Should women pay more than men for health insurance?

by on May 17, 2017 at 1:07 am in Economics, Law, Medicine | Permalink

That is the query motivating my latest Bloomberg column, here is one bit:

Second, the higher health-care spending for women is partly because of services related to childbearing. Society may have an obligation to help out babies (and mothers), plus they will someday finance our retirement, so let’s make childbearing easy. That said, governments have numerous means of subsidizing childbearing — direct payments, tax credits, free clinical services and public education — and it’s not obvious that regulating insurance pricing is this best way to achieve this end.

And:

Uniform pricing also gives insurance companies less incentive to attract female policyholders. To be sure, as a matter of law the companies cannot turn women away. But if writing policies for women is less profitable, or perhaps unprofitable altogether, the insurance companies will allow or encourage their provider networks to evolve in a way that is more attractive to men than to women. Services for women, including for childbearing, might end up underprovided or stagnate in quality. That also would be a kind of differential treatment, with potentially dire consequences.

There is much more at the link, controversial throughout.  You’ll find plenty of overwrought reactions on Twitter, simply because I am saying there is a trade-off, and we do not yet know what is the right margin to seek.

1 kyle May 17, 2017 at 1:35 am

single payer or risk adjustment can make women more profitable to health insurance companies

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2 Hazel Meade May 17, 2017 at 9:38 am

yeah, no. Single payer would make insurance companies obsolete. Private insurance was literally banned in Canada until recently.

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3 Scott Mauldin May 17, 2017 at 10:08 am

Numerous countries have both baseline single-payer systems and private insurance companies for for complete care and advanced treatment. See France or Spain, for example.

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4 prior_test2 May 17, 2017 at 10:30 am

Not to mention Germany, Switzerland, and Austria, to cover the major German speaking countries.

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5 Someone from the other side May 17, 2017 at 1:23 pm

Switzerland has a mandate with a few pools but not technically single payer

6 Someone from the other side May 17, 2017 at 1:24 pm

And one of the differentiating factors for the pools is indeed gender, btw

7 prior_test2 May 17, 2017 at 1:43 pm

I was pointing out, perhaps inadequately, that in the ‘single payer systems’ of those three countries, people can also buy private and/or supplementary insurance.

8 prior_test2 May 17, 2017 at 1:46 pm

‘And one of the differentiating factors for the pools is indeed gender, btw’

Cannot speak for Switzerland, and my point was only concerning the ability to buy private/supplementary insurance, but this is definitely not true in Germany, and I would assume in Austria also, in terms of EU law not allowing gender discrimination.

9 David Wright May 17, 2017 at 6:36 pm

Germany is not “single-payer” in any sense except “more lefty than the US”. And Switzerland isn’t single-payer even in that sense.

10 Hazel Meade May 17, 2017 at 11:14 am

But that means richer people get better health care, which is abhorrent, right?

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11 prior_test2 May 17, 2017 at 1:56 pm

There is absolutely nothing abhorrent about people paying for a higher level of care, and I don’t know of a single German who would think that – neither do I, for that matter. After all, the German health care system is a private one, and those that can pay more are in a better position, a reality that is so obvious that no one feels a need to even bring it up in health care discussions here.

What the German health care system provides is a floor under which essentially no one is allowed to fall. A floor that costs a third less than the cost of health care in America, while being thoroughly comparable (better is always such a combative term to use, even when linking to the Commonwealth Fund repeatedly) to the health care that middle class Americans consider thoroughly acceptable.

These debates get very strange for non-Americans to read, as basically none of them would have any problem with rich people being able to pay for more health care. So what? Would that not be obvious? Who cares? And so on.

As an American, I at least have some framework to realize just how skewed American perspectives are, and their projection onto the rest of the world. Nobody I have ever talked to in Germany, ever, thinks that those with the money should not be able to buy whatever health care they can afford.

12 JonFraz May 17, 2017 at 2:07 pm

Agree, there’s nothing abhorent about it. But there does need to be an acceptable form of “base care” that does everything standard and needful, but with few to no frills. This is a form of “inferior goods” which are necessary for a market to function properly (because people can always switch to the inferior good if they the price of the higher quality goods unacceptable). Just as the base level housing should not be homelessness, and the base level for food should not be “starvation”, the base level for healthcare should not be “none” (or undependable “charity care”)

13 Hazel Meade May 17, 2017 at 2:26 pm

Well, this is an interesting discussion. Growing up in Canada, for MANY years, Canadians regarded with abhorrence the idea that Canada could become a “two tier” system – meaning one in which rich people got better private care and poor people got lower-quality publicly funded care.
This is the “single payer” system that I grew up with, and which Americans leftists have adored and pointed at as a model. NO private hospitals or private health care of ANY kind. heck, a couple of years bakc there was a huge controversy in Vancouver when someone wanted to open a private fee-for-service urgant care clinic. So this is STILL an issue in Canada. Single payer, to Canadians, means ALL health care is payed for through a single government channel.

So if the left is now backing off on that and saying “OK we only mean single payer for basic care, if you want anything more you have to pay for it yourself”, that’s really a huge difference from what they have advocated in the past.

14 Phil May 17, 2017 at 2:52 pm

Is it abhorrent that the wealthy can buy a better education and better housing or should they be shamed into being less literate and comfortable, along with less healthy?

15 prior_test2 May 19, 2017 at 4:47 am

‘So if the left is now backing off on that’

Who’s left? I am not on the left (depends on your viewpoint concerning the Pirates, admittedly), and the ‘left’ in West Germany has always been perfectly fine with the German health care system, which actually dates back to the 1880s, and which was implemented by that noted leftist Bismarck.

My limited personal knowledge of Canadian health care comes from spending several months total in Nova Scotia, and talking to people, in the mid-1980s. The system seemed no different in its essence (apart from being sales tax financed as I recall) from what Kaiser Permanente offered as an HMO. That is decades in the past, of course.

It is always a mistake to extend these discussions into how people in other countries look at their health care systems, at least without a fair bit of experience of how that country’s health care system functions, and what people think about.

A recent anecdote concerning that point – an English teacher of English sliced her finger quite badly, and after she went to the clinic, she could not imagine that the first question she was asked, with a blood soaked covering over her finger, was which insurer covered her? She had never imagined, from all her experience in the UK, that someone essentially dripping blood would be asked about paperwork before being seen by a doctor – after all, the UK does not have any insurers at all. She definitely found the German health care system quite inferior, based on that experience alone. (And let us not even get into the discussion concerning a ‘Betriebsartzt.’)

16 Daniel Weber May 17, 2017 at 3:30 pm

Canada and Taiwan are probably the only two countries with a somewhat strict definition of “single payer.”

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17 Dan Lavatan-Jeltz May 17, 2017 at 9:07 pm

No the Canadians only pay about 70% through the government, for example it doesn’t include any vision or dental coverage. They just feel a strong need to lie about it.

18 Hazel Meade May 18, 2017 at 1:13 pm

Vision and Dental aren’t typically covered by American health insurance either.
For whatever reason, most places seem to regard them as non-medical.
When people talk about health coverage they generally aren’t including vision and dental care in the numbers.
But hey! New horizons for the welfare state, right? You gotta know that dental coverage is next in line. Nobody should have to endure bad teeth.

19 Art Deco May 17, 2017 at 1:42 am

It’s their own damn fault that women engage in risky behaviors such as child bearing

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20 Jan May 17, 2017 at 5:49 am

And, really, let’s get to the crux of the matter–if women just kept their legs closed, they wouldn’t have kids and their care wouldn’t be so expensive. And no I am not saying insurance should have to cover birth control. That’s immoral as well.

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21 Slocum May 17, 2017 at 7:21 am

But it’s not just child-bearing. Women consume more healthcare services throughout their lives. They’re more likely to suffer from depression, for example and mental illnesses in general. And when they do have a mental illness they are more likely to seek treatment and do so earlier. In contrast, men are more likely to die young and are charged much more for life insurance because of it. Should the government force insurance companies to charge men and women the same life insurance premiums based on the idea that society benefits when men have life insurance and the family is provided for when a man drops dead of a heart attack at 45?

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22 Axa May 17, 2017 at 9:32 am

In that case men are the high risk pool and women subsidize men’s life insurance :/

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23 The Engineer May 17, 2017 at 10:40 am

Women also tend to live longer than men, A LOT longer. And so they simply have more years of health insurance consumption, and get to ages where there is more expensive, long term illnesses like Alzheimers.

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24 Cooper May 17, 2017 at 2:28 pm

Women don’t subsidize men’s life insurance. Men pay significantly higher premiums.

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25 Thomas May 17, 2017 at 10:41 am

“Should the government force insurance companies to charge men and women the same life insurance premiums”

‘No, that would be sexist’ – everyone on the left with any influence.

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26 Floccina May 17, 2017 at 5:20 pm

Robin Hanson said that we should get life insurance from the same company that we get health insurance from.

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27 mulp May 17, 2017 at 10:45 am

Women chose to be born without an SrY gene, just like Woody Guthrie, chose to be born with a defective huntingtin gene??

Given cost cutting it the key to higher profit, and that drives gdp growth, the ideal economics is one without females. Girls and women en are just too costly, so the Asians who spend money weeding out females are the most rational cultures and economies.

Only the rich should have the option of burdening society with too costly women.

After all, Tyler is not calling for eliminating the costs of females, just calling for cutting the individual female ability to pay for the costs of being female. Women are not paid as much as men based on their choices, just as they cost too much based on choosing to be female.

The issue Tyler does not address is how government addresses the deficits this creates. Shouldn’t government creatively destruct women once they impose a burden on society in excess of $10,000 between costs and income? Euthanasia and then sale of body parts for maybe transplants or food, to recover that $10,000 in individual debt to society?

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28 Dan Lavatan-Jeltz May 17, 2017 at 9:08 pm

It isn’t risky at all, in fact it is done for free all the time. They just want to do things the most inefficent way possible, and have someone else pay for it.

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29 Axa May 17, 2017 at 2:25 am

As a married guy who pays his wife’s insurance, differential pricing is meaningless.

I think the answer to differential pricing is in marketing people, they should have the numbers on what clients want and who pays insurance.

Childbearing is complicate. What about the women who can’t have children? Will they subsidise other women? If a line is needed, perhaps start charging a higher Purim me after the second child.

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30 tjamesjones May 17, 2017 at 4:05 am

if the policy is to charge a higher premium based on probability of having a baby, then surely after 2 children the premium would come down. And, yes, a woman who didn’t have a baby would be subsidising women who did, but she already is, as are men. But it is at least reasonable to identify men as unlikely to have a baby.

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31 mulp May 17, 2017 at 10:56 am

So, wealthy women who are least likely to have children but most likely to buy insurance should be charged higher premiums than men, because poor women who likely already have children are are likely to have more won’t buy insurance they can’t afford, putting the cost of children on society in systematic ways that punish any people who try to care for women.

In an ideal society, women will be eliminated based on costing society too much and not producing as much as men.

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32 byomtov May 17, 2017 at 3:59 pm

a woman who didn’t have a baby would be subsidising women who did, but she already is, as are men.

No. Men are not “subsidising” women who have children. The notion that men have no responsibility for the costs of pregnancy and childbearing, which Tyler comes close to endorsing,

Second, the higher health-care spending for women is partly because of services related to childbearing. Society may have an obligation to help out babies (and mothers), plus they will someday finance our retirement, so let’s make childbearing easy. That said, governments have numerous means of subsidizing childbearing — direct payments, tax credits, free clinical services and public education — and it’s not obvious that regulating insurance pricing is this best way to achieve this end.

is brainless.

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33 Axa May 17, 2017 at 4:57 am

The point is married guys already pay the 2 insurances. What’s the gain in having one invoice slightly lower that the other if the addition is the same?

Men unlikely to have a baby? So the bee and the flower story is true? 75+% of men 40-44 years old has biological children. https://www.cdc.gov/nchs/nsfg/key_statistics/f.htm The only way to avoid costs is to disappear after sex, if you stay you pay the invoice in one way or another.

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34 Slocum May 17, 2017 at 7:28 am

Actually, in dual-career couples the reverse pattern seems common. Women are more likely to have an ‘eds & meds’ job with a more generous health plan than the one available to the husband working in the private sector. I have some elderly relatives who are quite wealthy. He ran a successful business, but their health insurance has always provided by her benefits as a K12 teacher (and still is even though she’s over 25 years into retirement at this point).

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35 AlanW May 17, 2017 at 10:38 pm

I think that’s the undercurrent of the conservative position on this issue: It’s not really an issue for married women, because their husbands necessarily subsidize them and it sort of evens out. Tyler walked right up to this point, but didn’t make it. I find this creepy, to put it bluntly, but it’s totally in line with a lot of conservative pro-marriage positions, so I’m surprised more people aren’t making the argument explicitly. Of course, the big winners in this scenario would be homosexual men, so maybe what conservatives are really telling us is to go gay?

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36 Axa May 18, 2017 at 6:35 am

Indeed, I don’t understand why the people that say “marriage is good” make an effort to create just another heterosexual marriage penalty.

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37 Saint-Frusquin May 17, 2017 at 2:30 am

Cause we live in a world where you need a licence to drive a car but are subsidized to make your own children. DIY stupidity at its best.

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38 Joe In Morgantown May 17, 2017 at 11:06 am

Agreed, requiring governmental permission to operate the common mode of transport is a gross intrusion on the rights of a free people.

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39 Aidan May 17, 2017 at 2:44 am

Look at the question from another angle. Why not replace the current US government “single payer” armed forces monopoly with a more efficient, market based system? Individual Americans could pay for national defence insurance through a market of brokers who could then sub-contract defense to private contractors. Why should those who live in easily defensible, central locations like Iowa subsidize those who live in vulnerable locations like Hawaii? There’s pretty much universal agreement across the American political spectrum that this argument is ridiculous. Why such faith in “big government”‘s ability to run the greatest military the world has ever seen and such total skepticism about its ability to run a healthcare system?

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40 BC May 17, 2017 at 3:29 am

Defense is non-rivalrous and non-excludable. Health insurance is excludable and, hence, not a public good. Next question.

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41 Aidan May 17, 2017 at 3:54 am

Got it. Defending Iowa necessitates also defending Hawaii and immunisation programmes only benefit those who are immunised.

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42 BC May 17, 2017 at 4:17 am

So, the case for subsidizing women’s health insurance depends on, and is no stronger than, the claim that defense is a non-public good? Got it.

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43 Alan May 17, 2017 at 6:35 am

Aiden should check out Marginal University “.

44 Aidan May 17, 2017 at 10:35 am

I’m not trying to say that one should be for the state running defence and healthcare. I just think it’s rather inconsistent to argue “absolutely yes, markets wouldn’t work here” to the first and “absolutely no, markets are the best solution here” to the latter. I don’t buy the argument that defence is alway non-rivalrous or non-excludable. I don’t see why, say, the defence of the rest of the United States necessitates the defence of Hawaii or why stopping defending those islands wouldn’t potentially save a lot of money from the federal budget. Modern states with their bureaucratic structure and monopoly of violence are a very modern invention. Alternative defence arraignments involving solutions such as self-defence, feudalism, kinship-based defence or outsourcing to mercenaries have been the norm throughout history and are still pretty common across much of the world today. Why so little faith in human ingenuity and innovation to come up with a market solution in this one area?

45 Greig May 17, 2017 at 9:54 am

Immunization is something like .01% of healthcare costs. Exception that proves the rule.

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46 mulp May 17, 2017 at 11:03 am

So, from a market standpoint, females are too costly and the economic policies of society should seek to eliminate women based on profit maximization, because women are excludable for society, but war is not?

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47 JonFraz May 17, 2017 at 2:12 pm

Not everyone agrees with your definition of “public good”. No god handed that down on Mt Sinai.

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48 Daniel Weber May 17, 2017 at 3:40 pm

You can make your own definitions up for anything, but “public good” for economists means non-rivalrous and non-excludable.

You can make plenty of arguments for the government providing health care, but if you are trying to say it’s the same as national defense, go home you are drunk

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49 JonFraz May 18, 2017 at 3:10 pm

The definition is entirely arbitrary.

50 JonFraz May 18, 2017 at 3:14 pm

And what’s more you can (in principle) exclude areas of the country from national defense, and you can exclude people from access to the Justice system– the latter has even been done in the past, as the Dred Scott decision shows. The reason we do not those things is because they are not politically viable (and we have enough sense and experience to realize they would be really, really bad ideas)– but there’s nothing inherent in them that renders them logically impossible in the same sense a four-sided triangle is. The day could easily come– and it already has in many countries– when healthcare is regarded in the same manner: politically impossible and morally offensive and pragmatically deleterious to exclude people from it, hence it becomes a public good.

51 AlanW May 17, 2017 at 10:42 pm

Childbearing is necessary for the continuation of our society. Whether that’s excludable or not depends on how much you value our society, I suppose.

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52 StraighteningUp May 17, 2017 at 2:59 am

“Should gays pay more than straights for health insurance, because they’re more likely to die younger from AIDS?”

No.

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53 So Much For Subtlety May 17, 2017 at 4:37 am

Why not?

If Gays are more expensive than normal people, the insurance companies will find out one way or the other. They will check a proxy.

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54 Jan May 17, 2017 at 5:56 am

Insurers already have tricky ways of trying to discriminate against people with AIDS. Not by charging them different amounts, but by trying to avoid them as customers. It’s illegal though.

http://theaidsinstitute.org/sites/default/files/attachments/Dickson-%20USCA%202016%20ACA%20Disc.pdf

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55 So Much For Subtlety May 17, 2017 at 6:55 am

Sure. That is my point. You can’t stop them doing it. They will just refuse cover for something else that is associated with being Gay. Better to let them do so openly and allow the market to set the price.

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56 Hazel Meade May 17, 2017 at 9:43 am

Exactly. It’s terrible policy to try to force private entities to pursue a social policy goal they have no financial interest in pursuing. If we want to cover gay people with AIDS at a lower cost, have the government subsidize AIDS drugs.

57 Thomas May 17, 2017 at 10:47 am

“Exactly. It’s terrible policy to try to force private entities to pursue a social policy goal they have no financial interest in pursuing. If we want to cover gay people with AIDS at a lower cost, have the government subsidize AIDS drugs.”

The Democrats are cowards who know that while there is support for X program, there isn’t support for paying for X program. That is why ACA was designed to fool “idiots”, as Gruber giddily announced. You can see this echo’d in the moral cowardice Democrats are showing when they claim Wal-Mart needs to pay more so that the poor can get off of Democrat welfare programs.

58 mulp May 17, 2017 at 11:20 am

“The Democrats are cowards who know that while there is support for X program, there isn’t support for paying for X program. That is why ACA was designed to fool “idiots”, as Gruber giddily announced. You can see this echo’d in the moral cowardice Democrats are showing when they claim Wal-Mart needs to pay more so that the poor can get off of Democrat welfare programs.”

So, you believe pricing should differ by the amount the customer benefits from a good or service on the market?

A new F-150 truck should be priced 50% higher to the $80,000 income construction person than to the $200,000 computer engineer because the construction guy will get more value from the truck per 100,000 miles than the computer engineer?

Isn’t the likely higher price paid by the computer guy compared to the construction guy for the F-150 irrational, and thus mustn’t be dictated by some Democratic policy?

59 Hazel Meade May 18, 2017 at 1:15 pm

I think pricing should differ based on the number of cars someone is purchasing at a time. And the type of car, too.

Do you think everyone should pay a flat rate for cars, and simply be assigned a bigger or smaller one based on what they “need”?

60 JonFraz May 17, 2017 at 2:14 pm

If they’re dying young, then they spare us the health costs of their old age. The same can be said about smokers, the morbidly obese etc. At the end of the day, none of us will get out of here alive, and unless we are “lucky” enough to die by sudden trauma, we will decline slowly and run up big healthcare bills on the way out. From a purely financial POV, does it matter in those bills happen when we are 40 as opposed to 80?

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61 blah May 17, 2017 at 3:06 am

From the article: “Let’s first consider the negatives of such a change in course from Obamacare. Insurance is fundamentally about the pooling of risk. If you are trying to cover $100,000 in health-care costs by buying a policy that costs you about $100,000, that isn’t really insurance at all. It’s merely changing who cashes your check. Differential pricing moves in this direction, and thus it limits one of the major benefits of insurance.”

Am I missing something: isn’t it better pooling of risk to weight charges according to the extent of risk?

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62 Hazel Meade May 17, 2017 at 9:50 am

Am I missing something: isn’t it better pooling of risk to weight charges according to the extent of risk?

Ding! Ding! Ding! Someone who understands statistics in the room!
Not all risks are equal. Not all risks are unknown. You can predict which groups of people are going to consume more health care. Democrats need to start living in reality on this issue. As long as insurers aren’t totally blind to whose is consuming more health care, they are going to find ways to try to minimize costs by attracting the relatively healthy. Unless you let them price according to risk.

I’m sure lots of us would love to live in the fantasy universe in which all risks were totally equally distributed or unknown. Then life would be fair. But it’s not. Some of us are more likely to get cancer than others. Some are more likely to have babies. Some are more likely to get AIDS. Forcing insurance companies to pretend they don’t know these things is a terrible way to correct for the inherent inequities of life.

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63 Captain Obvious May 17, 2017 at 9:55 am

…Or maybe move to Canada or Europe.

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64 JonFraz May 17, 2017 at 2:18 pm

Re: You can predict which groups of people are going to consume more health care.

Can you? I mean over the course of a lifetime not just in some arbitrarily narrow slice of life? I think not. No one has the sort of crystal ball than can enable them to foretell that otherwise healthy person X will be killed instantly in a car accident while person Y will linger for 20 years with Alzheimers and diabetes. We should pretty much assume that everyone will run up big bills eventually and divide the cost accordingly. Sure, that may be “unjust” to the healthy-as-a-horse guy who does die in the car wreck, but then– he’s dead.

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65 Hazel Meade May 17, 2017 at 2:48 pm

Yes, you can. The statistical probability of dying in a car accident is measurable, so is the statistical probability of getting Alzheimers. There are Alzheimers risk factors that we know about. We know which people have them and which don’t. You can add up risk factors and cost associated with the likelihood of different diseases and get different numbers for different people.

Anyway, why is the entire lifetime the relevant time horizon? Insurance terms are one-year time horizons. It’s pretty easy to know which people are going to spend more money over the next year than others.

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66 byomtov May 17, 2017 at 3:44 pm

why is the entire lifetime the relevant time horizon? Insurance terms are one-year time horizons.

Because if it’s not then your so-called insurance is no insurance at all. Losing your insurance because it has a one-year term, and you got very sick on the last day, means it really wasn’t worth much. Illnesses, unlike car accidents, do not simply take place at a single point in time.

67 Daniel Weber May 17, 2017 at 4:20 pm

When I was on the private market, I had guaranteed reissue at the base rate price, as long as the pool itself was still alive. So the company would have to kill the whole pool (or raise everyone’s base rate by extreme%, which is the same thing) to kick me out.

Which is definitely possible, especially if it looks like I’m going to start racking up lots of bills over the next several years. The backup plan was to find a new job with good benefits, because, for all its many faults and distortions, the employer-provided health insurance model still functions.

68 byomtov May 17, 2017 at 5:54 pm

Daniel,

That’s fine, but it means that you really did have a long-term policy, not a year-to-year one. And you were no doubt paying something for the privilege of renewing at the base rate, because that plainly has considerable value.

Nothing wrong with any of that, but let’s be clear as to what was going on.

69 Daniel Weber May 17, 2017 at 7:12 pm

It didn’t seem especially unusual, although that “base rate” did creep up year over year. I was plenty aware that I didn’t know the size of “the pool” and that they could find ways to get rid of me and my family if we became especially onerous on them.

70 Hazel Meade May 18, 2017 at 1:17 pm

Right, in a private market it is possible to have a variety of different term lengths. One might pay slightly more for a longer term to cover greater uncertainty.
My point is simply that what someone’s actuarial risk is is a measurable thing, and it is different for different people. And no matter how much you wish it were different, insurance companies are going to make use of that information.

71 JonFraz May 18, 2017 at 3:16 pm

Re: The statistical probability of dying in a car accident is measurable, so is the statistical probability of getting Alzheimers.

Across large numbers of people: Yes. Which is why you should risk-rate entire groups, not individuals, with whom a sort of quantum randomness prevails.

72 Daniel Weber May 17, 2017 at 3:44 pm

If it’s impossible to predict health care consumption, why are people so worried that insurance companies are going to discriminate against people with expected higher costs?

It’s precisely because some groups are going to cost more, and society keeps on trying to hide the ball of how we pay for it, that we have so much controversy.

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73 BC May 17, 2017 at 4:03 am

Should health insurance be priced based on actuarial risk even if doing so fails to produce certain desired statistical outcomes in men’s vs. women’s premiums? Should men receive subsidies for life insurance simply because they are more likely to die younger? Should insurance companies “discriminate” against those that self-identify as having a smoking orientation? Should a 2-BR apartment have higher rent than a 1-BR? These are all variations of the same question.

Insurance is a *financial* product. Insurance that pays higher expected claims is a security with higher expected payoffs. Hence, one gets a higher value product in exchange for commensurately higher premiums. Should a bond that pays a higher coupon be priced higher than one that pays a lower coupon? I would like to make some trades with anyone that answers “no” to this question.

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74 prior_test2 May 17, 2017 at 4:15 am

Health care is not health insurance, and health care that extends to essentially all citizens (most definitely including pregnant women) in every other industrial society costs at least a third less than in the U.S. In large part because companies like Aetna do not exist – and every single person insured by Aetna is paying 100 dollars a year to ensure that Aetna earns more than 2 billion dollars in profit. Yet somehow, this example of a thoroughly for profit middle man does not exist in the health care systems of other countries. Yet not a word from such concerned people as Prof. Cowen about reducing the role of those taking money on providing health insurance, but never actually using it to provide health care.

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75 So Much For Subtlety May 17, 2017 at 4:42 am

It is absurd to think that the Trades Unions that dominate the NHS are not for-profit. Or the bureaucracies that manage it. Everyone is for-profit. That is why the Prison Guards’ Union is one of the largest supporters of harsher laws in places like California.

Worse than absurd really.

American health care is not expensive because of Aetna. It is expensive because it is very good and because America develops most of the world’s medicines. The NHS does not any more. Nor do the Germans. They get artificially lower prices on drugs. Also their lawyers are under better control.

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76 prior_test2 May 17, 2017 at 5:40 am

‘It is absurd to think that the Trades Unions that dominate the NHS are not for-profit.’

Seriously, do you even have the remotest clue what you are talking about? Maybe you can start here, though admittedly, it is written in a style intended for those who actually know something about the country they live in (for England, in this case) – http://www.nhs.uk/NHSEngland/thenhs/about/Pages/overview.aspx

‘Everyone is for-profit.’

Not really – the Social Security, to use another example of an ‘insurer’ has overhead far lower than that of other pension providers. Seemingly because the SSA is not run by people interested in profit, but in actually ensuring that as much money as possible reaches those who are entitled to it, and not those who think they are entitled to it because they are motivated by profit. Do note the trend in administrative costs in this link – https://www.ssa.gov/oact/STATS/admin.html

‘American health care is not expensive because of Aetna.’

No, but every single person with health insurance from Aetna (being simple) is paying an extra 100 dollars a year, which is how Aetna earns its over 2 billion dollar profit in 2016. That 100 dollars does not go to health care, it is simply taken from the person paying Aetna for health insurance and redistributed to those who contribute nothing to providing health care – call it socialized shareholder ROI. Obviously, Aetna is only one health insurer among many in the U.S.

‘It is expensive because it is very good and because America develops most of the world’s medicines.’

Again, let us post a table showing the world 10 largest pharma companies – https://en.wikipedia.org/wiki/List_of_largest_pharmaceutical_companies_by_revenue

‘The NHS does not any more.’

It never has – in the UK, such work is done by, among others, an obscure company called GlaxoSmithKline, with its measly 9.5 billion dollars in revenue in the first quarter of 2017.

‘Nor do the Germans.’

Well, apart from that equally obscure Bayer, with its miniscule first quarter revenue of 10.6 billion dollars. And to give an example of that non-existent German pharmaceutical research leading to a major future reduction in cancer (oddly, mainly among women), I suggest typing in Harald zur Hausen, 2008 Nobel Prize in Physiology or Medicine, and doing a bit of reading.

But then, really, who has heard of the University of Heidelberg? Though I am quite certain that at least Prof. Cowen has heard of the University of Freiburg.

‘They get artificially lower prices on drugs.’

No they don’t. German health insurers look at cost and benefits, and since together they represent the purchasing power of roughly 80 million customers, simply treat the pharma companies as a supplier like any other, and when the price is too high, the pharma company is told to either reduce it, or forget about selling it to essentially anyone in Germany. It is the power of a free market, oddly enough, with political power backing it up. Since 5 of the world’s ten largest pharma companies are based in Europe, those companies fear how their customers, who are also actually generally voters, would react against excessive profiteering. It is Americans that pay an artificially high price, because their system is a hopeless mess, filled with people who apparently cannot be bothered to look at facts.

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77 So Much For Subtlety May 17, 2017 at 6:49 am

prior_test2 May 17, 2017 at 5:40 am

Well yes, actually I do know what I am talking about. And yes, obviously, the Unions that run the NHS are entirely for-profit. They just claim otherwise. A good example being the recent pay deal done with doctors under Blair.

And yes, really. Everyone is for profit. The people running SSA are not doing it from the kindness of their own hearts. They are busy looting the public purse for all the cash and goodies they can get. It may be true that a government program can run a simple program with a relatively low bureaucratic overhead. But some of that is hidden – not all the bureaucracy is counted which is cheating. Some of the costs are hidden in government programs – pensions for instance. But mostly medical care doesn’t make that much of a difference and if you deny people treatment or tests, it is cheaper and it doesn’t make that much of a difference. Even more so if you cheat.

Obviously shareholders are providing health care. Very good health care as it happens.

The fact that many foreign pharmaceutical companies are from overseas is hardly news. It doesn’t change a damn thing. Their main market for research and new drugs is the US. And the NHS used to do research by the way.

No they don’t. German health insurers look at cost and benefits, and since together they represent the purchasing power of roughly 80 million customers, simply treat the pharma companies as a supplier like any other, and when the price is too high, the pharma company is told to either reduce it, or forget about selling it to essentially anyone in Germany. It is the power of a free market

So yes you agree with me but as usual you need to pretend you do not. And no, it is not a free market.

The work of pharmaceutical companies in Germany has been greatly hampered in recent years due to legislative measures. Several steps of tightening discount regulations have caused legally mandated manufacturer discounts to triple since 2005. In addition, discounts have increased substantially in recent years based on individual agreements. Overall, the manufacturer receives only about half of the selling price of a drug.

78 Greig May 17, 2017 at 10:00 am

Social security is not “insurance,” apart from SSD. The point of insurance is that you might get a large benefit and might not.

79 prior_test2 May 17, 2017 at 10:44 am

‘ And yes, obviously, the Unions that run the NHS are entirely for-profit.’

The government runs the NHS – please read some information, like the link. This would be like a non-American saying that the unions run Medicare or the VA entirely for profit.

‘They are busy looting the public purse for all the cash and goodies they can get.’

Why bother explaining that the people working for SSA are federal employees with fixed wages, just like Prof. Cowen is a Commonwealth of Virginia employee with a fixed wage. Neither a person doing data entry for SSA nor Prof. Cowen are looting the public purse.

Please, continue living in your fantasy world.

‘ It doesn’t change a damn thing. Their main market for research and new drugs is the US.’

No. it isn’t. That the U.S. is their most profitable market, is easy to say and likely very true. That does not make it their main market, just the one with the dumbest customers willing to pay the highest prices.

It would be nice to include an actual link, or even if you would read what you post – ‘In addition, discounts have increased substantially in recent years based on individual agreements. Overall, the manufacturer receives only about half of the selling price of a drug.’ Those individual agreements are the market working, as the health insurer consortium says no purchase without a discount, and the drug company, unwilling to forego a reasonable profit selling a product whose price is mainly based on a government granted monopoly in the form of a patent, cuts its price. And hard as this might be to imagine as an analogy, Hertz, Avis, etc don’t pay list price for their purchased auto fleets either, because major customers have their own interests and power to see that those interests are represented in a contract – or else the contract is not signed.

Softball is what Americans apparently consider normal in such pricing matters – the rest of the world plays hard ball, like grown ups.

80 prior_test2 May 17, 2017 at 10:50 am

‘ is not “insurance,” ‘

Strictly, you are absolutely correct, and I had debated internally about putting that in quotes.

However, in the sense that the SSA administers benefits in a fashion similar to how many health care systems work (in a very broad sense) in other parts of the world, it is an appropriate comparison for the ‘only profit motivates’ idea.

But this still gets back to conflating health care and health insurance. The actual German term for those entities that handle the ‘front end’ of making sure everyone is paying for the health care system is ‘Krankenkasse’ – call it ‘sick fund.’ DAK, TK, AOK, Barmer, etc are not insuring anything – they are simply organizations that collect and disburse funds related to health care.

81 Jan May 17, 2017 at 6:01 am

“It is expensive because it is very good and because America develops most of the world’s medicines.”

Complete and utter bullshit. American health care is expensive because it is byzantine and, in short, we charge higher prices. The care is not better than care in other rich countries. This has been shown so many times, that unless you’re a total fool, you’re just lying. And drugs are only 10-15% of health costs, so that answer is also wrong. Though we do pay and idiotic amount for the same damn drugs compared to the rest of the world. Our countries’ reward for developing many of the world’s drugs is that we pay 2-3 times as much for the meds as other place–and it’s because we are dumbasses.

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82 So Much For Subtlety May 17, 2017 at 6:53 am

American health care is much better than other countries. The UN and other leftist groups obscure this by counting things like “equality” towards an overall ranking. But you can see how good American health care is by the fact that people – especially politicians – from places like Canada go to the US for treatment. For responsiveness and availability the US system has no peer.

Also the Europeans cheat. The Germans, for instance, count many infant deaths as still births if they are within a month of birth.

Someone has to pay for new drugs. So far it has been those American dumba$$es. Maybe they will stop. Then no one will have new drugs. I think the whole world should thank Americans for being so selfless.

83 Captain Obvious May 17, 2017 at 7:02 am

American health care is much better than other countries. > If you can afford it right? Most americans simply can’t. And this is not quite true, I know that some procedures like a simple prostate biopsy cost a lot more money in US, than in Europe, there is no “my health care is better than yours argument” here.

84 Jan May 17, 2017 at 7:11 am

You’re wrong on both counts. 1) Spend literally five minutes doing some research. Seriously, that’ll be that. I suspect you meant to say “health care for upper middle class white people is about the same as it is in other rich countries.” Is that it? 2) drug companies charge whatever they can get in each market. We give them way more than other rich countries despite fact that Medicare is the largest payer for drugs in the world. Their profits continue to beat the Fortune averages. Hint: they’re not spending most of that sweet US subsidy on R&D.

85 Sure May 17, 2017 at 9:04 am

Not in the least. American healthcare is very good. We have similar outcomes even though our patient population starts with all sorts poorer health metrics. For instance, 33% of Americans are obese compared to 27% in the UK, 25% in Germany, and 18% in France. Likewise, Americans have worse issues with guns, cars, and stress. The fact that Americans are even in the ballpark for long term medical outcomes (death, disability, etc.) is a major tribute to American medicine.

The NHS would be swamped in a day if they had to deal with the obesity and gunshot rates seen in the US (which is not a knock on them, they built their health system for the medical problems their population has). Dealing with the healthcare needs of Americans are going to be more expensive regardless of the system behind that care.

86 Chip May 17, 2017 at 9:40 am

Jan, here’s five minutes of research:

https://www.cdc.gov/cancer/dcpc/research/articles/concord-2.htm

The US has the best overall survival rate for cancer among leading western countries. And most of the drugs used in those countries originated in the US.

Because the US consumer pays the research costs for drug development while the rest of the world negotiates to pay a premium on just the manufacturing cost.

If the US paid Canadian drug prices we would get a world supplied by Canadian drugs, which is none.

87 Hazel Meade May 17, 2017 at 10:02 am

American health-care is expensive and byzantine because of third party payment systems – employer-based insurance and Medicare/medicaid.
The patient is never held responsible for even trivial costs – the ACA won’t even allow a $20 co-pay for a doctor’s visit! Women get birth control pills for free!
It’s insane.

88 Thomas May 17, 2017 at 10:55 am

“It has been shown many times”

Detached from demographics and baseline health? Nope, it sure hasn’t, but that won’t stop you from repeating this tired lie.

89 prior_test2 May 17, 2017 at 10:58 am

‘The Germans, for instance, count many infant deaths as still births if they are within a month of birth.’

Please, a link? Because the German wikipedia link concerning still births is pretty clear about definitions, the legal duty to report them, comparisons to other countires etc. Further, if Germans were counting in that fashion, it would increase their statistics compared to the U.S., not deflate them (or simply move them around – but then, American statistics in all of these areas are across the board worse, so it would not make much difference in general).

https://de.wikipedia.org/wiki/Totgeburt – ‘Eine Totgeburt liegt laut deutscher Personenstandsverordnung vor, wenn nach der Geburt eines mindestens 500 Gramm schweren Kindes kein erkennbares Lebenszeichen nachzuweisen ist, also weder das Herz geschlagen noch die Nabelschnur pulsiert oder die natürliche Lungenatmung eingesetzt hat (§ 31 PStV). Die Schwangerschaftsdauer ist hierbei unerheblich. Im Unterschied dazu ist in der Schweiz eine Totgeburt auch gegeben, wenn bei einem Gewicht unter 500 Gramm die Schwangerschaft mindestens 22 Wochen dauerte (Artikel 9 der Zivilstandsverordnung).

‘Someone has to pay for new drugs.’

Of course – Europe is a major market, and home to half of the world’s largest pharma companies.

‘So far it has been those American dumba$$es.’

Well, in terms of providing all the profit the pharma companies and their shareholders can squeeze, yep.

90 prior_test2 May 17, 2017 at 11:28 am

This is getting confusing in terms of reply.

However, regarding this from Hazel Meade – ‘The patient is never held responsible for even trivial costs’

That is most definitely the case in Germany, where the hated ‘Praxisgebühr’ was discontinued after several years. But then, Germany pays a third less for health care that covers essentially everyone. The really funny thing? Doctors hated the Praxisgebühr too, since it meant they had to deal with handling petty cash from each patient. There is a co-pay of something like 7 dollars for a prescription, but in a strange way, think of it as a prescription administration fee – you do not pay that fee for refills, for example. And prescriptions for children (definitely) and over 65 (I believe) have no co-pay anyways. And no one here complains about that fact.

91 Steven Kopits May 17, 2017 at 12:30 pm

To Chip’s point, cancer patients have higher survival rates in the US — without universal coverage — than do the residents of Canada, France or the UK, which do have universal coverage.

Those arguing for universal coverage are arguing for higher cancer death rates, to the extent correlation is causality.

92 prior_test2 May 17, 2017 at 2:00 pm

‘Those arguing for universal coverage are arguing for higher cancer death rates, to the extent correlation is causality.’

But they are then also arguing for lower heart disease death rates, to the extent correlation is causality.

‘ One area where the U.S. appeared to have comparatively good health outcomes was cancer care. A 2015 study by Stevens et al. found that mortality rates from cancer in the U.S. were lower and had declined faster between 1995 and 2007 than in most industrialized countries.16 Other research based on survival rates also suggests that U.S. cancer care is above average, though these studies are disputed on methodological grounds.17

The opposite trend appears for ischemic heart disease, where the U.S. had among the highest mortality rates in 2013—128 per 100,000 population compared with 95 in the median OECD country. Since 1995, mortality rates have fallen significantly in all countries as a result of improved treatment and changes in risk factors.18 However, this decline was less pronounced in the U.S., where rates declined from 225 to 128 deaths per 100,000 population—considerably less than countries like Denmark, where rates declined from 242 to 71 deaths per 100,000 population.’ http://www.commonwealthfund.org/publications/issue-briefs/2015/oct/us-health-care-from-a-global-perspective

93 JonFraz May 17, 2017 at 2:21 pm

Re: American health care is much better than other countries.

Nope. that’s just jingoism.
Yes, our healthcare is better than, say, Somalia’s, but when it comes to other advanced nations we’re more or less on par: better at this, worse at that. Do note that no nation on Earth has ever proposed junking their healthcare system and using ours as a model.

94 JonFraz May 17, 2017 at 2:29 pm

Hazel Mead, are you posting from an alternate reality? Outside Medicaid and some Medicare plans no one, I reapet NO ONE, has a health pkan that has neither deductibles nor copays. Indeed, most people have coverage that has fairly substantial out-of-pocket expenses. Please come back to Earth and the year 2017. Yo ucontribute nothing to the debate by posting sucvh unrealistic nonsense.

Re: The US has the best overall survival rate for cancer among leading western countries.

Nope. No. We. Do. Not. Your claim is an Internet meme that crudely exaggerates data from a binary study between the US and Canada some years back looking at ten chronic, serious conditions: on two (breast and colon cancer I think) the US had superior “survival” rates (more of those scare quotes in a minute); but the Canadian had better stats on several others, and on the rest there was no significant difference.
Now, as for “survival” what does that even mean? Are people being effectively cured, living long lives and dying of something else? Are they being diagnosed earlier but still dying of the condition? Are they being kept on life support a while longer at the very end? The first would be a good thing, I agree. But the second is a meaningless data artifact, and the last possibility is just gruesome.

95 Hazel Meade May 17, 2017 at 2:50 pm

I went to the doctor two weeks ago for my daughter’s well-visit. It had no co-pay. It is simply a demonstrable, documented fact that the ACA bans charging co-pays for “preventive” health care. Go look it up.

96 JonFraz May 18, 2017 at 3:22 pm

Are you on Medicaid, Hazel Meade? Because that’s the only sort of policy I am aware of that would not have a copay (even some Medicaid coverage has very low copays, ~2$ for example). My copay (on a workplace policy- yes it is ACA compliant) is $20 for even a wellness visit. In any even ti am not speaking about a single service, but overall: I will be very skeptical (outside of Medicaid coverage) if you tell me your insurance has a $0.00 deductible and no copays for anything.

97 Dan Lavatan-Jeltz May 17, 2017 at 9:13 pm

American health care is no better than other countries, some costing only 1/5th as much. It is more responsive, but most of the response is waste. The waste exists because of insurance.

I agree the US should not overpay for medicines, the best way to do that is end all subsidies, including those imposed via the tax code.

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98 Hazel Meade May 17, 2017 at 9:59 am

An insurance company is a lot more than a “middle man”. Insurers help to determine what charges are reasonable. They decide what is insurable and what is not, and they negotiate prices with providers and set prices for varying coverage levels (and risk factors) for patients. They do the work of determining how much people should pay and how much providers should charge. Insurers are pretty much the only entity keeping costs down at the moment (because of government regulation) and they get shit on for it all the time.

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99 AlanG May 17, 2017 at 10:39 am

@Hazel Meade – they get crapped on all the time because they are inept at what they do. It’s been our experience over the years that about 20% of claims are “lost” by the insurer so we have had to refile. They don’t play as much hardball as they should with hospitals and imaging companies often times over paying for services whereas Medicare does not. Also you are dead wrong in your previous post about co=pays under the ACA. Both of my daughters were/are on Obamacare policies and they definitely had copays. Medicare also has copays for all physician visits. You should read Elisabeth Rosenthal’s new book on the health care system; it’s pretty much rotten to the core! I suspect overpaying is responsible for 40% of the bloat. Don’t say individual empowerment will change things because it won’t Too many corporations are running things and the ability to bargain is quickly disappearing. Try to get a quote for a lumbar MRI, I couldn’t last spring when I needed one.

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100 Hazel Meade May 17, 2017 at 11:05 am

Co-pays for “preventive care” are explicitly forbidden by the ACA, so I don’t know what you’re talking about.
Insurers probably are doing a shitty job at lots of things, but we’re also dealing with a market where people’s choice of insurer are limited to maybe three options selected by their employer. Not exactly a lot of competition or options. Again, this is due to government regulation fucking up the market by creating a system in which nobody pays for their own insurance and nobody cares what anything costs. The reason prices aren’t transparent is because there aren’t any patients asking for them.

If we got rid of the employer based system and got everyone back into the individual market lots of things would change.

101 prior_test2 May 17, 2017 at 11:08 am

‘An insurance company is a lot more than a “middle man”.’

No, that is pretty much all they are. As noted above, the German term Krankenkasse translates into ‘sick fund.’ Nothing is being insured, the Krankenkasse simply collect and disburse funds related to health care. This is why SSA is a good comparison, as it is much the same idea (speaking very broadly, of course). Money comes in from all those required to pay (just like with social security), and money is paid out to all the private entities that provide health care according to a standard fee schedule – no ‘insurance’ component involved. Social security is independent of the considerations of life insurance (again, speaking very broadly).

Generally, I hate the term single payer (it is inaccurate, at best, most of the time), but that is what SSA or the Krankenkasse are in a (broad) sense – they collect money and disburse it, without any need to generate a profit. Nobody’s Krankenkasse here cares about your ‘risk factors’ in terms of how much you pay – they are not insurance companies, after all. But they do perform the function of trying to keep health care costs down – without a need to make a profit.

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102 JonFraz May 17, 2017 at 2:32 pm

Either the Krankenkasse are negotiating prices with providers or the government in Germany is. I don’t know who, but someone is doing that work. I’m pretty sure the Krankenkasse also keep an eye out for fraud and errors too. They do not just pay every bill submitted without consideration.

103 Thomas May 17, 2017 at 10:52 am

Aetna earned 2 BILLION in profit? Why, if we removed that amount from the 2015 health care expenditure of 3.2 trillion dollars, we could almost even notice!

We pay for our demographics, our access, our poor personal health, and for the rest of the world to pay discounted rates for pharma. We could tax foreign use of American medical IP. In fact, why don’t we? Germany should finally pay its share.

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104 prior_test2 May 17, 2017 at 11:22 am

‘Why, if we removed that amount from the 2015 health care expenditure’

Well, the Republicans plan to remove current health insurance coverage from an unknown number of people with pre-existing conditions, and to make the latest version of their vision, an additional 8 billion dollars will be provided to meet those increased premiums. Possibly you are not a loyal reader – see here – http://marginalrevolution.com/marginalrevolution/2017/05/state-federal-government-decide-marginal-increments-health-care.html. So Aetna’s profit would cover 25% of that increase, to keep people from having no health insurance at all.

‘and for the rest of the world to pay discounted rates for pharma’

No, the rest of the world pays a normal price for pharma products – Americans pay a vastly inflated one. Because only American has a socialized return on pharma shareholder ROI.

‘We could tax foreign use of American medical IP.’

Please do – then you will discover that other countries will simply ignore American patents. IP is a government granted monopoly – what governments grant, they can take away. As the several governments considered doing to Bayer’s Cipro patent during the anthrax attacks – http://www.nytimes.com/2001/10/19/business/nation-challenged-treatment-canada-overrides-patent-for-cipro-treat-anthrax.html

But don’t worry – Cipro was discovered and patented by a European pharma company, and it was Canada overriding it. Nothing to do with American pharma companies at all in this case – https://en.wikipedia.org/wiki/Ciprofloxacin

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105 mulp May 17, 2017 at 11:54 am

Yeah, a global corporation needs to earn 1000% return on costs producing a drug invented with UK tax dollars, but it evil that this is allowed only in the US, but not in the UK!

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106 prior_test2 May 17, 2017 at 4:09 am

‘and it’s not obvious that regulating insurance pricing is this best way to achieve this end’

Again, that wonderful conflation between insurance and health care. But let us leave aside the unique contribution women make to the demographic developments which lead to apparently inevitable economic growth.

Why should any adult have to pay the insurance costs related to infant or childhood immunization? After, your typical 25 year old male has his, so why should he have to pay for anyone else’s? Ever?

And considering how miserably the U.S. does in providing decent health care to pregnant women and children, one would think that a person motivated by something other than steering public policy debates in a direction that appeals to selfishness would have concrete suggestions of how to bring American health care for future citizens to a level recognizable in all the other industrial societies, where health care is at least a third less expensive.

‘Uniform pricing also gives insurance companies less incentive to attract female policyholders.’

Requiring everyone to have insurance eliminates that problem entirely, which again seems to be pretty much another area where the U.S. really stands out compared to all the other health care systems in the industrial world.

‘simply because I am saying there is a trade-off, and we do not yet know what is the right margin to seek’

A trade-off that does not seem to exist in any other health care system in the industrial world, all of which cost at least a third less than that found in the U.S. One would think that someone honestly concerned with costs would actually look at any of the number of possibilities offered by other health care systems to improve the American health care system, instead of decrying that it is impossible to change because the pregnant, the sick, and the old cost too much for a rich society like America’s to afford.

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107 Anonymous May 17, 2017 at 6:08 am

“Why should any adult have to pay the insurance costs related to infant or childhood immunization? After, your typical 25 year old male has his, so why should he have to pay for anyone else’s? Ever?”
Creating new children is optional, immunizing already existing ones is not. Or one could argue that immunization is part of the cost of creating a child, in which case we should demand a big upfront payment before childbirth representing all the expenses to society. But that’s not happening, much easier to make your typical 25 year old male pay for everyone else’s freedom of choice.

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108 prior_test2 May 17, 2017 at 11:30 am

‘much easier to make your typical 25 year old male pay for everyone else’s freedom of choice.’

No, it is much easier, and seemingly much cheaper, to just treat health insurance as a percentage of wages deducted from everyone’s paycheck, and then disburse the funds. Much like how social security works.

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109 JonFraz May 17, 2017 at 2:34 pm

The 25 year old has been a 5 year old child and he will probably be a 65 year old man someday. Stop thinking in such pathetically narrow slices of time. We should be looking at whole lifetimes when we are dealing with healthcare.

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110 Anonymous May 17, 2017 at 3:49 pm

Is he going to be an 85 year old woman some day? Because I thought that’s what the discussion is about.

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111 chuck martel May 17, 2017 at 6:18 am

“they will someday finance our retirement,”

Why should that be the case? If parents are expected to provide for their children, why aren’t those children expected to assume responsibility for their parents in their dotage?

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112 Anonymous May 17, 2017 at 9:10 am

The children didn’t ask to be brought into the world. Parents are responsible for their happiness because it’s the least they can do after shitting them out, there’s no debt in the reverse direction.

That said, there’s a practical more practical concern behind the phrasing. Even if you’re a big strong libertarian who responsibly saved money in his youth, you still need to live in a society with a certain young:old ratio if you want to retire. Money isn’t worth much if there aren’t enough workers to stock the shelves or build the robots. Plus a lot of the elderly don’t have that much and so rely on there being enough youngsters around to extort for rent.

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113 Evans_KY May 17, 2017 at 6:26 am

First, thank you for a more reasoned and logical argument.

Second, I wonder how far down the rabbit hole we are willing to go with this line of reasoning. Consider the costs associated with genetic factors. Should we have every American submit to genetic testing to pool people based on risk factors? Or lifestyle choices, should we pool based on exercise and eating habits? Would men scoff at the invasion of privacy such an initiative would entail?

Third, in a society constructed for men by men I reject the notion that women should sacrifice more. We had little to say about the structure of health care in its inception. We are marginalized in the legislative process. We manage households, finances, child-rearing, and a full-time career. Some women have little to no sick leave to take care of a child and may lose their job as a result. Americans need to decide whether women are truly cherished or whether we are just another warm body on the assembly line.

Is it naive to expect some altruism from the opposite sex?

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114 MMK May 17, 2017 at 6:52 am

A public health subsidy ONLY makes sense if you control for lifestyle habits. I have no problem subsidizing people for genetic conditions and kids who get cancer through no fault of their own. I have absolutely no sympathy for Type 2 diabetics who have never set foot in a gym and eat 4000 kcal a day.

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115 MMK May 17, 2017 at 6:54 am

Also everyone is assuming traditional nuclear families in these comments. Only one poster has pointed out that if women don’t pay more, then effectively single men are subsidizing single mothers. This is not something that we want to incentivize as a society.

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116 Ricardo May 17, 2017 at 10:23 am

Just to follow the analysis all the way through, decreasing incentives for childbirth increases incentives for abortion and contraception. That would be a strange thing for “family values” advocates to be on board with.

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117 Thomas May 17, 2017 at 11:00 am

Just to follow the analysis all the way through, not paying infinity dollars per live birth is anti-family values.

Brilliant.

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118 Ricardo May 17, 2017 at 12:01 pm

Not so brilliant strawman.

119 JonFraz May 17, 2017 at 2:35 pm

Every child has two parents: a father and a mother (Jesus was a one-off). I have no problem with men subsidizing the expenses of pregnancy: men are a participant in the process after all.

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120 So Much For Subtlety May 17, 2017 at 7:04 am

The whole of Western civilization is set up to provide women with what they want and protect them from the inevitable consequences of their actions.

The idea that women are not getting altruism from men is insane. Women spend on the order of 80 cents of every dollar earned. Even today most women choose less stressful careers, or to stay at home altogether, so they can live off the earnings of a man.

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121 Evans_KY May 17, 2017 at 8:43 am

Putting aside cultural assignments, being female is a genetic condition.

My larger point is that sex, predisposition to disease, and health are expressions of your genes. “Good” genes may protect a person from bad health outcomes irregardless of sex. “Good/bad” lifestyle habits may cause genes to express differently irregardless of sex.

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122 Anonymous May 17, 2017 at 9:16 am

“We are marginalized in the legislative process. ”
Women are convicted much less often, get child custody blabla. What are you referring to? There are a lot of processes where women apparently had little say, yet for some reason get a better deal (see: earlier retirement despite longer lifespans and less intensive work lives).

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123 mulp May 17, 2017 at 11:59 am

“Is it naive to expect some altruism from the opposite sex?”

What is naive is Tyler assuming that society would be better off by using the market to eliminate all females from society based on them costing society far more than they contribute to society.

It’s free lunch economics. Ie, costs need to be eliminated so gdp is 100% profit.

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124 Anon7 May 17, 2017 at 1:13 pm

More women can’t manage to get themselves elected despite being a majority of the population (and having the right to vote much longer than African-Americans) and then whine about being “marginalized in the legislative process” (no women on the senate Republican health care task force!). So are women just poor, helpless victims who need to lean on men or not?

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125 Jim May 17, 2017 at 7:01 am

To better understand THE societal implications at play here, consider premiums for blacks, whites, and Asians instead of for men and women.

Let’s say blacks cost 20% more to insure than whites and Asians cost 20% less than whites. Should it be legal for insurance companies to price each race’s risk accurately?

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126 Anon7 May 17, 2017 at 1:21 pm

Yes, let’s consider THE societal implications at play here. Why should Asians have to subsidize less talented whites, Hispanics, and blacks in college admissions?

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127 Jim May 18, 2017 at 6:36 am

Capitalizing THE was an accident. I’m an old man and my eyesight isn’t very good these days.

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128 rayward May 17, 2017 at 7:11 am

Cowen is on a roll with his theme of unification and division. Cowen seems to prefer division, in his post about health insurance and generally. Professor Shilling teaches his finance students that if all risks were shared the per capita cost would be nominal and economic output and well-being would be much, much greater. Shilling is more inclined to unification. Human beings being human beings, they often prefer division, believing, irrationally, that they will land on the positive side of the risk ledger. On health insurance, America has come down on the side of division (with different treatment for the old and young, for males and females, for employed and unemployed, etc.). Some oppose unification in the case of child birth because they don’t wish to pay for “those people” to have babies. It may take a Village, but your Village may not be my Village. Of course, division often leads to conflict, conflict leads to destruction, and thus historical cycles. Cowen is partial to the cyclical view of history – he says so in his book. Cycles are all about division, and humanity pays an enormous price we pay for it. It’s irrational.

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129 rayward May 17, 2017 at 3:52 pm

Shiller. What a dope.

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130 Tom T. May 17, 2017 at 7:46 am

Presumably if differential pricing is unacceptable for health insurance, it should similarly be impermissible to charge men more for auto or life insurance.

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131 AlanG May 17, 2017 at 7:51 am

In writing about women and health insurance, I’m stunned that you did not discuss whether abortion services should be covered. there is a strong push by conservatives to not fund such services (they are not covered by Medicaid) not to mention restrict access via a change to Roe v. Wade.. A safe abortion saves considerable money both in future health care costs and welfare payments. If we are to believe Steven Levitt’s chapter in “Feakonomics” it’s also responsible for a lower crime rate.

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132 Thomas May 17, 2017 at 11:04 am

“A safe abortion saves considerable money both in future health care costs and welfare payments. If we are to believe Steven Levitt’s chapter in “Feakonomics” it’s also responsible for a lower crime rate.”

Can we make this a DNC plank, please?

Women of color are five times more likely to have an abortion than white women therefore increasing abortion results in less welfare, better public health, and lower crime.

https://www.theatlantic.com/health/archive/2014/09/abortions-racial-gap/380251/

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133 Ironman May 17, 2017 at 8:14 am

Here’s an analysis of the odds of going to the hospital by single year of age and sex. The data is from Singapore, but would be similar for the U.S.

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134 Gil May 17, 2017 at 8:19 am

One overlooked problem with splitting risk pools is that it adds a lot of friction to the market. Maybe splitting men and women isn’t so complicated, but consider “preexisting conditions” or otherwise splitting people based on their current health. With that, then you can no longer have an “insurance exchange” because you will need to submit to a checkup and records search before you can get a quote. This also makes it difficult to find the best price and after you have purchased health insurance, it makes it unlikely that you are going to shop for a better price next year. This all cripples the invisible hand.

“One size fits all” allows commoditization of health insurance and simple competitive “exchanges”. There are winners and losers, but there are overall cost savings both from a more competitive environment and the elimination of things like checkups to screen for preexisting conditions.

I don’t think splitting men and women into different risk pools is fair, as a value judgement. Just because women consume more health care in a statistical sense doesn’t mean an individual woman will. I consider it unfair to treat individuals differently based on group behavior or attributes in cases where the individual can’t really change what group they are in.

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135 Anonymous May 17, 2017 at 11:40 am

Good point on market friction.

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136 Hazel Meade May 17, 2017 at 9:37 am

I’m not even sure childbearing should be encouraged.
If you’re talking about a married couple, they are already probably jointly paying for insurance for both parents and thus sharing the cost within the family.
If a single woman or a lesbian couple wants to get pregnant, that’s their own business and they can pay for it themselves (and both parents in a lesbian couple can be pregnant at the same time, so it’s totally reasonable for them to pay more for insurance). In none of these cases is there a moral obligation for society to pick up the bill.

Moreover, even IF we wanted society to subsidize childbearing, it’s always a terrible idea to foist social policy goals off on private sector entities that have no interest in those goals of their own. of course, their financial incentives point elsewhere and they are going to do what they can to maximize profits, not to pursue whatever political goal the government wishes to pursue. That should be taken as a given, and instead of piling layers of regulation on them to get them to behave the government should subsidize the desired goal directly. “let’s regulate insurance companies to make them act like charities” is just insane policy.

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137 collin May 17, 2017 at 9:42 am

Quite honestly, I have never seen a chart that explains the difference of health care of men and women. I have heard the two primary reasons are women live longer (mostly Medicare here) and Pregnancy issues which of course benefits society a lot in our modern world considering almost all developed nations, except Israel, are below fertility level birth rates. So I expect this to be huge problem for any Republican plan because if we make it harder and more expensive for women to have babies then that is what our society gets.

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138 A Definite Beta Guy May 17, 2017 at 10:55 am

The question is whether making child-care cheaper is best addressed through community rating. Education is also good, but we don’t tack that into health insurance: we pay property taxes.

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139 Hazel Meade May 17, 2017 at 11:12 am

Why the assumption that pregnancy and childbearing benefit society?
I see an overpopulated planet where unskilled labor is becoming obsolete. Why do we need more people?
the only explanation anyone ever gives is that we have to have more babies so they can support entitlement programs for the elderly, which is really a horrible argument. if society has to encourage an ever growing population in order to support the social welfare state, then the social welfare state is unsustainable.

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140 GoneWithTheWind May 17, 2017 at 9:53 am

It is unseemly for people to beg for the government to take money from someone else to enrich them. Why should women’s or anyone’s health care costs be subsidized by someone else. At the very least if you are going to beg for money do it at the street corner with a handwritten sign like the homeless people do.

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141 Captain Obvious May 17, 2017 at 10:02 am

I guess the answer in any sane civilized society should be no. But Americans and in particular libertarians are clearly insane, so let’s consider it 😉

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142 AndrewL May 17, 2017 at 10:22 am

the big takeaway from this discussion thread is that health insurance and health care in the US is very confusing and unnecessarily complex.
Considering the byzantine laws regarding health insurance/care, the big insurance companies are actually incentivized to make it confusing and complex so they can play their actuarial games to make money. For instance, can anyone explain how the business model actually works?

Has anyone ever received an EOB from Aetna or one of its competitors? does it not seem like all the numbers on that EOB are simply made up? How can a medical procedure costs 1,453.54$ and the “in-network” discount is “1428.54$” leaving your responsibility exactly 25$. what part of this does not seem completely fabricated?

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143 A Definite Beta Guy May 17, 2017 at 10:49 am

There’s a charge-master rate and an adjustment based on contract specifics and patient deductibles. This is increasingly electronic and there are a lot of trained professionals shaking their fists at each other over stuff like this.

I mean, it’s complicated, but so is a lot of other stuff in accounting, finance, and SLAs. The major problem, IMO, is that ultimate end-consumer payments fluctuate massively and you cannot tell what it is until you run it through the system….which most providers will not do until a service is actually performed.

I imagine this sector getting reformed eventually. It’s only been relatively recent that electronic adjudication even became a thing, that’s been a game-changer.

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144 prior_test2 May 17, 2017 at 11:34 am

Exactly the proper conclusion.

Leading to the question why the subject is handled the way it is, in part ensuring that such a crazy system remains unchanged.

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145 Albigensian May 17, 2017 at 10:30 am

The general principle is that when the actuarial risk is higher for women then rates should be the same (e.g. medical insurance, pensions) but when the actuarial risk is higher for men (e.g., car insurance) then men should pay more.

Because the general principle is that there is no general principle other than politics. Without legislatively-enabled regulation insurers will use anything that correlates with risk to adjust premiums, but, that means some will pay more based on factors they couldn’t have controlled, and a few will be unable to obtain insurance at any price.

Therefore politics makes it more “fair,” by distributing the political spoils to those groups with sufficient political clout to be catered to, and denies it to those who lack this.

Therefore since black, male Americans have significantly lower life expectancy than white, female Americans it’s only fair that the taxes which support the Social Security retirement fund, and the benefits paid by that fund, should be blind to race and sex: because it’s only fair that black men should subsidize white women.

Isn’t it?

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146 Anonymous May 17, 2017 at 11:45 am

As captain obvious says above, it is obvious. Discussing alternatives is for the insane.

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147 Jim May 17, 2017 at 10:44 am

It’s surprising that nobody has pointed out that starting at around age 38, women are actually less costly to insure than men.

I think across all ages (pre medicare), the cross subsidy between men and women is basically a wash.

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148 prior_test2 May 17, 2017 at 11:32 am

I guess when the incorrect link was fixed, comments related to it were simply removed.

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149 King Cynic May 17, 2017 at 11:56 am

Tyler, Tyler … trolling the world again?

Keep dabbling in misogynism and pretending you’re not.

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150 Anonymous May 17, 2017 at 5:25 pm

He’s making an objective observation without even stating a position. If there’s any misogyny it’s in the comments. Or are you using the term in its redefined progressive meaning?

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151 B. Reynolds May 17, 2017 at 12:06 pm

“Should women pay more than men for health insurance?”

If gender is a social construct, then how would that even be possible?

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152 Captain Obvious May 17, 2017 at 1:29 pm

+1000 HAHHAHAHHAHAH

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153 Dino May 17, 2017 at 2:05 pm

For every pregnancy there is a 100% chance that there is a man who is partly responsible for it.
Really, even if you take “economist” into consideration, this is a misogynistic notion.

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154 Hazel Meade May 17, 2017 at 2:20 pm

True, but the correct recourse is for women to sue for compensation for the costs of pregnancy. Not for society to compel insurers to charge men in general more.
By making this a general rule that covers ALL men and ALL women, you’re essentially saying that men that practice safe sex or abstinence should subsidize the pregnancies caused by men that father children.

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155 Albigensian May 17, 2017 at 4:41 pm

Not only that, but, if ten men impregnate 100 women, then why should the other 90 men share the bill?

There is, after all, a large biological asymmetry, in that the mother’s physical investment in reproduction is much larger in duration and cost than the father’s.

And therefore, if you look at one baby you’ll find one (biological) mother and one (biological) father, but if you look at 100 or 1,000 babies you’re likely to find fewer individual fathers than mothers (although the ratio won’t be 10:1, but it’ll almost certainly be greater than 1:1).

Of course, one might justify governmental pro-natalist policies in other ways, such as a with to favor population maintenance through native reproduction rather than via mass immigration. But Tyler’s strongly pro-immigration, and at least some of these immigrants will be from cultures with very high birthrates. So, if the purpose of this equalism is to increase childbirth, why might one wish to do that instead (or in addition to) admitting large numbers of immigrants?

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156 Hazel Meade May 18, 2017 at 1:25 pm

Yes, examples like this really expose the socialism fundamentally built into the structure of the ACA. ALL childbearing costs are shared amoung ALL insurance holders , they aren’t shared among people of childbearing age, or among people who have high birthrates. Nobody has any choice about what activities they wish to subsidize. if the government decides that “essential health benefits” include maternity, EVERYONE has to cross-subsidize maternity. It’s really a mechanism for socializing costs across the whole of society for select types of expenses that the state favors.

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157 byomtov May 17, 2017 at 3:54 pm

The first thing to do is to stop acting like men have no obligation to bear their share of the medical costs associated with pregnancy and childbirth. All the stupidity about, “Why should men have to pay for maternity care” is just that – stupidity.

So if you have a mandatory insurance scheme it is plain that men should have the same requirement to pay for maternity as women. That’s the way they meet their responsibility. In fact, if you want to identify a group that is treated unfairly by such a requirement it is women past childbearing age. A man can become a father at an age well past that at which a woman can no longer bear children.

To the extent the extra amount women pay for health care is due to pregnancy and childbirth there is no case at all for charging them higher premiums.

If you don’t have a mandatory insurance scheme then you should have strict rules about paternal responsibility for these expenses, so that women can make the father pay his share, and without suing. We do this with child support, after all. Maybe, if we did that, men would buy health insurance to cover the expense, and maybe women’s premiums would go down. That would happen in libertarian fantasyland, anyway.

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158 Anonymous May 17, 2017 at 4:32 pm

As already mentioned above, for children born within wedlock, it doesn’t matter who gets taxed – the family shares finances anyway. So this topic is mainly about bachelors paying for single mothers. It’s not so plain to me that childless men are responsible for single mothers’ upkeep, but I’m stupid – maybe you’ll enlighten me. Not to imply that it’s your job to educate me, of course.

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159 A Definite Beta Guy May 17, 2017 at 5:59 pm

You’re misogynist! Misogyny tax for you!

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160 byomtov May 17, 2017 at 6:08 pm

Not a question of upkeep but of being responsible for expenses that you helped incur.

OK. So some bachelors will not father children, just as some women will not get pregnant. But some unmarried individuals do have children, and there are medical cost involved. Now, I hope you can agree that those costs ought to be shared equitably between the parents, notwithstanding the fact that only the mother bears the physical burden. If not, then we have nothing to discuss.

So my point was that in a mandatory insurance system men as well as women should pay for maternity benefits, because when the bills come they should pay their share. It’s true that, as an administrative matter, the bills go to the mother’s insurer, but if the father has contributed to the pool then he pays indirectly, as he should.

Now, you complain about childless bachelors. But the complaint is of course equally valid for childless women who pay for maternity benefits. And it is especially so for older women who can no longer become pregnant, in contrast to older men who may still become fathers.

You seem to be advocating for a system in which prenatal and childbirth expenses are not covered by insurance at all. If so, I hope you at least agree that there ought to be a mechanism in place to insure that fathers pay their fair share of the bills.

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161 Anonymous May 17, 2017 at 6:23 pm

When the father runs away, it’s often because he doesn’t want a child. In an ideal world, financial abortion is a thing, so a mechanism that ensures fathers pay their fair share is only needed in rare edge cases like “both parents want the child but aren’t together” or “pregnancy discovered too late for abortion to be an option”.

The more practical outlook is that childbirth expenses will stay covered by insurance, and you have a point that this unfairly punishes women who don’t get pregnant if also combined with gender-specific pricing.

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162 byomtov May 18, 2017 at 7:45 am

When the father runs away, it’s often because he doesn’t want a child.

Too bad for him. And why should a woman who wants a child have to have an abortion because the father ran away and she can’t pay the bills herself? Sounds like an argument for mandatory maternity insurance to me.

163 A Definite Beta Guy May 18, 2017 at 9:03 am

It’s not unfairly punishing women, it’s insurance against a possible medical expense. That’s like saying I am being punished for buying insurance because I don’t get prostate cancer.

Maybe you can create an insurance product that does not cover maternity expenses for women who are confident they do not want to get pregnant, except that’s illegal today.

164 Anonymous May 18, 2017 at 9:58 am

Why should a man who doesn’t want a child pay for the choices of a woman who does? Because he didn’t keep it in his pants? I believe the same argument applied to the other gender keeping their legs closed has long since been discredited.

>why should a woman who wants a child have to have an abortion because the father ran away and she can’t pay the bills herself
I want a lot of things, and I don’t get them when I can’t pay for them. Children are no different.

165 Hazel Meade May 18, 2017 at 1:33 pm

The problem is pooling risks among groups of people who demonstrably do not have the same risks.
You can insure childbirth among women of childbearing age, and then have some legal mechanism for recovering the costs from biological fathers through liability. The same way that medical expenses due to auto accidents are recoverable from the person that caused the accident.

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166 Hazel Meade May 18, 2017 at 1:27 pm

As discussed above, why should ALL men share the cost of childbearing, even if some of them practice abstinence or safe sex?
Your system provides no mechanism or incentive for men to avoid impregnating women. In fact, by spreading the cost across all men (and infertile women) you’re actually subsidizing bachelors knocking up single women.

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167 Hazel Meade May 18, 2017 at 1:28 pm

“to avoid paying the costs of impregnating women”

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168 V May 17, 2017 at 4:38 pm

Maybe a different way to think about this is if a couple could choose which one would carry the child, what would be fair compensation (internally negotiated) and how would insurance and health care look in that world? OR, what if the world was only gay couples, and for the couples that wanted children but happened to be men, wouldn’t they pay for a woman to carry their child and then in that world, differential medical insurance pricing by sex would make sense? Also, for those women who choose NOT to be child bearers, would pay a different rate? America is so weird, we simultaneously love (anti-abortion) and hate (low education funding per capita, no universal kids health care) all kids…actually that sounds like real life with toddlers.

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169 ohwilleke May 17, 2017 at 5:52 pm

It is not obvious that healthcare expenses related to child bearing should be the sole obligation of the mother in the first instance.

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170 byomtov May 17, 2017 at 6:09 pm

In fact, it is obvious that such expenses should not be the sole obligation of the mother.

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171 A Definite Beta Guy May 18, 2017 at 9:04 am

It’s called child support, and it doesn’t operate in insurance markets.

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172 Dan Lavatan-Jeltz May 17, 2017 at 9:21 pm

Insurance should try and measure risk as precisely as possible. If you knew your car would be destroyed on a particular day it would be best just to have money that day to get a new car. Some people might not have that much cash and prefer financing. Although not ideal, it is OK to finance things, just like some people finance cars that aren’t destroyed. Insurance might have some value here, although not much since most people don’t get sick until their 50s which is plenty of time to save.

There is also some unknown risk which can be balanced by pooling, but insurers should be obligated to use all available information to minimize this. Anything else is charity and should be called out as such. Charity should probably go to those most in need, none of whom are in the US. One argument for insurance is to protect others, however just like with cars any means of showing financial responsibility should be accepted and none should be subsidized more than any other. Insurance is very inefficient and wastes more than $2 trillion US annually. Insurers should reimburse the public for these costs or have their corporate charters revoked.

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173 Jay May 17, 2017 at 9:35 pm

“Should women pay more than men for health insurance?”

Should teenage boys pay more than girls for auto insurance?

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174 prior_test2 May 19, 2017 at 4:48 am
175 KL May 23, 2017 at 7:49 am
176 Steve Schow May 19, 2017 at 4:48 pm

Women pay different prices for life insurance (not sure more or less, your health plays a role too). Why is health insurance so different that people throw out the rest of the insurance market as a comparable example?

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