I don’t agree that government healthcare will be needed in the age of ‘big data’. Lowered costs are a result of freedoms, not government restrictions on choice in the health care and health insurance markets… e.g. ACA and its current death spiral.
The author of this biased piece is obviously ignorant of scenario options OTHER restriction of predictive data / algorithms by insurance companies OR universal government run health insurance. Hence, she offers only TWO possibilities, and discredits the ONE she doesn’t like because she is liberal, and thus unable to conceive of the possibilities of free markets using innovation to solve problems as they did for high risk auto drivers, flood risks, bed pan mutuals for med mal risks with high severity claims, etc.
Polar, I see you still have your followers eager to down vote you even though they don’t have courage to answer you. By all means, let’s not have a discussion on insurance topics without leftists seeking to eliminate free speech.
By the way, Big Data aka Algorithms have not worked so well in Personal Lines insurance. Need an example, State Farm lost $7 Billion in Personal Auto just last year with their faulty data insuring a lot of bad drivers and cell addicts.
Good points. But fret not about the down-voting silent objectors. They are now unable to censor conservative opinions due to anti-BOT tech employed by IJ. They can call in their friends to tr to censor opinions, but that will wear thin their friendships in a short time.
IMO, Personal Auto lines are in too great a state of flux to be easily modeled by GLMs or Machine Learning tools. In the end, actuaries and data scientists who do so have no control over what other segments of the market do without those tools, and in the end, underwriters have to chase accounts with price softening when faced with loss of revenue if they adhere strictly to modeled rates using the most accurate models.
Polar, I kind of like that doctor practice in Wichita, Ks who doesn’t take insurance and provides concierge services for about $50 per month per person. If there are more serious conditions, the person can use a high deductible plan for major surgery, cancer, heart etc. Healthy people need not subsidize the unhealthy in this country or you end up with Oblamacare which is what we certainly don’t want or some Single Payer nonsense which would bankrupt the country in a few years.
This practice would be charging my healthy family $250 per month for what exactly? Does this plan cover prescriptions and lab work? What is the premium and deductible for the major things?
This is just creating adverse selection. Only those with chronic conditions who need regular visits would purchase this plan. Healthy people would just go for annual check-ups.
It would not take long for them to either add a deductible, charge more money or exclude treating any pre-existing condition.
PolarBeaRepeal,
While I did not down vote your post, above is a brief explanation indicating why this, and nearly any free-market approach, will not work. Therefore, I agree that it is a good example of the impact of freedom of choice.
Oh my. This starts with some early comments bordering on the intelligent side but then takes big swings at suppositions that reflect little understanding of the insurance market and insurers. For all of our sake, please understand that this is misguided.
20 states have already banned the use of big data to price optimize auto insurance. That will preserve insurance. If big data separates risks into smaller and smaller groups, each paying their own way, ultimately you reach a point where “insurance” is useless and everybody should just pay their own way without the overhead costs of any insurance system
Ideally, subdivision of classes yields classes that cannot be again subdivided and yield dissimilar risk costs. At that point, experience or retro rating isn’t likely to be beneficial. Or, slightly larger classes with heterogeneity can be retro rated to achieve the same goal, while creating incentives for cost savings per actions of insureds.
The focus on analysis rather than the big picture may limit realistic medical insurance options. Being distracted by precision analysis may interfere with accurate long term results. Reminds me of Covey’s book with story about being efficient (management style) but in the wrong jungle (leadership style)!
The real issue is that medical coverage contains significant expense that can be mitigated.
Tort reform (Legalocracy), Rx reform (Pharmocracy) and Lobby reform (Lobbyocracy) need to be addressed not enabled with continued inefficient expanded government control.
If we could compress the current medical industrial complex more funds would directly available for preventive and needed medical care.
The 4% (1940) to current 18% (2017) of GDP for health spending is irrational and may not be sustainable.
During World War II with frozen wages, the third party payer system was started to attract and retain employees.
Current over use of high end equipment, Rx and specialists in America has average cost about $10 K per person expenditure. Most other “developed” counties pay 3 to 5 K year!
More self-reliant, low exposure medical risks may want to contribute to wider “risk pools” if they only had to donate $300 month for net preventive or needed care.
More choices, less force in the process would also be appreciated!
Good points, especially about OPTIONS. ACA was never about options, and was intended to lead to Single Payer through an intentional construction of a death spiral through exemptions, dropping separate high risk pools, and useless / ineffective penalties for not insuring.
Doug, I would agree that an increase from 4%-18% is not sustainable. I wonder how much of the increase is due to new treatments & drugs for previously untreatable diseases as compared to unnecessary regulations & malpractice lawsuits. Plus an increase in life expectancy since 1940 only makes cost higher, not lower. I live in the land of retirees and it’s common to see knee replacements on 85yr olds, eye lid surgeries, etc. Where do we draw the line on this without the “death panel” issue. Doctors may complain about the reimbursement rates for Medicare but let’s face it, it’s their meal ticket and without Medicare doctors wouldn’t have as many customers. Certainly the elderly could not afford to pay out of pocket.
Surely, it is not beyond our wit with all this data to structure a reinsurance type mechanism that combines the knowledge and experience of the insurance industry in managing healthcare claims with the modelling expertise of the reinsurance industry and a catastrophe level backup from the much greater resources of financial markets and the government.
I agree the expense of healthcare can be mitigated with more focus on preventative care. The interesting thing is that thanks to big data we are discovering the real causes behind many of the ailments effecting our communities. Increase consumption in red meat, sugary beverages, and processed foods have been paramount in our health decline, and the food industry has done a superb job at keeping consumers in the dark about the effects of this diet. Big data is a double-edged sword in that it can topple the insurance market if not used properly, but also can reveal the truth about where this healthcare crisis originally came from. Cancer is a modern preventable disease. (See Source)
Agree Interested. Many of our medical ailments are caused by the choices we make – what we eat and how we live (smoking/drugs/alcohol). Plus we’re very accident prone in the US (more auto accidents, more guns). Our freedoms cost money but we’ll never settle for a plan that divides cost or limits care based on these freedoms. People would scream it’s not fair. Example – smoke all your life and get lung cancer after 80, no treatment for you unless you pay for it. I’d advocate this but others won’t because “it wasn’t Grandpa’s fault he was addicted – it was big tobacco’s fault”.
It’s ironic that we’re largely a Euro-centric country yet we scoff at Europe’s proven single-payor success. Take away the greedy doctors, the greedy pharmaceutical companies, and the greedy lawyers, and you have affordable care for all which doesn’t cause bankruptcies. In fact, it creates a healthier society, where not only healthcare but also education and retirement are included in one’s tax bill, leaving one to pursue their dreams unencumbered. Germany doesn’t have the world’s leading economy by accident.
You make some good points but I would ask this question – If a pharmaceutical company uses their own time & money to develop a drug, why can’t they charge any amount they wish? Most businesses work this way. At some point, if an insurance plan as a dollar limitation on drug costs or the public can’t afford the out of pocket for the drug, then the pharm company will drop the price if they want to sell product. One of the reasons drug costs are high (and insurance) is because we demand that our insurance company pay for any drug available and we think it’s terrible if they don’t.
Sac-Flood – I have extended family in Germany and the healthcare is terrible. Very long waits to see doctors and get surgeries. Don’t believe all the “grass is greener” fodder you hear.
For the few European countries where it appears to work, you have to compare the size of their country and how many people have to be supported compared to the US. Our issues are exponential to that of Sweden or France.
SacFlood, Germany does not have the world’s leading economy. Where are you pulling that statistic from? Germany has Europe’s largest economy, but it certainly pales in comparison to the United States or China. The German economy is about 3.5 trillion GDP compared to 15.5 in the United States. Keep in mind that Germany’s economy is often favorably viewed compared to the US because their government debt to gdp is lower. Yet you are advocating a position that would even further increase the United States’ debt to GDP ratio. Also, I was born in Canada and raised in the United Kingdom–single payor systems are terrible and the standard of care is far lower (that is my personal opinion). I watched my grandmother die at home because her local English NHS hospital sent her home because they were out of beds. You American leftists are so naïve when it comes to European healthcare. The best physicians and hospital in the world are here in the united states. Europe’s greatest examples of single payor systems are the Scandinavian countries—Sweden, Norway and Finland. The populations of all three countries are significantly lower than TEXAS ALONE (even if you throw in Denmark and Iceland it is still lower). Also, their standard level of education is higher, and their government bureaucracies are far more advanced. Our inept government in the United States could not possibly run a competent single payor system with a bloated federal government and population approaching 400,000,000.
I don’t agree that government healthcare will be needed in the age of ‘big data’. Lowered costs are a result of freedoms, not government restrictions on choice in the health care and health insurance markets… e.g. ACA and its current death spiral.
The author of this biased piece is obviously ignorant of scenario options OTHER restriction of predictive data / algorithms by insurance companies OR universal government run health insurance. Hence, she offers only TWO possibilities, and discredits the ONE she doesn’t like because she is liberal, and thus unable to conceive of the possibilities of free markets using innovation to solve problems as they did for high risk auto drivers, flood risks, bed pan mutuals for med mal risks with high severity claims, etc.
Polar, I see you still have your followers eager to down vote you even though they don’t have courage to answer you. By all means, let’s not have a discussion on insurance topics without leftists seeking to eliminate free speech.
By the way, Big Data aka Algorithms have not worked so well in Personal Lines insurance. Need an example, State Farm lost $7 Billion in Personal Auto just last year with their faulty data insuring a lot of bad drivers and cell addicts.
Good points. But fret not about the down-voting silent objectors. They are now unable to censor conservative opinions due to anti-BOT tech employed by IJ. They can call in their friends to tr to censor opinions, but that will wear thin their friendships in a short time.
IMO, Personal Auto lines are in too great a state of flux to be easily modeled by GLMs or Machine Learning tools. In the end, actuaries and data scientists who do so have no control over what other segments of the market do without those tools, and in the end, underwriters have to chase accounts with price softening when faced with loss of revenue if they adhere strictly to modeled rates using the most accurate models.
Polar, I kind of like that doctor practice in Wichita, Ks who doesn’t take insurance and provides concierge services for about $50 per month per person. If there are more serious conditions, the person can use a high deductible plan for major surgery, cancer, heart etc. Healthy people need not subsidize the unhealthy in this country or you end up with Oblamacare which is what we certainly don’t want or some Single Payer nonsense which would bankrupt the country in a few years.
That is a good example of the impact of freedom of choice of coverage levels, e.g. Cruz amendment/ provision in last bill by US Senate.
Two voters thus far think that wasn’t a good example, yet they offered no alternatives.
Agent,
This practice would be charging my healthy family $250 per month for what exactly? Does this plan cover prescriptions and lab work? What is the premium and deductible for the major things?
This is just creating adverse selection. Only those with chronic conditions who need regular visits would purchase this plan. Healthy people would just go for annual check-ups.
It would not take long for them to either add a deductible, charge more money or exclude treating any pre-existing condition.
PolarBeaRepeal,
While I did not down vote your post, above is a brief explanation indicating why this, and nearly any free-market approach, will not work. Therefore, I agree that it is a good example of the impact of freedom of choice.
Oh my. This starts with some early comments bordering on the intelligent side but then takes big swings at suppositions that reflect little understanding of the insurance market and insurers. For all of our sake, please understand that this is misguided.
20 states have already banned the use of big data to price optimize auto insurance. That will preserve insurance. If big data separates risks into smaller and smaller groups, each paying their own way, ultimately you reach a point where “insurance” is useless and everybody should just pay their own way without the overhead costs of any insurance system
Ideally, subdivision of classes yields classes that cannot be again subdivided and yield dissimilar risk costs. At that point, experience or retro rating isn’t likely to be beneficial. Or, slightly larger classes with heterogeneity can be retro rated to achieve the same goal, while creating incentives for cost savings per actions of insureds.
The focus on analysis rather than the big picture may limit realistic medical insurance options. Being distracted by precision analysis may interfere with accurate long term results. Reminds me of Covey’s book with story about being efficient (management style) but in the wrong jungle (leadership style)!
The real issue is that medical coverage contains significant expense that can be mitigated.
Tort reform (Legalocracy), Rx reform (Pharmocracy) and Lobby reform (Lobbyocracy) need to be addressed not enabled with continued inefficient expanded government control.
If we could compress the current medical industrial complex more funds would directly available for preventive and needed medical care.
The 4% (1940) to current 18% (2017) of GDP for health spending is irrational and may not be sustainable.
During World War II with frozen wages, the third party payer system was started to attract and retain employees.
Current over use of high end equipment, Rx and specialists in America has average cost about $10 K per person expenditure. Most other “developed” counties pay 3 to 5 K year!
More self-reliant, low exposure medical risks may want to contribute to wider “risk pools” if they only had to donate $300 month for net preventive or needed care.
More choices, less force in the process would also be appreciated!
Good points, especially about OPTIONS. ACA was never about options, and was intended to lead to Single Payer through an intentional construction of a death spiral through exemptions, dropping separate high risk pools, and useless / ineffective penalties for not insuring.
Doug, I would agree that an increase from 4%-18% is not sustainable. I wonder how much of the increase is due to new treatments & drugs for previously untreatable diseases as compared to unnecessary regulations & malpractice lawsuits. Plus an increase in life expectancy since 1940 only makes cost higher, not lower. I live in the land of retirees and it’s common to see knee replacements on 85yr olds, eye lid surgeries, etc. Where do we draw the line on this without the “death panel” issue. Doctors may complain about the reimbursement rates for Medicare but let’s face it, it’s their meal ticket and without Medicare doctors wouldn’t have as many customers. Certainly the elderly could not afford to pay out of pocket.
Surely, it is not beyond our wit with all this data to structure a reinsurance type mechanism that combines the knowledge and experience of the insurance industry in managing healthcare claims with the modelling expertise of the reinsurance industry and a catastrophe level backup from the much greater resources of financial markets and the government.
I agree the expense of healthcare can be mitigated with more focus on preventative care. The interesting thing is that thanks to big data we are discovering the real causes behind many of the ailments effecting our communities. Increase consumption in red meat, sugary beverages, and processed foods have been paramount in our health decline, and the food industry has done a superb job at keeping consumers in the dark about the effects of this diet. Big data is a double-edged sword in that it can topple the insurance market if not used properly, but also can reveal the truth about where this healthcare crisis originally came from. Cancer is a modern preventable disease. (See Source)
(http://www.avaate.org/IMG/pdf/HALLBERG_JOHANSSON_-_CANCER_TRENDS_DURING_THE_20TH_CENTURY.pdf)
Agree Interested. Many of our medical ailments are caused by the choices we make – what we eat and how we live (smoking/drugs/alcohol). Plus we’re very accident prone in the US (more auto accidents, more guns). Our freedoms cost money but we’ll never settle for a plan that divides cost or limits care based on these freedoms. People would scream it’s not fair. Example – smoke all your life and get lung cancer after 80, no treatment for you unless you pay for it. I’d advocate this but others won’t because “it wasn’t Grandpa’s fault he was addicted – it was big tobacco’s fault”.
There are already examples of HI reinsurance pools using insurance-linked securities / Cat bonds for HI…. they’ve been used for about a decade.
It’s ironic that we’re largely a Euro-centric country yet we scoff at Europe’s proven single-payor success. Take away the greedy doctors, the greedy pharmaceutical companies, and the greedy lawyers, and you have affordable care for all which doesn’t cause bankruptcies. In fact, it creates a healthier society, where not only healthcare but also education and retirement are included in one’s tax bill, leaving one to pursue their dreams unencumbered. Germany doesn’t have the world’s leading economy by accident.
You make some good points but I would ask this question – If a pharmaceutical company uses their own time & money to develop a drug, why can’t they charge any amount they wish? Most businesses work this way. At some point, if an insurance plan as a dollar limitation on drug costs or the public can’t afford the out of pocket for the drug, then the pharm company will drop the price if they want to sell product. One of the reasons drug costs are high (and insurance) is because we demand that our insurance company pay for any drug available and we think it’s terrible if they don’t.
“Take away the greedy doctors, the greedy pharmaceutical companies, and the greedy lawyers…”
And replace them with greedy politicians? No thank you.
Sac-Flood – I have extended family in Germany and the healthcare is terrible. Very long waits to see doctors and get surgeries. Don’t believe all the “grass is greener” fodder you hear.
For the few European countries where it appears to work, you have to compare the size of their country and how many people have to be supported compared to the US. Our issues are exponential to that of Sweden or France.
SacFlood, Germany does not have the world’s leading economy. Where are you pulling that statistic from? Germany has Europe’s largest economy, but it certainly pales in comparison to the United States or China. The German economy is about 3.5 trillion GDP compared to 15.5 in the United States. Keep in mind that Germany’s economy is often favorably viewed compared to the US because their government debt to gdp is lower. Yet you are advocating a position that would even further increase the United States’ debt to GDP ratio. Also, I was born in Canada and raised in the United Kingdom–single payor systems are terrible and the standard of care is far lower (that is my personal opinion). I watched my grandmother die at home because her local English NHS hospital sent her home because they were out of beds. You American leftists are so naïve when it comes to European healthcare. The best physicians and hospital in the world are here in the united states. Europe’s greatest examples of single payor systems are the Scandinavian countries—Sweden, Norway and Finland. The populations of all three countries are significantly lower than TEXAS ALONE (even if you throw in Denmark and Iceland it is still lower). Also, their standard level of education is higher, and their government bureaucracies are far more advanced. Our inept government in the United States could not possibly run a competent single payor system with a bloated federal government and population approaching 400,000,000.
Great post, Augustine!