Reply #68: Still not very comparable, cost stabilization in car insurance is possible...

[Cleobulus]

because of many factors, the most obvious of which is that cars are devalued, in some cases drastically, as soon as they drive off the lot brand new and they continue to devalue over time. Its a lot cheaper to insure a 20 year old car than a car that was built this year. The same cannot be said with health insurance, everyone eventually will need more medical care as time goes on, and in addition to this, unlike with cars, many people inherit or come down with conditions that greatly increase the costs of their medical care when such things are rare to happen in cars. Cars, in general, do not become more expensive to insure if they break down frequently, because the car insurance companies do not pay for that.

Not to mention that other factors, such as age and sex, in addition to driving habits, affects the cost of car insurance, a 20 year old male pays more for car insurance than a 25 year old female, we consider this fair due to driving statistics that state that the 20 year old male is more likely to be reckless in his driving. Of course, individual driving habits(i.e. no claims) also affects the cost of the insurance coverage as well.

The same cannot be said with medical insurance, with only a few exceptions(smoking, severe obesity) generally people don't think its fair to charge more for health insurance due to factors such as hereditary diseases and/or chronic conditions that people inherit or have no control over. Even in cases where we think it could be due to personal habits, such as certain cases of being overweight or obese could be cause by underlying conditions that the person in question has no control over.

Probably the biggest issue I have is that you think that competition will automatically drive prices down. You just said that revenue will go up when the market for health insurance expands, well, what is the market? Healthy people of course, preferably young healthy people, to add to the risk pool of insurance companies. The problem is that you hit a wall of sorts when the product, or market, is actually people, because we don't roll off an assembly line, even if every single legal resident in this country is insured by some insurance company or another, it will only reduce insurance rates, by itself, about 10-15%(30 to 45 million people added into the risk pools), and this is assuming we have only ONE insurance company in the country.

Since the market is inflexible for health insurance, the cheapest, most cost effective way to reduce premiums and maximize being able to pay claims for people as needed is to have everyone in the country by into one health insurance company, because if you have two, or even multiply it up even more, then you half the risk pool, or divide it up even more, which would DRIVE PRICES UPWARDS. This is one of those cases where competition actually makes things more expensive for everybody.

Not to mention this doesn't mitigate the costs of actual health care, the paying out of claims, unlike car insurance, with the ability to swap parts, find replacements, and even, if the damage is too much, being able to buy a new car as options, there's an actual limit to how much of a claim they will pay for a car, and this can be fixed using market factors. For people, its completely different, for one, we cannot swap parts easily, and for two we are much higher maintenance that even the worst oil burning jalopy out there. We don't even place a value as such on our bodies, and we really can't either, if you contract a disease that will cost hundreds of thousands of dollars to treat and/or cure, its going to cost that much, period. There's not much to negotiate there.

Yes, the government, and possibly large plan pools can negotiate, but not the individual because they have no power to do so, and frankly unless they are multimillionaires they will never have the power to do so. Also, medical costs, in many cases, have absolutely no relation to inflation, new cutting edge treatments are going to be expensive as hell, and even procedures that are considered common or at least not cutting edge are, in many cases expensive as hell. And this is just talking about catastrophic coverage, even something as simple as going to a doctor's office, or getting a consultation with a specialist, can in some cases be expensive.

Let me throw a comparison out there just to illustrate my point. You have a car insurance company that has someone trying to get insured through them, they go through his driving record, his age, etc. and they sign him up, no problem. The reason is because they know that they are only going to cover his car and possibly others at a set amount, let's assume that the average American drives a car worth about 10,000 dollars, a reasonable number, after the car is driven off the lot it could be worth that. So the insurance company, on average, if this guy gets into an accident that is his fault, will only have to pay, at maximum, approximately 20 grand, and maybe more for multiple car accidents(those are rarer). And of course, if the guy in question is a bad driver they are free to drop him as well, or put him in a high risk, much more expensive pool.

A medical insurance company, on the other hand has no such assurances, that healthy 20 year old who they just signed up could develop MS, for example, and cost the company hundreds of thousands or even a millions of dollars over his lifetime, or he could be healthy until he's 90 and then die in his sleep. They run a much higher risk, in this sense, and hence are much less likely to take such risks, hence the need to regulate them much more heavily, at the very least.