to opt out, which TO DATE has not yet caused the predicted ACA death spiral, but its come pretty close, with premiums inflating across the industry even more than they were prior to the ACA’s passage.

(And, the death spiral still could possibly occur, depressingly.)

So, that’s what I mean when I say “I trust the insurers more than the government”. The politicians start thinking in terms of voting blocs and who they want the legislation to be popular with, and before you know it, you have a cockeyed pricing mechanism which gives little attention to actuarial reality, with the result that the system becomes worse than it is today (which is saying somethin’.)

Health insurers necessarily operate within an environment constrained by both the government (i.e., administrative apparatus) and the politicians (i.e., elected leaders) — even without reform, the status quo is such that many statutes, court decisions, regulations, etc. already define what insurers can and can’t do. So we’re never really seeing a ‘pure’ form of what insurers would do if left to an unrestricted, profit-first approach.

Sure. But al insurers are operating under the same set of rules. If you pulled all the regs, they’d stick back in their risk control tools (preexisting conditions, lifetime maximums, rights of cancellation, etc).

Specifically, I’m interested in what you trust insurers to do: Perform their existing duties? Perform a more narrow range of duties based on further regulation/restriction, or a broader range? And, if you could share, what would you say underlies this confidence gap for you (in addition to your concerns with how ACA was implemented, as you outlined in your initial comment)?

I think I’ve answered this above. Insurance risk pricing is a data driven exercise. As soon as politicians get involved, suddenly social considerations jump into play, which screws up the insurers ability to price risk. So, they jack up prices more than they need to, just to be on the safe side.

Data Driven Econophile. Muslim, USA born. Been “woke” 2x: 1st, when I realized the world isn’t fair; 2nd, when I realized the “woke” people are full of shit.

Data Driven Econophile. Muslim, USA born. Been “woke” 2x: 1st, when I realized the world isn’t fair; 2nd, when I realized the “woke” people are full of shit.