Hacker News Reader

Comment by marvin | Hacker News Reader

A completely free market in healthcare will absolutely not work. Insurance companies will drop everyone who has shown any form of uncommon illness - this is their natural incentive in the absence of regulation. Many serious and expensive illnesses are so rare that most insurance companies would severely curtail support towards these illnesses, with cheaper premiums and more customers as a result.

Libertarians are suffering from the same delusion that the communists did: In a world where humans are perfectly ethical towards each other and always put the public good ahead of their own interests, it will work perfectly. In the real world, it won't.

View on HN

I'm having difficulty parsing your prediction. Are you saying that in a free market, nobody would offer insurance against the possibility of developing a rare, expensive medical problem? Or that once you've developed an expensive medical condition, you'll no longer be able to get insurance against it? Or something else?

Its not just that.

The problem is that for the insurance to work optimally everyone have to chip in so that those that are healthy offset the cost of those that aren't.

In the US the young aren't getting insurance which is one of the reasons for the Offordable Healthcare Act. To force everyone to have an insurance so that economics become better.

Of course in reality the best possible system would be a single payer (tax based) healthcare system with some payment for usage but where no one can go bankrupt or be dropped or fall under the deadly pre-existing conditions clause.

Or a mandated private insurance like in Germany & Switzerland. Obamacare is one step of that way but it's so alien to US culture and have been so poorly implemented that on could fear for its future.

> Or a mandated private insurance like in Germany [...]

There is no mandated /private/ health insurance, there is just mandated health insurance in Germany.

See e.g. http://www.slowtravelberlin.com/guide-health-insurance-germa...

Thats true but I don't think that is as important for the point I am making, but sure.

Assume you were an insurance company executive and you wanted to maximize profit and you were indifferent to the plight of your customers. What would you do?

I'd release new products regularly, while increasing the insurance premiums of old products. Healthy people would just switch to the new product to avoid the price increase, but people with pre-existing conditions wouldn't be eligible so I could price-gouge them.

So you could get insurance against expensive medical conditions - but if you had to claim on that insurance, suddenly your premiums would start rising by 30% a year, and you would have no alternative because of your pre-existing condition.

The companies that didn't engage in this would then look expensive to healthy people and attractive to unhealthy people. And if the healthy (profitable) people leave and unhealthy (subsidized) people join, meaning premiums have to go up further, you could get a chain reaction putting them out of business.

To bolster this example, I hear from my parents that this is more or less what's happened to insurance premiums in Switzerland since some idiot in government deregulated the insurance industry.

I think a free market insurance system would basically end up paying out lump sums for various illnesses and conditions. Hospitals would publish average price lists and then insurers would advertise and pay based on that.

Get lung cancer? Here take $200k courtesy of your insurance. Only going to cost you $150k? "No problem, glad you found a cheaper place. Buy a nice gift for your wife with the difference"

There is no set cost for complex chronic diseases like cancer, so there is no way that could be published. No single case of cancer is exactly the same, and the course of it and how it responds to various treatments varies widely.

Sure it could. They would just have to categorize the major varieties etc. if you mean it wouldnt be 100% accurate well of course not as it is rough aggregate data. But it is very useful aggregate data.

Anyone would pay a slightly smaller premium in exchange for the awarded sum being limited to actual incurred/billed costs

Pretty good insurance company to be able to offer a smaller premium when they have to cover the exact same costs on average when they have 10x the overheads of a company that pays lump sums.

Not to mention you are by necessity limited by the hospital and doctors on the insurance companies approved docs list. No thanks; they don't have my interests at heart.

Not to mention the very real incentive for such an insurance company to stop paying for "problem" clients with long ongoing illnesses.

If 25% of lung cancer cases cost less than $150,000 to treat, 50% cost less than $200,000 to treat, 75% cost less than $250,000 to treat, 99% cost less than $500,000 to treat and 99.999% cost less than $2,000,000 to treat, how much would the insurance company pay out for lung cancer?

A completely free market in healthcare will absolutely not work.

It doesn't work because of other reasons. And libertarianism is quite irrelevant. A good economist can point out the flaws in economic markets...using economics. A marxist alternative is clearly from the wrong century and is irrelevant. The important point that govermnet semi-intervention is part of the problem is perfectly plausible. That is a different point than no co-operation is needed for a viable solution. People co-operate all of the time without the need for a "government solution". Try staring at people in the elevator or invading the personal space of someone on the NYC subway if you want to prove this point to yourself.

Would it be possible for charities to fund the medical costs of people with uncommon illnesses?

Of course, but then you're right back at where you started: Taxation.

Charities are much more common in the US than in Europe, because they cover services and treatments which are provided by the public sector in European countries. In the US, many of these services are based on voluntary donations and volunteering.

Of course, if the state is as corrupt as it is in the US, I understand the reluctance to pay more taxes. But in effect, charities do the same thing, except veiled by the fact that contributions are voluntary.

Reply on news.ycombinator.com