What a joke…when will this gouging end??? http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/03/03/MNFH1I2CU5.DTL&tsp=1
Did not read, do not care.
I think that we can all sympathize with people with pre-existing conditions, that’s one of the few areas of the gubmint health care initiative that I can get behind (in theory). But make no mistake, an insurance company insuring someone that can’t find other coverage will be losing money on them most of the time. Beating up on the insurer for trying to get closer to break-even is probably unfair. If however the insurance companies are ‘gouging’ these highly profitable customers then you can take comfort in the fact that their competitors or far-seeing entrepreneurs will soon enter the market, undercut them on pricing, and steal away all of these customers that are supposedly being taken advantage of.
why don’t you just go long http://www.thestreet.com/quote/IHF.html and hedge your exposure? am I missing something?
Bankin’ Wrote: ------------------------------------------------------- > I think that we can all sympathize with people > with pre-existing conditions, that’s one of the > few areas of the gubmint health care initiative > that I can get behind (in theory). But make no > mistake, an insurance company insuring someone > that can’t find other coverage will be losing > money on them most of the time. Beating up on the > insurer for trying to get closer to break-even is > probably unfair. > > If however the insurance companies are ‘gouging’ > these highly profitable customers then you can > take comfort in the fact that their competitors or > far-seeing entrepreneurs will soon enter the > market, undercut them on pricing, and steal away > all of these customers that are supposedly being > taken advantage of. You are assuming that their is real competition in this market. If there were, we would not be having this conversation and it wouldn’t be such a contentious issue. Health insurance coverage the way it is right now is price inelastic. As far as the person who doesnt care I am assuming they are young, have no family or are very wealthy or they will care when they or their loved ones fall seriously ill and are denied coverage/ are dropped. Or if they have kids with some defect and insurance refuses to cover them.
Meanwhile, my doctor friends are getting their reimbursement cut dramatically. So where is all of the money going? The insurance companies are blowing it. They are abusing their control of the system and making single payor much more attractive by comparison. Unless you’re an employee of a big company, the insurance companies are walking all over you.
Your article quoted people with pre-existing conditions. People that had their rates hiked AND couldn’t shop for other coverage because they didn’t qualify due to preexisting conditions. I have this group in mind when composing my response. Now, your statement may be combining two issues, so I’m going to break it apart. marcus phoenix Wrote: ------------------------------------------------------- > You are assuming that their [sic] is real competition in > this market. If there were, we would not be having > this conversation and it wouldn’t be such a > contentious issue. This statement assumes that the customers having their rates hiked are profitable, dare I say very profitable. Let’s assume that this is the case. I’m not an insurance expert, but I see no reason why a company can’t start insuring people with pre-existing conditions at prices lower than the prevailing market rate. What sort of ‘lack of real competition’ do you think is keeping Aetna, UHC, or mom & pop insurance company coming in and scooping up these gems of customers, charging them a bit less, and still making ‘excess’ profits? > Health insurance coverage the > way it is right now is price inelastic. I agree that health insurance coverage is very inelastic for unhealthy (read: not profitable) people. I contend that coverage is quite elastic for people in good health. This gets to the crux of the issue. Does the healthy pool have a social, perhaps moral, obligation to subsidize the unhealthy, unprofitable pool? Unfortunately that question is big and hairy and will not be solved on AnalystForum.
Bankin’ Wrote: Does the healthy pool have a > social, perhaps moral, obligation to subsidize the > unhealthy, unprofitable pool? Unfortunately that > question is big and hairy and will not be solved > on AnalystForum. I thought that was the whole point of insurance. The pool of seriously ill/ unhealthy (lets just say the just ones who become sick or inured through no fault of their own such as by smoking or obesity) is far smaller than the pool of the people in relatively decent condition. Of course the unhealthy pool is increasing primarily due to obesity but I woudn’t think it justifies such sharp rate increases.
marcus phoenix Wrote: ------------------------------------------------------- > Bankin’ Wrote: > Does the healthy pool have a > > social, perhaps moral, obligation to subsidize > the > > unhealthy, unprofitable pool? Unfortunately > that > > question is big and hairy and will not be > solved > > on AnalystForum. > > > I thought that was the whole point of insurance. > The pool of seriously ill/ unhealthy (lets just > say the just ones who become sick or inured > through no fault of their own such as by smoking > or obesity) is far smaller than the pool of the > people in relatively decent condition. Of course > the unhealthy pool is increasing primarily due to > obesity but I woudn’t think it justifies such > sharp rate increases. You almost want to break it up into groups of people. There are the people who are NOT forward looking, who don’t buy insurance because they view it as a waste of money (after all why would a healthy person need insurance…right?) They would prefer to spend that money on other items such as big screen tv’s and other tech crap that they don’t need. When they do develop a chronic condition that requires ongoing medical treatment they whine and cry about pre-existing condition…blah blah blah. I have no sympathy for this group of people. They could have made the choice to get health insurance when they were healthy so that it would be there when they weren’t healthy. This is the group of people that doesn’t really understand the insurance concept and just assumes that there is some magic multiplier effect that transforms their $200 in premiums into $50,000 for a kidney transplant. Then there are the people who buy insurance when they are healthy and develop chronic conditions while under coverage. At this point the insurance company that was more than happy to collect their premiums when they were healthy suddenly decides that they don’t want them in the pool anymore. So they raise their premiums by the maximum amount allowed by law each year until it finally exceeds their income level and they have to drop their coverage. Of course no other insurance company is going to pick them up now because they represent an ongoing drain on the bottom line. I feel a great deal of sympathy for this group because they did the right thing but were literally forced out by the insurance company. In reality what happens is they will close off a block of policies to new entrants. As the pool ages and individuals get sick they can raise the premium on the block to cover their costs plus profit. As it gets more and more expensive, healthy policy holders will find new lower cost policies. Those with chronic conditions would be uninsurable if they dropped their coverage so you get a situation of adverse selection. In the end you are left with only sick people in the pool and of course the costs associated with treating that pool are enormous which means the premiums would be cost prohibitive for pretty much anyone. The result is a group of people who have to drop their coverage and then can’t find any other insurance company that will take them on as a risk. A law could be written to regulate that practice which is clearly designed to clear the books of bad risks, but of course that would have to get past a very powerful insurance lobby.
marcus phoenix Wrote: ------------------------------------------------------- > Does the healthy pool have a > social, perhaps moral, obligation to subsidize > the unhealthy, unprofitable pool? Unfortunately > that question is big and hairy and will not be > solved on AnalystForum. > > > I thought that was the whole point of insurance. You’re conflating insurance (risk pooling) with wealth redistribution. They’re different. Insurance works because utility curves are concave – people and institutions exhibit decreasing absolute risk aversion. There are any number of primers available if you’d like to understand the theory; e.g. http://emlab.berkeley.edu/users/webfac/card/e101a_s05/101insurance.pdf