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Comment by rayiner | Hacker News Reader

> These are enormously beneficial to insurance companies (they essentially have unlimited liability without them) and there is a ton of money to have the caps reinstated.

I don't understand why you'd phrase it this way. Under the ACA, 80% of premiums have to go to medical care. A dollar saved providing care disproportionately benefits the premium payers, not the company.

People act like all this money comes out of insurance companies' profits. Cigna's (to pick a random example), operating profit margin is 6.5%. There isn't this fat margin that insurance companies can use to offer additional benefits without raising rates. That's just the math.

Saying that this is about what "benefits the insurance companies" is gas lighting the public. Lifetime caps insure that you, the ratepayer, aren't on the hook for unlimited liability. Now, I personally am willing to pay higher rates so people don't die when they hit their lifetime limit. But don't piss on my leg and tell me its raining, acting like the money isn't coming out of my pocket.

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The entire point of insurance is to pool risk so that a bunch of people together pay reasonable amounts, instead of a few people paying enormous amounts and the others paying less. Lifetime limits give you lower rates in exchange for making the insurance much less like actual insurance.

If we’re talking about “don’t piss on my leg and tell me its raining,” don’t sell me “health insurance” that will leave me high and dry if I ever really need it.

It's absurd to say that imposing a limit is somehow misleading for something sold as "insurance." "Actual insurance" almost always has a policy limit. Everything from car insurance to corporate liability insurance has a limit. I can't think of any "actual insurance" besides health insurance that doesn't have a limit.

Again, I'm not arguing against having health insurance be unlimited. I'm taking exception to your rhetorical mode, which I think is dishonest. By making the issue about the "big greedy insurance company," you obscure the fact that the public will be paying for these benefits. You're selling the public something as a "you can have your cake and eat it too" but that's a bill of goods.

Car insurance has no lifetime limit. The limit is either per year or per event.

Car insurance is sold in a 6-month or 12-month policy term, with a "lifetime limit" during that term. You can buy a new policy at the end of the term, but the insurance company isn't obliged to sell it to you.

Is there an explicit limit, or is it just implicit based on how many crashes you can possibly get into and get repaired within the policy period?

There are very explicit limits that you select when buying car insurance.

Per incident, though, not total, isn’t it?

Hmm, you’re right. I always figured the non-minimum limits were per term. This Geico policy document I’m reading specifically states it’s per incident.

Health insurance was typically sold in annual terms, with annual, lifetime (actual lifetime), and often per-event limits. Health insurers were not obliged to sell you the same policy at the same rate, the same policy at any rate, or any policy at any rate, either.

My renter's insurance technically has no lifetime limit either, but they declined to renew my policy for another year after I made a single claim.

No other insurance is like health insurance in terms of the consequences of having a cap (not being made fully whole vs being left to die).

FWIW, insurance in other countries has limits, but rather high ones.

For example, my private liability insurance (50 EUR/a premium) is limited to 50 million EUR/event. So, yeah, if I ever accidentally create 60 million EUR damage (in one fell swoop), I'll be broke.

My travel health insurance is 12.50 EUR/a, and pays 100% of medically necessary out-patient and hospital treatments (for an unlimited number of trips up to 8 weeks), as well as repatriation, without limit. (This works, presumably, because if shit hits the fan, they'll fly you home and hand you off to the normal health insurance).

I can't emphasise enough how good it is to be in a civilised society where the existential risks are covered and shared. Furthermore, because they are borne by someone (either insurers or gov't), there are also experts dedicated to managing them, and reducing them.

It all works because everyone is insured, so the insurers don't have to worry about adverse selection.

This raises a really important point. A limit that’s basically impossible to hit is very different from a limit that you’re basically guaranteed to hit if you have a major problem.

It's also how single-payer healthcare works in the majority of countries that have it.

The problem is simple - in most developed countries, health insurance doesn't bankrupt the people it serves. It also doesn't have policy limits for common terminal illnesses.

So why does this happen in the US - a country with insanely high costs and relatively mediocre health outcomes?

The problem isn't insurance, it's the influence that unregulated privatised insurance has had on health industry costs as a whole.

Hospitals, medical professionals, pharma companies, and insurance companies are all primarily motivated by profit, and will price gouge patients to the maximum extent possible.

Insurance companies may be regulated intermediaries, but in reality many insurance companies are actually owned by hospital chains.

They simply provide a layer of regulated bureaucracy that disguises and legitimises the price gouging.

So while technically it's true that insurance companies have regulated margins, it's also a misdirection. The true role of the insurers is to provide corporate and bureaucratic cover for the outrageous sharking and exploitative profiteering in the rest of the industry.

Customers - i.e. patients - most certainly do not benefit from this arrangement. Shareholders and CEOs very much do.

> It's also how single-payer healthcare works in the majority of countries that have it.

Only a couple of countries actually have single-payer healthcare[0]. For those that do, treatment for complex, expensive conditions like cancer is regulated by the government much more strictly than in the US, with the result that patients have far fewer options for (covered) treatment. Incidentally, those countries, like the UK, tend to have dramatically worse cancer survival outcomes than the US does.

[0] The UK (if we ignore the divisions between the NHS in England, Wales, Scotland, and Northern Ireland) is one of the only ones.

Do you have any citation for the "dramatically worse" claim?

>in reality many insurance companies are actually owned by hospital chains.

Huh? In the US, Kaiser is the only integrated provider of insurance and healthcare that I know of. It actually is a fairly good model. Otherwise Cigna, Bluecross etc.. are strictly insurance companies that have contracts with other providers to provide care to their members.

The entire point of insurance is...

Oh good, we're going to hash this out from the very beginning.

I don't have any other insurance policies with unlimited caps. My home, auto, liability etc all have limits. Why is healthcare special in this regard?

Those are all inherently limited by the replacement cost of the insured item. With health insurance, there is no replacement cost.

So you want the insurer to provide insurance with unbounded downside? OK. But don't be surprised when the price of this insurance is very high.

I don’t understand why this is only a problem in the US. Are people so sick over there, are they continuously poisoning or shooting each other? Heck, even their life expectancy is not top notch.

If you actually want insurance, then that is exactly the right way to phrase it.

The purpose of insurance is to provide me a way to pay for disasters that I otherwise could not afford. To that end I make payments that, on average, leave me poorer. But since I can afford the payments and can't afford the disaster, it leaves my expected quality of life better off by reducing the variance in my expected outcomes.

When I am paying a premium to pay for normal things that I can actually afford, that is not serving as insurance. It is now just a bad deal for me, pay extra for a middleman that I have no reason to want.

I may not want that middleman, but health care insurance companies want to be one. They therefore want me to pay a premium to them for things that I could have afforded, and not cover things that I couldn't afford. To that end they work to construct deals with employers+government so that employees don't have a viable alternative to entering this deal no matter what my opinion is.

This would give them a large amount of business with a guaranteed profit margin. And leaves me uninsured exactly when I would have wanted to be insured. I understand exactly why they want to be in that line of business. But none of the rest of us should support that.

Incidentally, while we are at it, the ACA has a really bad perverse incentive. As you say, 80% of premiums have to go to medical care. Which means that if health care providers charge more, then "insurance" companies are allowed to profit more.

Now look at this from the point of the insurance company's CEOs. As long as they can predict the growth in medical expenses, growing medical expenses are good for their bottom line. Where then the incentive for cost savings?

Better yet, if they know that some of those medical expenses are fraudulent and can readily expose it, they can always keep their predictions of expenses in line with the reality by exposing just enough fraud to make their predictions accurate. This is an incentive to turn a temporary blind eye to fraud.

And so the ongoing explosion of medical expenses is good for insurance companies.

Similarly, they've largely stopped negotiating and just raise rates and premiums.

The scenario the parent poster is describing is where ACA is repealed and replaced, and presumably that replacement would also do away with the 80% medical loss ratio. In that scenario the insurance companies will likely just not reduce premiums from what they are today, netting them a huge windfall.

This is also why states like Alaska have seen ACA premiums fall over the past year or two. They instituted a state-wide reinsurance program, which means insurance companies' losses are capped at a reasonable amount per claim, then the state comes in and pays for the rest. This reinsurance program is funded in sort of a complicated manner, but basically it funnels the ACA tax credits that would have been paid to taxpayers, absent the reinsurance program, into the reinsurance program.

Rates go down when insurance company losses are capped, either by a lifetime or annual benefit limit or by legislation that says they'll be made whole, because losses are predictable.

Even before the ACA, most money from premiums was paid out in benefits: https://www.healthaffairs.org/do/10.1377/hpb20101124.949788/...

> According to an April 2010 report prepared by the Democratic staff of the Senate Committee on Commerce, Science, and Transportation, the nation’s largest health insurers in 2009 had medical loss ratios ranging from 68 percent to 88 percent in the individual market; 78 percent to 84 percent in the small-group market; and 83 percent to 88 percent in the large-group market.

For major medical plans, sure. Short term plans (which are still unregulated and should not be allowed to use the term "health insurance") generally have MLRs in the neighborhood of 50%.

Also keep in mind, prior to ACA buying a major medical plan without through a large group required one to have no preexisting conditions. If you had one you were either denied or got an exception written into your policy that said they didn't have to cover anything related to that thing. That's one of the other major things that ACA did away with, and another reason premiums are higher.

United Healthcare's CEO received $17.4 million in compensation last year. I don't know anyone on the GS pay scale making that. That excessive compensation could've been directed towards healthcare delivery instead of padding someone's pockets.

Private insurance is beholden to shareholders, universal healthcare is beholden to citizen stakeholders. It's plainly obvious that the private insurance market in the US has failed us. Politics aside, from an economic efficiency perspective, it would be illogical for us to continue to operate the system as it currently exists.

EDIT: This isn't an emotional appeal, it's an economic appeal to cut the fat of unnecessary, expensive bureaucrats who have no accountability except to their shareholders, and no involvement in the delivery of care. Private insurance interests are in the collection of their piece of total revenue, not care delivered.

> Either way, the public is on the hook if the system is more generous.

The public ends up on the hook regardless, whether that's through higher premiums, government subsidies, or diminished quality of life and lower life expectancy. Socialized losses, privatized gains.

UHC paid out over $100 billion in care. How much it pays its CEO is completely irrelevant, except as an emotional appeal and rage bait. The system may not be functioning properly, but it has nothing to do with how much UHC's CEO makes, or shareholders make. (UHC's profit margin is just 7.5%).

The decision of whether to have limits on how much you're willing to spend for one case exists whether you have a private system or a public system. Either way, the public is on the hook if the system is more generous.

What strikes me as disingenuous about your posture is this: You are basically arguing that the insurers are introducing lifetime caps (making life much worse for the affected individuals, basically nullifying the whole point of insurance) not out of concern for their profit margin, but out of the goodness of their hearts to keep the premiums low for the paying public. That strikes me as unlikely.

Of course, if you don't impose these limits, the costs must be borne by the collective insured. However, if there is one government/single payer insurer, nobody would ever dream up the insane idea of saying, hey, if you're really fucked, we'll stop paying your health bills, so we can shave off a few dollars of everyone's premiums.

> not out of concern for their profit margin, but out of the goodness of their hearts to keep the premiums low for the paying public.

Lowering premiums allows insurers to win customers away from competing insurers. It's e.g. why HP sells business laptops with awful LCD panels. It's not because HP makes fat profits on each laptop (their margins are razor thin). It's because the lower price allows them to take sales away from competitors.

> However, if there is one government/single payer insurer, nobody would ever dream up the insane idea of saying, hey, if you're really fucked, we'll stop paying your health bills, so we can shave off a few dollars of everyone's premiums.

Of course they would! You think government bureaucrats aren't under pressure to control outlays? https://www.dailykos.com/stories/2017/5/8/1660050/-Death-Pan...

> In the UK, the NHS has a system based on QALYs — quality-of-life years. In crude terms, it values a year of normal health at £30,000, so if the proposed course of treatment will cost £150,000, the patient would need to have good prospects of having five years of normal life once the treatment is over to get it. For a patient who would need assistance to live because they can’t walk more than a few steps or what have you, the QALY figure might drop to £15,000, so the patient would have to have an expectancy of 10 years of assisted life to get the treatment.

Note that in the example in the story, the lifetime limit was $500,000, or 380,000 pounds. In the UK, the guy would've needed to live 12-13 years to justify spending that much. He had an aggressive cancer and died a year later, while receiving treatment. Under the U.K. system, the NHS would've been willing to pay well under $100,000 with that prognosis.

The idea that "one government/single payer insurer" systems wouldn't have these sorts of limits is the product of the exact gas-lighting I was complaining about. By focusing on the insurance companies, and the fictional fat profit margins out of which benefits can be paid for with no cost to rate payers, it totally obscures the fact that, at the end of the day, a functioning healthcare system needs to make decisions about when to cut off care.

I appreciate the informative reply.

> Lowering premiums allows insurers to win customers away from competing insurers.

Absolutely. That's what leads to competition with insurance plans that are superficially more attractive ("hey, cheaper premiums"), while basically nullifying the benefits of insurance (by making you and your family broke when things turn bad - and then you die).

The alternate system doesn't need to optimise for "optics" & sales, but can optimise eg for QALYs.

Of course neither system can overcome the fundamental issue that you can't pay for unlimited treatment for all. But quite evidently, the US system leads to harrowing quandaries for many ill people and their families, worse overall health outcomes, higher overall costs, and richer health insurance CEOs than what's done in all other developed countries; and I still don't understand why you appear to defend it.

> But quite evidently, the US system leads to harrowing quandaries for many ill people and their families, worse overall health outcomes, higher overall costs, and richer health insurance CEOs than what's done in all other developed countries; and I still don't understand why you appear to defend it.

We're specifically talking about cancer treatment in this thread, where the data is pretty clear: the US has dramatically better survival rates for cancer in the US, and the gap is even wider for forms of cancer which are considered highly treatable.

Yes, people in the US pay a lot for cancer treatment, but the overall outcomes are not worse.

> the US has dramatically better survival rates for cancer in the US,

No, the US massively over-tests and over-diagnoses cancer at very early stages, but this does not lead to better quality of life nor to longer life.

Overdiagnoses?

I thought the US had bad preventative healthcare.

Any sources you’d like to share? Sounds like BS.

Over diagnosis is a well known problem in the US.

https://scienceblog.cancerresearchuk.org/2018/03/06/overdiag...

https://academic.oup.com/jnci/article/94/13/981/2519795

> No, the US massively over-tests and over-diagnoses cancer at very early stages, but this does not lead to better quality of life nor to longer life.

Prostate cancer is considered one of the most treatable forms of cancer. It's lethal if not treated. But given the proper intervention, a person can live for literally years (if not decades). The treatment isn't fun, but it's very effective, and most people consider it better than, you know, death. As of a few years ago, the survival rate for people with prostate cancer was over 90% in the US. People are actually more likely to die from an unrelated cause than they are to die from prostate cancer after treatment.

The UK, on the other hand, has an abysmal track record of treating prostate cancer - worse than every other OECD country, in fact. As of a few years ago, the survival rate was barely more than 50%. That is shameful , and it's ridiculous to dismiss that as "overdiagnosis".

Buit this is the point: The US appears to have better 5 year survival rates for prostate cancer because they massively over diagnos cancers thatwould otherwise not kill the patient. Once you've detected these cancers you don't need to provide any treatment at all, your 5 year survival rates increase. But when you do treat all these men you significantly decrease the quality of life for many of them without providing any benefit.

https://academic.oup.com/jnci/article/94/13/981/2519795

> Background: Overdiagnosis of clinically insignificant prostate cancer is considered a major potential drawback of prostate-specific antigen (PSA) screening. Quantitative estimates of the magnitude of this problem are, however, lacking. We estimated rates of prostate cancer overdiagnosis due to PSA testing that are consistent with the observed incidence of prostate cancer in the United States from 1988 through 1998. Overdiagnosis was defined as the detection of prostate cancer through PSA testing that otherwise would not have been diagnosed within the patient's lifetime.

> Methods: We developed a computer simulation model of PSA testing and subsequent prostate cancer diagnosis and death from prostate cancer among a hypothetical cohort of two million men who were 60–84 years old in 1988. Given values for the expected lead time—that is, the time by which the test advanced diagnosis—and the expected incidence of prostate cancer in the absence of PSA testing, the model projected the increase in population incidence of prostate cancer associated with PSA testing. By comparing the model-projected incidence with the observed incidence derived from the National Cancer Institute's Surveillance, Epidemiology, and End Results (SEER) registry data, we determined the lead times and corresponding overdiagnosis rates that were consistent with the observed data.

> Results: SEER data on prostate cancer incidence from 1988 through 1998 were consistent with overdiagnosis rates of approximately 29% for whites and 44% for blacks among men with prostate cancers detected by PSA screening.

> Conclusions: Among men with prostate cancer that would be detected only at autopsy, these rates correspond to overdiagnosis rates of, at most, 15% in whites and 37% in blacks. The observed trends in prostate cancer incidence are consistent with considerable overdiagnosis among PSA-detected cases. However, the results suggest that the majority of screen-detected cancers diagnosed between 1988 and 1998 would have presented clinically and that only a minority of cases found at autopsy would have been detected by PSA testing.

That's a lot of people being put through unpleasant surgery that has considerable side effects for no benefit.

> Buit this is the point: The US appears to have better 5 year survival rates for prostate cancer because they massively over diagnos cancers thatwould otherwise not kill the patient.

The methodology of that study is highly suspect, but even if we took it at face value - the magnitude of the effect that they propose is nowhere near enough to explain the difference in survival rates by overdiagnosis alone. It's a drop in the bucket.

> In the UK, the guy would've needed to live 12-13 years to justify spending that much. He had an aggressive cancer and died a year later, while receiving treatment. Under the U.K. system, the NHS would've been willing to pay well under $100,000 with that prognosis.

This is simply untrue.

There's too much wrong with your link to debunk it. It's almost entirely wrong. Mostly, there is a different QALY threshold applied when drugs are used for people with life expectancy of under 24 months, and also they're using an unsourced value for QALYs.

> How much it [United Health Care] pays its CEO is completely irrelevant, except as an emotional appeal and rage bait.

That's a pretty significant exception, from the perspective of "designing" a social order.

It's a brute fact that humans measure their well-being in part by comparing their situations to those of their neighbors and of others with whom they come into contact. [0] People can become disgruntled, even envious, when they discover that they want things that others have but they don't. It's a fact of life: natural selection has hard-wired us to experience at least mild envy, which motivates us to try to improve our lot (by fair means or foul).

So how should we respond to that brute fact? I used to think that folks who resented high executive compensation should just get over it, or go and earn such compensation themselves. I remember listening approvingly to the old Eddie Chiles TV commercials: Don't have an oil well? Get one! [1]

These days, on the other hand, I'm increasingly realizing that this is unrealistic, and also that we broadcast an unrealistic message: You, too, can make it to the executive suite and pull down the big bucks if you just work hard enough and smart enough, starting when you're young. But that's akin to saying that if you just work hard enough and smart enough, you can play for an NBA team or win the British Open golf tournament. That's certainly true for a few people; for the vast majority, though, that message seems delusional and perhaps even fraudulent.

That in turn has led me to think that high executive comp, and the sense of vague disgruntlement among others to which it contributes, might be akin to the unremarkable public water pump that was discovered to have been the source of London's deadly 1854 Broad Street cholera outbreak, in which more than 600 people died in just a couple of weeks: [2] To outward appearances the water pump was innocuous and beneficial, but in reality it was silently poisoning the community and attacking the social fabric.

[0] https://academic.oup.com/qje/article-abstract/120/3/963/1841...

[1] https://en.wikipedia.org/wiki/Eddie_Chiles

[2] https://en.wikipedia.org/wiki/1854_Broad_Street_cholera_outb...

In the pre-ACA world, those who were healthy might save in rates by opting into lifetime caps, but those who didn't want the lifetime caps -- i.e. those more likely to get sick -- ended up paying more than they do now. The whole idea behind the ACA is to equalize the playing field between healthy ratepayers and sick ratepayers.

> I don't understand why you'd phrase it this way. Under the ACA, 80% of premiums have to go to medical care. A dollar saved providing care disproportionately benefits the premium payers, not the company.

The retained premiums rule and the lifetime limit ban were both adopted as part of the ACA; lifetime limits only existed before the ACA, and indeed benefited the insurance companies.

> Lifetime caps insure that you, the ratepayer, aren't on the hook for unlimited liability.

No, ratepayers are not on the hook for unlimited liability without lifetime caps. They are on the hook for insurers expected costs plus capped profit margin, given the insurer being subject to uncapped liability for covered, medically necessary services, but the ratepayer’s exposure is well-defined upfront.

If an insurance company underestimates tail risk then it may not be solvent when it's time for you to make a claim. Not sure if this is what was meant, but a policy holder always assumes some risk even with caps.

Unless the insurance industry is insolvent you don't really have to worry about that. Any company you're buying insurance from has reinsurance against abnormally high payouts.

This makes the risk effectively zero since if the 'turtles all the way down' system can't pay out then we're probably in a state of national emergency.

> gas lighting the public

I think it is merely misleading. Gaslighting is far more persistent and requires far more deliberateness than writing a comment on a forum.

I think that operating margin might not be a good metric for measuring this. Although, I do think that there is too much focus on the 80% rule in general.

I mean, if all of the insurance companies are really close to that already (or even marginally above it), then it shouldn't matter either way, right?

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