Big data + private health insurance = game over


#1

Originally published at: http://boingboing.net/2017/08/04/highest-risk-pools.html


#2

Of course for many in the GOP, the reaction to this would be “That’s the way it SHOULD be,” Just like being poor, if you’re sick it’s because of your choices and I shouldn’t have to pay for that. When their arm gets worn out from whipping the poor for being poor, they’ll gladly switch to using their left arm to whip the sick for being sick.


#3

Private, for-profit health insurance ahould be abolished. Period.


#4

I disagree. It has a purpose, and ignoring that will cause any strategy for heading toward universal coverage to fail. Keep it, but as a voluntary supplement to an admittedly under-funded single-payer universal healthcare (call it Medicare, to drop the Obama/Trump fight) that has big gaps and caps. Let employers continue to provide coverage for employees, starting first with funding the federal and state governments’ portion of medicare costs at a per capita large pool rate, and continuing with any supplemental costs for a traditional level of additional coverage. The private market can continue to flourish as subcontractors in states that arrange their medicare that way. Other states can organize a state-run medicare program if they wish, within federally established guidelines. Citizens who dislike the program in their state can vote in their state legislature elections to effect the kind of market they want and, if that is ineffective, can ‘vote with their feet’ by moving to a state that meets their needs.


#5

No, for-profit means it is inherently flawed and removed from what its purpose should be: providing health care coverage. Investors who want to make profits should look to other industries. Profit motive is incompatible with health insurance and makes the cost to the “consumer” higher than it should be. Privately run would be acceptable only if it was non for profit. And then, only if there were strict regulations in place preventing outrageous pay and golden parachutes for CEOs and other executives.


#6

I don’t necessarily agree, but I see your point. That said, their current profits will create lobbying that will hinder their elimination. An intermediate step is the most likely way to effectively defeat them.


#7

The author may be a first-rate mathematician, but there is a good deal she doesn’t seem to know about health care. For example, it makes no sense to compare Medicaid to a high-risk pool, because it’s not a program for the sick; it’s a program for the poor. The poor may have marginally worse health outcomes, but they’re hardly the tuberculosis ward.

Also, there were already some regulations in place before the ACA, even if they were insufficient. The insurance industry doesn’t get to do whatever it wants.


#8

They don’t use their arms for that. They use the fellow poor.


#9

I’m not an expert here either, but I am not sure it works out that way in practice. Medicaid recipients also include (IIRC) elderly people who have depleted their savings due to long term care costs (aka nursing homes and assisted living facilities), and some subset of people receiving disability benefits, both groups that are likely to have high health care costs.

Also, in recent years the with the surge in people on Medicaid as a result of the ACA, there may have been/may be a surge in people making up for years of not getting needed care, raising current costs? Not sure if that has actually happened.

When medical costs are a common cause of bankruptcy, the gap between “program for the poor” and “program for the sick” becomes less clear, I think.


#10

Good discussion. I reactively tend to agree with @seyo, but you both make great points. I’m not intimately familiar, but this seems to be how it works in nations with universal care. There is a private option for those who can afford it, but reasonable coverage is extended to all. It seems that if insurers were working with smaller, more focused pools with specific needs there is a place for them. However, as it stands in the US I think that the corrupting influence of profit over care is too powerful for it to work.


#11

And this is why I refuse to answer anything but verifiable questions when it comes to my health insurance coverage through my employer, and why I do not participate in their wellness plan. Data gathering, all of it, and who knows how it will be used later, even if it saves me a few bucks today.

Thankfully they don’t have access to my or my family’s medical records. Yet.


#12

Ever heard of MIB? You might be surprised what “they” know about your medical records.


#13

Hm! Reading about them now. On their record request page:

You will not have an MIB Consumer File unless you have applied for individually underwritten life or health insurance in the last seven years.

That may or may not be true, I’m aware. But I certainly have only been on group life insurance for at least the last 12 years.

Doesn’t cost anything to request your file, so we’ll see!


#14

I agree, it’s not cut-and-dried. There are some elderly in the Medicaid pool. There are also millions of small children. I only meant to point out they’re not as homogeneous as the cancer pool or the diabetes pool.


#15

Not unsurprising in the least. In addition to the concerns you mention, the OP’s concerns are also somewhat nonsensical. Private insurance has very little interest in eliminating its customer base nor pricing them out.

Based on what I learned from my last employer which was an insurance group, overall the interest in big data is about:

  • trying to achieve savings on running many different DBs which often have licensing and legacy costs as well as the complications of all the data interchange software
  • Getting better around detection and prevention of fraudulent claims.

#16

I don’t disagree with the fact that the perverse incentives are cripplingly serious(and the advantages amount too “if we launder it through Aetna, some people won’t accuse us of filthy socialism”, hence most of the ACA’s extra fun features); but as a strategic matter I’d avoid going after it too hard: my understanding is that in most if not all countries that do offer some sort of universal coverage, it isn’t forbidden for insurers to attempt to sell supplementary packages, or for people to buy them; which has the advantage of blunting the “zOMG, the collectivist death panel service is mandatory!” freak-out, since it isn’t.

Farming out a single payer scheme to private contractors requires a truly delusional level of faith in the efficiency of the private sector, given their demonstrated awfulness; but one gains little by trying to actively stamp out whatever supplementary coverage schemes people attempt to offer in the context of universal coverage (while, not terribly unexpectedly, assuring the vehement opposition of those in line to be stamped out); which isn’t much of a win when the objective is to fix the dire state of the risk pool and baseline coverage.

It’s sort of like the difference between opposing the “let’s destroy public education and send the cash to those innovative charter schools!” and “let’s forbid all private and parochial schools, period.” The former is pretty much necessary to avoid a massive smash 'n grab; the latter might prevent some of the abuses that are currently accomplished just by moving to a wealthy suburb; but at the cost of substantial additional opposition.


#17

My understanding is that the problem is that “their customer base” is not necessarily a fixed group; and that better actuarial data can assist in pruning it, or charging premiums that are an ever more accurate function of its expected costs.

In the hypothetical extreme case where the insurer has perfect information; you’d be better off just paying out of pocket and taking out a loan for anything you couldn’t afford upfront: lower overhead and no claims battling. Only if they serve a risk pooling function(either because it’s mandatory, because their information is imperfect, or both) do they provide any advantage beyond repackaging your costs into monthly payments, with overhead.

The perfect information scenario is obviously a hypothetical; but there are plenty of people who have enough information available to be identifiably lousy risks(or, in the case of pre-existing conditions, lousy known what quantities); and there is absolutely no reason to expect them to be insurable through the incentives of an insurance company.

With the less obvious risks, or the low risks, sure, no reason to kick a customer off the rolls(at least until they start making claims); but the fight has never been over “but how will we possibly get healthcare to mostly healthy people who can afford it anyway?”


#18

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