myrkul999 on May 24, 2012, 06:22:21 pm
It all depends on the kind of policy, most of them can be most aptly described as limited forms of lottery.

I see it sort of the other way 'round... the insurance agency is gambling that you won't cash in before your premiums have covered the cost of your payout. Which is why higher risk = higher premiums.

Arondell on May 24, 2012, 06:58:30 pm

"May be"?  Is that like an "if"?   Does anybody have some solid facts, or are we just guessing as to the reasons they "still manage to turn a profit"?


My only point was they manage to do so despite government restrictions.
Businesses have to make a profit to stay in business--whatever it takes, regardless of the amount of regulation that they are buried under.  No business can stay in business without customers.  Unless the government is going to outright subsidize the business or industry to keep it going.

Quote

I never said they are not allowed to turn anyone down. Please debate honestly. I said they were not allowed to turn down people with pre-existing conditions, and they are not allowed to cancel policies of people who fall critically ill.

From http://en.wikipedia.org/wiki/Insurance :

"Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment."

I don't see anything here that requires refusing to cover people pre-existing conditions or catastrophic illness.

Because that's too vague a definition to be very useful in understanding insurance.  Why does health insurance not cover annual checkups, for example?  Because an annual checkup isn't a "risk" or an unexpected situation.  If someone has a pre-existing condition or illness, then that's a known factor, not a possible risk that the person may or may not encounter. 

De-lurking here.  While not jumping into the debate as such I thought I would mention my otherwise high deductible health insurance covers 100% of the cost of annual checkups.(Also vaccinations.)  I always figured the point was because its often cheaper to deal with potential problems if they are caught early.  I don't really think it affects your overall argument but if your going to use a specific example it should be pointed out that the example is not universally true.

myrkul999 on May 24, 2012, 08:29:47 pm
De-lurking here.  While not jumping into the debate as such I thought I would mention my otherwise high deductible health insurance covers 100% of the cost of annual checkups.(Also vaccinations.)  I always figured the point was because its often cheaper to deal with potential problems if they are caught early.  I don't really think it affects your overall argument but if your going to use a specific example it should be pointed out that the example is not universally true.

Fine point, here. Preventative medicine is often much cheaper than curative. This also illustrates that different agencies will have different policies, and each person can choose the one that suits them best.

ex-Gooserider on May 24, 2012, 08:54:29 pm
If you have insurance that covers checkups or other "routine" costs, you can safely bet that the "wholesale costs" of those services is included in your premiums.  Yes, it may in theory lower costs by catching things early, but I've never seen convincing evidence that the payback is enough to cover the exam costs in most cases...  (there are exceptions for certain specific treatments / illnesses - many of which I have to worry about as a paraplegic - UTI's are expensive, single use disposable catheter supplies reduce UTI's enough to make it less expensive to supply them than to have patients attempt to clean and reuse them...  Likewise an expensive seating solution that prevents a pressure sore, and thinks of that sort.)

One of the reasons for extremely high insurance costs in the US is that current policies are required to provide for a great many services that fall in the "routine" category, or are high cost 'discretionary' (as in non-life essential) services (i.e. 'fertility assistance') all of which have their costs included in the premiums we all pay.  

In a few cases, it is possible to get a high deductible "catastrophic" policy that ONLY pays for serious illnesses / accidents, and not any of the routine stuff, or costs of things like fertility treatments and other 'non-life critical' services - and those policies are MUCH less expensive

Presumably an AnCap society would have a variety of insurance options available to consumers, ranging from something like the "everything" policies of today, to the previously mentioned 'catastrophic' policies.  However since people purchasing the cheap policies wouldn't be part of the "pool" contributing to the "everything policies" the premiums for the full coverage stuff would be higher, but this isn't all that bad...

Insurance companies presumably WOULD also end up doing a certain amount of "social engineering" via premium costs, but this is something I would see as less objectionable than the gov't attempting to force it on us...  It is pretty obvious that certain activities increase or decrease one's risk of accidents / illnesses, and I don't think it's unreasonable for an insurance co. to have surcharges or discounts for those things....  The market will keep those appropriate, since companies that charge unreasonable surcharges can be undercut by their competition, or those giving oversized discounts will lose money...  However if your insurance company charges extra if you ______ then you might or might not want to keep doing it, depending on if you find the pleasures are worth the surcharge or not...  This kind of voluntary 'social engineering' doesn't seem at all unreasonable...

ex-Gooserider

myrkul999 on May 24, 2012, 09:27:41 pm
Once insurance starts covering non-emergency things, it's a pretty predictable feedback pattern that causes the huge insurance and medical costs:

  • Insurance covers routine checkups, etc, removing the price signal from these procedures;
  • Price signal removed, these procedures begin being used more often (arguably this is a good thing, but it leads to some unfortunate consequences);
  • With increased usage of the routine procedures, insurance companies start paying out more;
  • With increased payouts, insurance agencies raise their premiums (typically across the board);
  • Increased premiums agitate clients, and since they're paying more, they want to get more;
  • The insurance agency acquiesces, covering more procedures, removing the price signal from those;
  • Repeat.

Now, there's a second loop with the hospitals/doctors, but it's basically the same. Doctors (naturally) want to get more money from the procedure, and increase their prices. The consumers never see this, except on the statement to the insurance, so the doctors never see the loss signal from too-high prices. Thus, the prices keep rising, making insurance vitally necessary to get these procedures (and exacerbating the increased payout/premium cycle), perpetuating the cycle.

There are many many more factors, but that's the root problem.

Scott on May 25, 2012, 04:38:09 pm
There's another problem with the 3rd-party payment system which shows up at the micro level. For example:

At the local clinic we use, there are two physicians and two nurses. PLUS a receptionist and THREE clerks to keep track of all the insurance billing, and making damn sure every 'i' is dotted and 't' crossed on the Medicaid/Medicare forms, as penalties for even honest errors are draconian. This creates a "cost wedge" between what the clinic must charge for services and what the physicians and nurses can earn from their practice.

Andreas on May 27, 2012, 01:00:53 pm
Hey Scott, do you remember the air-purification question you asked me?
I suggested a sort of buy-in-society, where the arriving immigrants to the space station are required to buy a share (paying in needed imports, ideally) of the station as a whole. This ensures a couple of things; first of all, since they buy a share, the residents will not be tempted to sell out the immigrants by allowing more immigrants in than the society can absorb (letting them fall to poverty levels and then flushing them out the airlock, for instance). The share ensures that the population will grow in step with the economy and capacity, else the present residents suffer (as all shares are equal).
It also ensures that the negligible costs of air and water purification (and heat venting, which might be a greater concern than heating) can be safely absorbed by the dividends on the share.
That same system could form the basis of very cheap "insurance", since the dividends on the share can form the basis of an emergency loan. Sure, eventually a very unlucky person could suffer such horrendous misfortunes that their share can't carry the load, but if that's not a call for charity, what is?


It still doesn't solve the childbirth aspect, so it needs specifying further, but it does do interesting things for a lot of those hard questions. It'd be a shareholder/cooperative/capitalist system.

Arondell on May 27, 2012, 07:19:25 pm
At the local clinic we use, there are two physicians and two nurses. PLUS a receptionist and THREE clerks to keep track of all the insurance billing, and making damn sure every 'i' is dotted and 't' crossed on the Medicaid/Medicare forms, as penalties for even honest errors are draconian. This creates a "cost wedge" between what the clinic must charge for services and what the physicians and nurses can earn from their practice.

Years ago I saw a youtube video of a doctor giving a presentation about why he decided not to accept any insurance plans at the clinic he ran.

His reasons were two fold.  One reason was that he felt that all the contracts the insurance carriers required him to agree too were unethical.  I don't remember all the details but the one that really bugged him was that the insurance carriers *required* that he charge them less then people that came to his office and paid out of pocket.

The other was that because his office didn't have to keep track of the administrative details involved with accepting various insurance plans he saved a great deal of money which he passed on to his patients.  He also had a very clear price list of every service he provided posted in his office.  Despite most of his colleagues saying he was nuts before he opened he turned out to be quite successful.

customdesigned on May 28, 2012, 10:26:03 am
Years ago I saw a youtube video of a doctor giving a presentation about why he decided not to accept any insurance plans at the clinic he ran.
Our high-deductible insurance covers use of such doctors with no problems.  They two deductibles, both the same size, one for "in plan" and the other for "out of plan" expenses.  So there would be no problem using such enlightened out of plan doctors exclusively - except that it is hard/impossible to find hospitals of that mindset should something major come up.

Scott on May 28, 2012, 10:35:31 am
I read another story about a year ago about a physician in New York who ran a "subscription" practice. That is, each patient would pay an annual subscription fee of $100, and would then receive general services (no specialties, and not including lab work that had to be done out-of-house) at no charge. The insurance companies got wind of this and were trying to shut him down for running an unregulated insurance service. I never heard how that turned out.


Andreas on May 29, 2012, 01:45:26 am
Let's take it one step further, with the subscription starting at the med-school level (perhaps indexed, to cover loss to potential drop-outs or tragedies), and we take "private doctor" to the logical conclusion. That would achieve social mobility too, making high-paying jobs more accessible to those without means to individually pursue the educations required.

ex-Gooserider on May 29, 2012, 08:51:18 pm
Supposedly there have been cases where "underserved" communities have attempted to get better medical care by contracting with medical students to pay their costs in exchange for a certain length of time working as the town Doctor (presumably at low cost...)

Seems like a quite reasonable idea to me, but my understanding is that the gov't has ruled that such agreements aren't enforceable...

ex-Gooserider

Andreas on May 30, 2012, 12:55:32 am
Supposedly there have been cases where "underserved" communities have attempted to get better medical care by contracting with medical students to pay their costs in exchange for a certain length of time working as the town Doctor (presumably at low cost...)

Seems like a quite reasonable idea to me, but my understanding is that the gov't has ruled that such agreements aren't enforceable...

ex-Gooserider

Well, the government would say that, right?
I figure the easiest and fairest way to do it would be to set up a formal debt arrangement, a debt that can't be called in unless certain conditions are met.

Warren on June 07, 2012, 04:37:22 pm
i thought it was understood that we were referring to demand deposits. if one were to try to withdraw a time deposit, one would forfeit not only the interest already accrued but also have to pay a percentage of the principal as penalty.

as for free banking, it is morally reprehensible since it attempts to legitimize the fraudulent practice of fractional reserve banking. free bankers claim that theres nothing wrong with FRB when it is the direct cause of inflation. abolishing a central bank will not end inflation, since paper money is still being printed, only now its in a decentralized manner.  a bank cannot loan out money it does not have. and making agreements with borrowers to be paid back in real money after lending out paper money is just plain fraud.

the difference between 100% reserve banking advocates and free bankers is whether printing money certificates in excess of loanable funds (also referred to as fiduciary media) is fraud. 100% advocates claim it is and that bankers found guilty of it should face criminal charges. FRB is not harmless by any means, and those who sought to profit from it should face the consequences.

There is quite a lot of confusion to clear up. If you look at the history of free banking in Scotland and Canada you will notice a decide lack of of panics and runs and that's because the system worked very well and the customers knew there was very little risk of losing their money. Below I talk of the era from @1700 to 1844 in Scotland.

Firstly, it is not FRB. Historically the banknotes that were issued were as loans that were backed by the collateral of the person getting the loan. In other wrods a person had wealth but was not liquid and did not want to sell his stuff so he took out a loan on the value. Standard stuff. Then the bank would issue him notes for that amount. These notes were general claims on the asset of the bank not for gold specifically.

Secondly, the banks discovered that they could hold less than 2% of their assets as specie (one bank was as low as 1/2%) because there was so little demand for coins. Instead they purchased interest-bearing securities such as stocks, bonds, annuities, and bills of exchange. This could be easily liquidated if there was a sudden need for gold. Why should the bank forgo the interest they could earn and pay the storage costs for gold that most people did not want? The 100% reservists have a fetish for a lousy business model and they demand everyone adhere to it.

Thirdly, deposits were very safe.   Very little money was lost, one study covering 40 years of activity  found losses  averaged around a 1000 Pounds a year total over a population of some 3 million which compared to the gain from having an interest bearing account is virtually no risk at all for individual customers.

The deposit were safe because of the competition between banks. Once every sum of days representatives of the banks would meet and exchange notes at a clearing house. Any bank that had notes in excess of the clearing had to pay gold to retire them. And since the gold reserves were so little banks had to be very careful because if they blew off their gold their securities were next and if those went then it was the actual assets of the stockholders.

In those days the banks were unlimited liability joint-stock companies. The investors were ultimately on the hook  for ALL losses. This tends to focus a person's mind on proper business practices.   There were bank failures of course notably the Ayr and a few others but this was not a problem for the man on the street.

So you had multiple layers of protection:
1. Gold
2. Securities
3. Loan Portfolio could be sold off
4. Physical assets of the bank
5. Investors personal wealth
6. The other banks...

After a failed bank exhausted steps 1-5 the other banks would step in and buy up the outstanding notes at face value.  

Does that sound like a fraudulent system to you?

Fourthly, it was not inflationary. Well-run banks (and most of them were) only lent on good collateral which meant in the case of a default the collateral would be sold thus providing the means to retire the outstanding notes. Also as businesses created new products and jobs there was both more new things to buy and people with money to buy them thus the new money was spread out amongst more people and things.  So per capita it (mostly) stayed level. http://www.bankofengland.co.uk/publications/Documents/speeches/1999/speech44.pdf That link is for the UK in general but Scotland is included by default, obviously.

Fifthly, fiduciary media is a cost saving device. Real-money coins can be altered and thus lose value. This introduces non-uniformity and that makes transactions just slightly more difficult. Second they are heavy, don't fold, and are had to make change for. It's like having nothing but $20s and $50s in your wallet and no one has change. Sure you make smaller coins but tiny coins have their own problems. People used to have to run a tab and then pay when it got to a point that matched the lowest coin. In another area currency was so lacking that a mine owner would gather groups of workers together and hand over a single gold Sovereign  and then the workers went to a pub and drank enough that the pub owner could make enough change for everyone to get paid.

With fiduciary media you can design a currency architecture where it is possible to have notes and base coins that cover every level of possible transactions.

Sixthly, criminal charges? Really? How about you bank the way you want to and I'll bank the way I want to?


Other gold standard thoughts:

You can have a GS without any gold in the official system. Just peg your currency's value to gold at some rate and keep it there.

The issuer of currency need not be a redeemer of it. As long as there are others in the area who will exchange gold for paper you have redeemability.

None of the above is to be taken that I am opposed to real coins circulating as money. I rather like the idea.  

Nor am I saying  that people must reject 100% reserve banking. To each his own and all that. Just know that 100% liquidity does not imply solvency just as 2% liquidity does not imply insolvency.  And it's solvency that counts, not how much gold is sitting in the vault.

« Last Edit: June 07, 2012, 08:29:45 pm by Warren »

Andreas on June 08, 2012, 02:43:04 am
I don't think it's wise to claim that speculators=market compensation.
Just as likely, if not moreso, is that speculators are taking advantage of government involvement; speculators do not necessarily serve a good purpose.
Like all the nobel prize winning bozos doing Gearing, thinking they can walk on water until, oops, turns out it was a long walk off a short pier.
If all the money bet on quick speculation wins would be in stead spent on long term investments, the whole up-up-and-crash theme would be a thing of the past.

[edited:+long term]
« Last Edit: June 08, 2012, 01:29:05 pm by Andreas »