Comment by krupan | Hacker News Reader

Comment by krupan | Hacker News Reader

Here's the deal. Insurance is a simple concept. Take house fires. They are fairly rare, but they do happen. We could all just save up enough money to cover a house fire ourselves, or, since we know that house fires are rare, we can pool our money together as friends and neighbors and when one of us in that pool gets unlucky and has their house burn down, it can be covered by insurance. A lot of us pay a little money for peace of mind that if a rare catastrophic event does hit us, we'll be OK.

This same concept applies to some medical issues, but there are a lot of medical issues it does not apply to. Getting a routine infection and needing antibiotics? Everyone is going to need that. It makes no sense to pool our money and pay out for the rare person that needs money for that. How many other medical expenses are like that? Even things that are rare for a group of 20-year olds like heart attacks are actually a lot less rare (more common than house fires, probably) for an older age group. So while it might make sense for a group of 20-year olds to pool money together to pay for the rare heart attack amongst that group, it might not make any sense for an over-50 group of people to do that same. It definitely doesn't make sense for a 20-year old to join that group. Yet this is exactly what we do. We all pool our money together and use it to pay for every medical expense that comes up. Minor infection? Use insurance! Need a couple stitches? Use insurance. Routine screening? Wow, didn't see that coming, good thing I have insurance.

This is insane, and this is the root of all our problems.

I completely disagree. The reason insurance pays for the small things is to encourage people to seek treatment early because it’s cheaper in the long run. Almost nobody would pay hundreds for a cancer screening like mammogram or colonoscopy that they don’t believe they need, but catching these things early is orders of magnitude better both for health and financial outcomes.

Insurance covering a minor infection prevents needing to handle a major infection. Your system assumes humans are rational and a good judge of risk, something that has proven to be untrue countless times.

Yes, humans are shortsighted and stupid. That's why we need state-sponsored medical care. Run by humans.

Not sure if you're joking, but that's a pretty lazy fallacy of composition there.

Ex: Human memory sucks, but you can generally trust the immutability of books, despite them being written and copied and bound and distributed and sold by humans.

It's all about using strengths in the right direction and order to sidestep weaknesses.

Fallacy of composition says I look at a few stupid humans and decide that all humans are stupid. That's what the person who I was replying to was doing in reply to my original post. I was trying to point out that if their supposition is true then we are all screwed no matter what.

Fortunately their supposition is false. Humans are not generally shortsighted and stupid, if you give them a chance.

Does this mean the average American is shortsighted and stupid then?

“But the average American has less than $4,000 in savings, while 57% of U.S. adults have less than $1,000 to their names.”

https://www.usatoday.com/story/money/personalfinance/budget-...

> Fallacy of composition says I look at a few stupid humans and decide that all humans are stupid.

No, a fallacy of composition would be "the organization is stupid because its employees are stupid", or "metal boats are impossible because metal sinks in water." It involves something which is composed of the smaller pieces.

What you're describing is more like a hasty generalization, where individual-qualities within a sample lead to a conclusion about individual-qualities shared by the entire population.

> I was trying to point out that if their supposition is true then we are all screwed no matter what.

And -- even if their supposition is true -- I disagree!

Metal boats can float on water, even though individual metal pieces sink. Institutions can solve problems, even ones that individuals humans suck at.

One reason they do it that way is that if you don't pay for screenings and small problems, people tend to skip going to the doctor for them, and you end up paying for more big, expensive problems.

Yes, and is that line of reasoning working? Are we as a society saving money doing it that way?

It seems what people really need is just a savings account and some incentive to actually save money for future expenses (because knowing that someday you are going to get an illness that 100% of people get apparently isn't enough motivation).

HSA’s are available and most people don’t effectively use them, part of the problem is most people don’t/can’t save anyway. You’re not all wrong, but you’re talking about changing behavior which is much harder than just making the system work for how people actually behave.

HSA's are horrible. Way to much government nonsense with limits on contributions and providers and tying them to particular insurance plans. Completely ineffective. When you see that you could save some money for future medical expenses, but you don't qualify for any tax breaks because the amount you want to save is too much or your health insurance doesn't allow it, it's very demotivating for saving at all.

The thought I have is we should all definitely carry catastrophic health insurance, but then people should be on their own for the rest. I'm sure that payment plans and medical care clubs would spring up to fit the needs of those who absolutely need a way to force themselves to save ahead. Those things should not be called insurance, they should not be sold as insurance, nor should they encroach at all into the territory of true insurance that is meant for rare and catastrophic events.

Only having catastrophic coverage for most people over 35 does not work, maybe younger too. We’ve already seen this.

You are basically guaranteed to receive care in the United States, doesn’t mean it’s affordable. The people that can’t afford the ~$300 screening or basic healthcare end up waiting until it’s major then we’re back to catastrophic level. People who can’t or don’t pay their medical bills still cost everyone using the health system money, it’s just hidden in fees, higher costs, tax write-offs, etc.

I'd like to think HSA's are a good idea, but many HSA's have a "use it or lose it" policy that any money contributed that doesn't get used by the end of the year just disappears into the pockets of the HSA provider. It's almost a scam. It might be nice for someone that has some sort of ailment that needs frequent care, such as diabetes or cancer, but it's worthless for someone that wants to have money kept aside in case of an emergency.

You are absolutely right, but we should probably just stop calling it "insurance", since it is nothing like what you are talking about. It's more like a pre-paid health plan. You pay a certain amount per month, and the plan pays for your health care. It's more like a co-op.

Read the article.

The man had insurance, it didn't pay out. Or more accurately, the hospital intentionally overwhelmed the insurance company's willingness to pay.

I can't think of the right analogy for house fire insurance. Because you can take your payout after the fire, and either rebuild or use it to buy another house. There's never a situation where you have house fire insurance, and end up paying MORE when your house burns down.

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