The sheer relentlessness of the “Well, if we completely eliminated the risk-pooling that is the whole point of insurance in the first place; it would be cheaper for the low cost cases” has really made it hard to decide between mendacity and
horrific cluelessness.
Yes, sure, if you slice and dice the risk pool hard enough, it’s trivial to extract major savings for certain groups; however, the more you dice the risk pool, the closer you get to the situation where ‘insurance’ is just the glorious prospect of paying your expected costs; plus the insurers’ overhead and profit, in premiums in exchange for the chance to fight brutal wars of bureaucratic attrition to get anything paid out.
If insurance isn’t going to pool risk; anyone who can afford it would be way better off just self-insuring(even if you need to borrow money, lenders have lower overhead than insurers, and you don’t have to fight them every inch of the way over what you can or can’t spend the loan on); and people who can’t afford it are basically choosing between paying ruinously high premiums and going bankrupt if they get sick or paying no premiums and going bankrupt if they get sick, so they are also better off self-insured.
Insurance is sort of a perverse business, even if you have no moral qualms about the implications of the distribution of medical coverage: the immediate incentive is always to improve your risk model and your estimate of each policyholder’s expected costs; but the closer you get to perfect modeling the less worthwhile your product is; because insurance perfectly calibrated to your expected risk is basically paying a hefty markup to have your out-of-pocket costs repackaged into monthly fees.
Similarly the incentive to deny every claim you can(but never mind that; look at the scary moral hazard over there!) has obvious immediate benefits; but kind of erodes the desirability of paying for coverage that you know will be withdrawn on some arcane technicality if you ever actually really need it.
