tag:blogger.com,1999:blog-610803938756668468.post3142056264549673137..comments2024-03-28T07:08:58.221-04:00Comments on Todd Seavey: I Cannot Has Fail? Also: Risk-Averse Megan McArdleTodd Seaveyhttp://www.blogger.com/profile/08589187886030112999noreply@blogger.comBlogger12125tag:blogger.com,1999:blog-610803938756668468.post-91723163545158337392009-03-30T10:04:00.000-04:002009-03-30T10:04:00.000-04:00Jenny: the point is that insurance companies can ...Jenny: the point is that insurance companies can deduce risk factors over a large population — the morbidly obese, for example, tend to have a higher risk of early death — and then factor those into the price of insurance for an individual. Thus the individual is penalized for having things in common with identifiable high-risk populations. This is a reasonably blunt instrument, but Mr. Seavey and I both think it is a legitimate role of insurers (who should enjoy a strong presumption in favor of being able to measure the risk they are taking). <br><br>I’m not sure what you are saying is “fraudulent”, but I hope it’s not this practice.Sammlerhttp://stonecity.blogspot.com/noreply@blogger.comtag:blogger.com,1999:blog-610803938756668468.post-86397299512745410552009-03-30T09:59:00.000-04:002009-03-30T09:59:00.000-04:00Brandon Berg: It is not hard to buy term life pol...Brandon Berg: It is not hard to buy term life policies which have a maximum rate increase (in exchange for a higher initial rate). This is an established example of the “insure my insurance premiums” policy you describe. I am not aware of such policies for medical, rather than life, insurance — but I have never looked.Sammlerhttp://stonecity.blogspot.com/noreply@blogger.comtag:blogger.com,1999:blog-610803938756668468.post-67497115171350848072009-03-30T09:37:00.000-04:002009-03-30T09:37:00.000-04:00The best thing about differentiated insurance is i...The best thing about differentiated insurance is it puts a price on misbehavior and you can decide whether or not to misbehave. Want to smoke? Eat too much? Fine, but it will cost you. I’ve been known to exceed the speed limit on occasion, and my insurance premiums reflected that for a while. It was worth it.<br><br>We’re already seeing the collective risk pool concept applied to such personal decisions and I don’t think anyone likes it.Sean Doughertynoreply@blogger.comtag:blogger.com,1999:blog-610803938756668468.post-52630629849077896162009-03-30T09:24:00.000-04:002009-03-30T09:24:00.000-04:00todd – you can’t base insurance on “individualized...todd – you can’t base insurance on “individualized” risk calculations – the entire mathematical model underpinning the concept is based on population aggregates. attempting to tailor to the individual rather than to broader risk profiles is impossible – and if anyone’s trying to sell insurance based on individualized assessments, it’s worse than impossible – it’s fraudulent.jennynoreply@blogger.comtag:blogger.com,1999:blog-610803938756668468.post-39846204013666267792009-03-30T00:41:00.000-04:002009-03-30T00:41:00.000-04:00Todd:While, I don’t like this, it does address a v...Todd:<br><br>While, I don’t like this, it does address a very real problem with medical insurance, namely that you can develop a health problem through no fault of your own, and while the insurance company will cover it, they’ll then jack up your premium to reflect the risk of recurrence. People with congenital health problems have the same problem.<br><br>Ideally there would be a way to insure against this sort of thing (i.e., for an additional charge your insurance will not only covers treatment, but also pay out a lump sum to cover the increased premiums). But for whatever reason (probably the fact that very few people actually have to buy insurance individually), this product does not, to the best of my knowledge, exist.<br><br>Without a market solution, this is the next best thing. However, I would want the insurance companies to be able to continue to discriminate on the basis of lifestyle factors.Brandon Berghttp://distributedrepublic.net/noreply@blogger.comtag:blogger.com,1999:blog-610803938756668468.post-92221548701823217432009-03-29T23:53:00.000-04:002009-03-29T23:53:00.000-04:00I think the less regulated the economy, the more l...I think the less regulated the economy, the more likely we’d be to see a drift away from health insurance plans provided through employers (or governments) and that individualized plans would tend to be tailored to customers’ desires: If you wanted to pay slightly less by proving to the insurance company that you were diligently maintaining your health, you could do so, but surely there’d be plans for people less inclined to put up with such intrusions.<br><br>One thing McCain had going for him (though not enough — and I didn’t vote for him, and I’m not confident we’d be any better off if he’d won) was the desire to enact health reforms specifically aimed at separating health insurance from employers, which would likely make plans more numerous and fluid _and_ have the potentially even more beneficial side effect of making people more willing to hop around between jobs, less beholden to a given employer and less frightened of losing their coverage if they made a change.<br><br>In general, though, I can’t blame insurance companies for wanting you to strive to be less risky — and, as with making people check off smoker or non-smoker, they might even be nudging you toward greater happiness in the process.<br><br>I also think insurance companies are the logical de facto arbiters of the “legitimacy” of gay marriage, but that’s a whole different, complicated story.Todd Seaveyhttp://www.blogger.com/profile/08589187886030112999noreply@blogger.comtag:blogger.com,1999:blog-610803938756668468.post-72180599314530702702009-03-29T21:27:00.000-04:002009-03-29T21:27:00.000-04:00Slightly tangential to the topic above, since very...Slightly tangential to the topic above, since very many of the most prevalent diseases that people die from (and insurance companies spend the most money on) are preventable is there a cost-benefit analysis between insurance companies charging everyone more or micromanaging the people on their plans. For instance I’ve heard of insurance companies asking their clients to call a number from the gym every time they go in. If they go in 120 days or more a year they get reduced premiums.<br><br>In this particular case I’m against everyone shouldering more burden when so much insurance money is spent on people who are irresponsible with their own health.<br><br>How far away are we from insurance companies putting a pedometer on you or having you photograph everything you eat and drink for a month so you can get lower premiums?Dianahttp://dianafleischman.com/noreply@blogger.comtag:blogger.com,1999:blog-610803938756668468.post-85932172955105340762009-03-29T10:35:00.000-04:002009-03-29T10:35:00.000-04:00No, that’s my _entire_ point. The whole exercise ...No, that’s my _entire_ point. The whole exercise becomes meaningless — or rather becomes welfare — if it ceases to be based on individualized risk calculations. Force everyone to behave as if their risks and resulting premiums are equal, and it’s a bit like saying, “Some of you should train for months for this upcoming race — really give it your all, people, no slacking — while others should continue to be morbidly obese and watch TV all day, and fear not, because you’ll all be judged as though you ran a fifty-minute mile, in keeping with basic justice.” <br><br>Insurance companies have every right to decide how fine-grained the risk ratings should be to make it worth their while to _be_ an insurance company, just as a race run merely to separate the fast half from the slow half might not bother with photo finishes, but saying “Insurance is about everyone together at the same time hedging for collective risk” is as absurd as saying “All the runners are in the race together, so no information is lost if they’re treated as though they ran the same speed.” <br><br>Maximum insanity. Let’s give all kids straight A’s while we’re at it and claim we’ve done no damage to education. This is how everything humanity has ever worked for ends, all things reduced to their lowest and most mindless level. If your best and brightest can’t intuit the problem, we’re done for. You’ll notice I don’t speak of a “future” as much I used to.Todd Seaveyhttp://www.blogger.com/profile/08589187886030112999noreply@blogger.comtag:blogger.com,1999:blog-610803938756668468.post-65318554845520463682009-03-29T08:26:00.000-04:002009-03-29T08:26:00.000-04:00you’re missing the pooled risk component of insura...you’re missing the pooled risk component of insurance. the bet isn’t just between the individual and the insurer, but between the insurer and the entire category of insureds. this shifts the incentives somewhat.jennyhttp://laloca.org/noreply@blogger.comtag:blogger.com,1999:blog-610803938756668468.post-11892852848173745342009-03-28T22:10:00.000-04:002009-03-28T22:10:00.000-04:00AIG’s role in insuring “stable-value funds†was ...AIG’s role in insuring “stable-value funds†was one factor<br><br>in Bernanke’s reasoning concerning bailing it out, so your<br><br>stock market analogy isn’t far off for that category of<br><br>investors (truth not far from fiction)Timnoreply@blogger.comtag:blogger.com,1999:blog-610803938756668468.post-88617699506593966462009-03-28T22:05:00.000-04:002009-03-28T22:05:00.000-04:00Re: no-loss stock market – there are such things a...Re: no-loss stock market – there are such things as <a href="http://www.smartmoney.com/investing/basics/what-is-a-stable-value-investment-17548/" rel="nofollow">“stable-<br><br>value funds,”</a> but essentially yields are given up to pay<br><br>insurance.<br><br>(Saw “stable-value funds” in an article about AIG)Timnoreply@blogger.comtag:blogger.com,1999:blog-610803938756668468.post-39144295250658661822009-03-28T09:56:00.000-04:002009-03-28T09:56:00.000-04:00I’m an actuary myself, and agree wholeheartedly wi...I’m an actuary myself, and agree wholeheartedly with your assessments both regarding insurance and Megan McArdle.<br><br>The information contained in actuarially sound insurance rates can often be a bitter pill to swallow, but it’s almost always good medicine. Some people say you can learn a lot about others by looking through their trash. I say you can learn a lot about yourself by reviewing your bill from GEICO.<br><br>Megan McArdle is one of my favorite bloggers. She’s a good writer with strong opinions, but her knowledge of economics and support for individual freedom have always struck me as weak. I was very surprised by her endorsement of the bailouts, and my opinion of her has yet to recover fully. It seems like there is precious little space in her worldview for recognition of uncertainty without correspondent fear.Toddnoreply@blogger.com