CorruptUser wrote: Yakk wrote:
CorruptUser wrote:The reason that young/healthy people aren't buying insurance is because they are being charged the same rate as old/sick people. Let the companies discriminate, and they will quickly adapt their prices to get more people insured. That's kind of my profession's job (Actuary, soon) to do that. The problem most people have with that is that the people that expect to need the most care will have to pay the most cash.
Actually, you'd expect that any seemingly young, healthy person will be a presumed lemon.
By what logic?
People who are actually sick have a higher chance of seeking health care services. So the act of seeking health care actively is evidence that you are (or have reason to think you will be) sick, and sick people who actually look healthy and young are "lemons" as far as the health care industry is concerned.
Yakk wrote:When health care can be socialized (say, over the employees at a company), the lemon problem mostly goes away, and prices become reasonable. When it cannot be socialized (small business, individual purchase, etc), the lemon problem makes the costs stupidly high.
Explain. AFAIK, having it not socialized prevents the lemons from even getting the care. Which may not be fair to lemons, but the lemon problem doesn't exist.
The lemons can get health care. They just need to pay ridiculously high prices for the insurance, have some kind of long waiting time, exclude prior conditions, and pay out of pocket.
With enough money, anyone can get health care. Without socialization of risk, the lemon problem boosts the cost of insurance to pretty ridiculous levels (but, in theory, not (much) above just buying it directly).
Yakk wrote:An actuary, working on population dynamics, cannot solve the lemon problem because it is a problem of information asymmetry (I know more about my health than you do, and I can hide information about it far better than you can reasonably be expected to be able to pry loose for a reasonable cost), not of understanding the information that the companies have about the demographics of the person who wants to buy the insurance.
Umm, no. With access to all your information and medical history, plus a check-up and blood-work, there's very little you can hide.
I can get my doctors to lie in their charts (ie, if I lack insurance, don't give my real name, because I know anything in my medical history can be used against me -- my charts now say I'm Mary Sue, not me...), or avoid going to a doctor about a condition until I have coverage. A huge chunk of diagnosis needs honesty from the person being diagnosed. Not everything, but a lot of it.
And maintaining a "clean" health history just consists of visiting doctors, and saying "no, I'm good" in your own name.
People do this all the time with car insurance, where they omit accidents from their record if the damage is low enough (and deal with it privately), because the insurance industry uses minor accidents as a sign that you are more likely to get in a serious accident, and you end up paying more for the minor accidents in increased premiums than the minor accidents cost to pay off out-of-pocket.
Now, I suppose you could start paying for full body cat scans of every 20 year old that wants health insurance, get multiple specialists to look over it for signs of problems, wait a year and repeat the scan and see if anything has changed, and from that eliminate lemons. But at that point, you just added how many thousands of dollars to every single sign up for health insurance?
The other method is to include draconian clauses in your policies that let you kill the policy on some pretext if it turns out that the person is a lemon (sometimes, this has a time limit -- like "if you get sick in the first year, we can terminate your policy because we fell like it" clause. Of course, this simply makes getting the insurance an even worse mugs game for the young, healthy person, and is just another "lemon" cost.
Both of these are attempts to break the information asymmetry. But they aren't free.
Socialized insurance clears that lemon problem statistically -- be it in a company health plan (which is a form of socialized insurance), or a universal mandate.
Wanting to vary the price sharply depending on details of how expensive you figure the person is simply returns you closer to the non-socialized state. Once you increase prices significantly for a given policy level, it pushes the healthy people away, and pulls the lemons in, which inflates prices...