Illusory Follies Andrew Flanagan's Blog

10Jan/092

Health Insurance

Stethescope by LadyheartThat's right folks, you know where to come when you need only the finest steaming fresh folly! Just minutes ago, I saw a new post on the infamous Slashdot. Rather than comment on the site itself and have my comments lost in the masses, I figured I'd comment here and let them get them lost in this corner of the Internet.

So the idea of the article is that cheap and easy genetic testing is here now. This sort of testing can provide massive insight into potential health risks. There's a lot of info that can be mined out of this that can help determine statistical likelihood for certain diseases, genetic defects, etc.

So it makes sense that health insurance companies would be interested in this.

But the line (posted in the Slashdot summary which is why it caught my eye particularly) that gets me is this: "Piecemeal insurance is not viable in a world in which insurers can cherry-pick the most risk-free customers". I find this statement to be fascinating. Not because it's so amazing and revealing of the future but because it's so stupid.

Insurance is a way to manage risk. In all things in life, there's risk. Even the sure things in life (that's right: death and taxes) have spawned insurance products. The idea is that you pay a known amount of money now in order to prevent you from paying an unknown amount later. It's considered equitable (at least when we're talking about regular, private insurance). That is, both the insured (the entity mitigating risk) and the insurer (the entity shouldering the risk) are happy to be involved.

And this makes sense... If I have a large amount of cash, I can charge more than the statistical likelihood of the sum output of cash expected. Statistics can be wrong, but if I leave a large enough gap, I can make money as an insurer.

If I wanted to insure against the possibility that I would die on my next plane ride (I just wrote this out as "my next plane crash"... har!) , I could probably get some sort of policy that would insure me for this. I would pay some amount -- let's say $50 and if, in fact, I died in a plane crash, the insurer would pay out $500,000 to my next-of-kin. This makes sense -- there's an extremely small chance of me dying in a plane crash. Statistics are fairly readily available that show the likelihood of such a crash (they're small -- really Mom -- it's not dangerous to fly!)

This premium charge would be quite a bit higher if you were an experimental test pilot. (By the way, shouldn't they call them "test pilots for experimental aircraft" to avoid adjective confusion? As in, "Hey man, I'm just experimenting with this 'test pilot' thing!").

Hutt, Jabba theSo now the fun begins: people want health insurance. Health insurance has been getting more and more expensive and people in the U.S. are having more and more trouble even being qualified to receive it. This makes sense.

Most of us are fat and unhealthy (see picture). Our idea of a nutritious meal is one that has fried meat AND fried vegetables.

So of course costs are rising. Of course some people are deemed "uninsurable". Who wants to cover someone who has an estimated 90% chance of developing a disease or condition that will cost on average $750,000 to treat? The answer is: someone willing to pay premiums that even at those estimated probabilities will still yield a profit (which is no one).

So insurance always has to be equitable -- it always has to make sense for both parties or else it will not be "viable".

I think the reason the statement was made is this: People don't want insurance, they want to avoid problems. They don't want health insurance, they want health. Insurance therefore is viewed not as a tool of the free market that helps manage and mitigate risk, but a social institution that promotes the general well-being of people.

Yummy! (but expensive)!One could say that the statistical ties between tobacco usage and cancer/death, resulting in increased premiums for folks using tobacco, has put pressure on healthy behavior. Previously, an individual could choose to simply ignore this but would have to suffer the consequences of their actions (in expensive treatment or in simply shuffling off this mortal coil earlier rather than later). Now, when applying for life insurance, you see a dramatic difference between the two rates based on that sole attribute: Do You Smoke? The result (at least might be) a decrease in smoking rates since people drive down the price they pay by changing their lifestyle. This is great! At least as long the statistical likelihood is actually accurate.

OK -- people don't seem to  have a problem with this. But with genetics they do... The reason is that someone genetically predisposed to some potentially expensive condition has no ability to alter their circumstances. Essentially, there is no socially reforming affect upon this person. They simply must pay more to mitigate their risk.

From the market's standpoint, this seems to make good sense: With increased ability to predict risk (at least in theory), there's less waste as premiums be can fine-tuned to more accurate levels. Competing insurance companies can make tiny profit margins on policies with a highly predictable amount of risk (which saves consumers money).

But it doesn't "provide for the general well-being". So, oddly, government provided health care is essentially the same as a private insurance company that knows only statistic: Some people die, some don't. And the government will also up the premiums a little bit more for everyone who can afford to pay them because there are some who can't afford to pay anything at all -- even a low premium.

This is the concept. I suppose it's better than forced sterilization or elimination of Lebensunwertes Leben. That's another way to care for society.

CommunismSo, after all this, it comes down to the purpose of government. Can we provide a system where we can all be happy, from each according to his ability, to each according to his need? How well has that worked...? Should we try the other way to create a perfect, genetically pure society where equality becomes irrelevant?

I think the answer is neither. Life is tough. People die. Babies are born with horrible conditions. Some people are more likely than others to get fat, get cancer, get drunk. Can we ever really change that? Are disabled people the same as non-disabled people because we have a telephone-book-sized stack of laws that give them in equality in all things? Of course not. Life simply isn't fair.

Capitalism isn't the answer either. The thing that makes sense about capitalism is that it works with regards to motivating production. Production and effectiveness is a good thing for any civilization that wishes to remain one. However, capitalism provides no way of making life fair. Let's not try to coerce it and massage it into something it can never be.

So what about those people? The people who are born with horrible conditions or who are likely to develop them? Neither capitalism nor socialism can help them. We as people can. Instead of saying "Someone should do something about this inequality!" be the someone and stop passing the buck. We may not be able to make their lives longer or less painful -- even with unlimited medicine this is probably impossible. But we can make a difference in their life by developing relationships with them and loving them. I think the hardest of hearts out there can understand how much more a real, genuine friendship means to someone than extending a life of misery and depression yet another day.

So that's it! Your economic lesson for the day:  Love people and don't become commies!

7Jan/084

Fight the law, or let the law win?

I'm not a big fan of government (see Ron Paul posts below). I'm also sick and tired of the police state. Today on my way to work I was pulled over for using the HOV lane. Foolishly, instead of letting the officer write the ticket and getting it dismissed (it was before 5:00am and the HOV lane was open to all traffic) I pointed it out. He paused, looked annoyed and told me that I was speeding at 72 miles per hour ALSO. This is a little silly because I always cruise at 68-69. Yes, it's speeding and still technically ticketable but I've found that it's the speed that everyone cruises on that stretch of road. I'm very consistent with my speed and always use cruise control. If he had given me a ticket for 68 or 69 I would have grumblingly accepted it.

Anyway, I told the officer this but he ignored me and told me to "have a good night". As I tried to decide whether I should tell him it's morning or hand him a Ron Paul flyer (I had a bunch on the front seat) I realized that he had already scurried back to his car. A little vexed, I continued to drive to work. I was annoyed but figured I'd live with it.

Upon arriving at work, I realized that the ticket I had received said that I had committed a traffic offense on "N/B I-5 at S. 200th". This is plain silliness. I never take I-5 to work (I use the Valley Highway and then take I-405 around Seattle). He had neatly signed the area that read "I certify under penalty of perjury under the laws of the state of Washington that I have issued this on the date and at the location above.". Ironically, the form was automated (actually printed in his car) and I think the only fields that he had to manually enter are the citations themselves and the location. My only conclusion is that the officer was delusional. Everything fits.

I think I'll take a softer approach at the hearing but since I clearly didn't speed on I-5 on January 7 at 4:49am I think I have a good case. We'll see what the courts say.

Update: By the way, because I know I'm "near the edge" on the speeding thing, I think I'm going to make the assumption that the new, super-secret, real speed limit of the Valley Highway and I-405 is 65 instead of 70. I don't relish more run-ins. These guys have tasers and they're not afraid to use 'em!