re: #688 Dark_Falcon

Let me try my brief writeup.

1. We have reached a level of actuarial and medical knowledge where the costs of a patient over time can be extrapolated.

2. Health insurance companies mitigate risk across a pool; however, the lower the amount of risk they can accept in the pool, the better for them.

3. The actuarial and medical knowledge in (1) can identify individuals— and populations, like cancer patients— who add risk to the pool. Or, to put it another way, individuals who’s care will cost more than they pay into insurance throughout their lives.

4. There is no incentive for insurance companies to keep those people covered if they have any way of forcing them off coverage, changing the coverage, or restricting the coverage. Every time they can get one costly person off the policy, they increase their profitability.

5. The population, in other words, that health insurance companies least want on their books are unhealthy people, since unhealth has a magnitude of cost that is orders of magnitude greater than standard care for a healthy person.

6. Since the larger risk pool you have— weeded out as much of actual sick people as possible— the better off you are as an insurance company, the field tends towards monopoly. If you are a new insurer trying to break into the field, the only really open market is those who are extremely expensive— there’s no way to make money on that.

7. The real ‘customers’ of health insurance, in general, are employers, who’s metrics for what they want in a health insurance company are vastly different from the actual employees. They coincide in some ways, but the real ‘customer’ of the health insurance company is the employer, not the employee.

8. A sick employee is something detrimental to a business, so with employer-provided healthcare and a sick employee, both the health insurance company and the employer have a financial incentive to get that person off of the health insurance plan.

There’s more, but I have a full day’s work to get into, so that’s probably as in-depth as I can go right now.