You are looking at a mathematical definition of insurance, whereas I am considering the social purpose of insurance.

The logical implication of taking the mathematical definition as the intent of insurance is, as I mentioned before, that everyone is presented with a health-insurance contract at birth, which for most people will be fairly small, but for a few others (who are genetically disposed to specific illnesses and cancers) will be extremely large. And it will be a “take it or leave it”; and if you leave it, what will happen to you when you become ill? Either: a) You will fall back into the emergency-room situation (which means, as described above, that you’re free-riding, however uncomfortably, on everyone else); or b) We get used to people being left to die in the street. You can explain b) to your children as follows: “That man’s parents made the wrong choice on their outcome probability-distribution function, so he’s being left in the street. Don’t worry, they’ll remove the body eventually.”

There will be good souls who contribute to the operation of hospitals on charitable grounds, as in India, but there won’t be enough. So it will go back the way emergency rooms are supported today: padded costing for everything in the hospital. You can’t force benefactors to be generous; but hospitals can increase your bill. So it still goes back to a) or b)

My definition of the intent of health insurance is that risk is spread over a community: Everyone kicks in a reasonable and affordable amount, and everyone is protected against catastrophe. No questions about pre-existing conditions, problems with my back from a car accident, etc. Health insurance is an application in which I believe ignorance actually is bliss; because too much information leads to the very “death panels” that Palin is decrying.

The function of insurance is not to redistribute wealth but to hedge against uncertain negative events. In the limit of zero uncertainty (for future medical care), there ought to be no insurance at all. A group of private people choosing not to sell you their product (insurance) because you would be a net drain is not “targeting” you anymore than hot girls not dating you because you’re too short is “targeting” you. Are you for compulsory height adjustment surgery on 16 year olds to eliminate the genetic injustice of the existence of tall people?

Also, what I’m against is not subsidies but forced subsidies. If you’d like to contribute to a charity hospital, no one is stopping you. Somehow the streets were not full of deteriorating corpses in the past, before the advent of large-scale government intervention in medicine.

A tight correlation produces a plot that looks like a darning needle or a rainbow or some other graceful arc. In the absence of much correlation, the plot looks closer to a side view of a bowling ball. My plot of obesity rates versus life expectancy looked like a big, fat bullfrog.
At the press of a few buttons, the TI-83 produced a linear regression analysis of the data. A key statistic from such an analysis is r^2, the so-called coefficient of determination, a measure of how well the data fit the regression line. The value of r^2 is always between 0 and 1, a value close to 1 indicating a good fit and a value close to 0 indicating a very poor fit, if any. In our case, r^2 = .200. This low value of r^2 confirmed the visual impression that the scatter plot did not suggest a strong correlation between obesity rates and average life expectancy (the plot did not suggest any simple curvilinear relationship either).

Three data points seemed particularly far removed from the others, lying along the underside of my corpulent bullfrog’s belly. A check of the tables revealed that these were the points corresponding to Mexico, Turkey, and Hungary. A little thought suggested that these countries were probably economically poor. Maybe I should consider them inappropriate outliers and toss them. Google led me to a table of gdp per capita compiled by the International Monetary Fund. Indeed, Mexico at $10.2 thousand; Turkey, at $10.5 thousand; and Hungary, at $15.5 thousand were the three lowest countries in my group in terms of gdp per capita. Before deciding whether to toss them, I made a scatter plot of gdp per capita vs. life expectancy for my 28 countries. Wow! Nice, simple curve.

My TI-83 offers the options of linear, quadratic, cubic, quartic, log, exp, and power regressions. Log, quadratic, and quartic all produced good values of r^2. I ran quadratic and quartic regressions (the two best in terms of r^2) with the U. S. excluded. Thus, these regressions each included 27 data points. The quadratic regression yielded r^2 = .648 and the quartic one gave r^2 = .775. The IMF table showed a value of $46.9 thousand for the U. S. My quartic regression line estimated a life expectancy of 73.1 years for a country with that value of gdp per capita, while the quartic one yielded an estimate of 73.3.

I decided to try another plot of obesity rate vs. life expectancy with the outliers from the IMF table excluded. I threw out the lowest six: Mexico ($10.2), Turkey ($10.5), Hungary ($15.5), Slovakia ($17.6), Czech Republic ($21.0), and Portugal ($23.0). Six seemed like a lot of data points to toss, but there was a large gap between Portugal and the next lowest country, New Zealand at $30.2. Two obvious outliers on the high end were Luxembourg ($113.0) and Norway ($94.3), both of which far surpassed third-place Switzerland at $67.3. This left me with 19 data points if I were to exclude the U. S. to form the same sort of estimate obtained in the previous paragraph. A linear regression for these 19 points gave a value r^2 = .198. The scatter plot does not indicate that I could significantly improve the situation by using one of the other regression shapes offered by the TI-83. Apparently, restricting the data to a group of countries that by at least one measure are economic peers of the U. S. still does not indicate a strong correlation between obesity and life expectancy. I tried; I give up.

The current scheme, which you seem to favor, gives rise to the incentive for the insurance companies to drop anyone who looks like they’re going to be expensive. This means that if you have unfortunate genes, you’ll be a target; if you have an accident or otherwise catch a disease that gives rise to a “pre-existing condition” when you change job, you’ll be a target. The greater the advances of genetic science, the greater the incentive for the insurance companies to pick & choose.

Medical insurance works best in the context of mutual ignorance. Since that ignorance is going away, the best way to destroy the perverse incentive described above is to just cover everyone at a flat rate.

As for getting rid of subsidization entirely: Unless you want the US to become a place where people are allowed to die in the street, emergency-room treatment will always be subsidized. So why not save money (if you don’t care about other people’s pain and suffering) and cover basic health-care insurance so the subsidization can be quantitatively reduced?

http://foreignparts.typepad.com/foreign_parts/2009/08/%C3%A0-aimer-getting-sick-part-two.html

btw France has the eight highest life expectancy in the world… (source wikipedia)

“The…purpose of my life is my own long-term happiness.”

Pretty much mine also, except I’m concentrating more on the short term. Not to neglect the future, but at least some of the fun has to happen now.

Health Care Waste

Whether or not you care about anyone else’s medical treatment, under the current system, you’re paying for it anyway: a lot of indigent people are treated in emergency rooms (often for reasons that could have been handled much less expensively if treated earlier on), and cannot be successfully billed. The result is that the hospitals treat the emergency room as a “loss center” (as opposed to a profit center) and spread the expense over the rest of the hospital’s operations. Hence $50/pill aspirin.

Thus, if you use that hospital, you will be paying for the medical expenses of indigent people, either directly or through higher insurance costs.

Brian137, Good question. The moral purpose of my life is my own long-term happiness. If you grant me that, there can be no justification for expropriating me to pay for other people’s medical care. Only a moral system that calls on me to sacrifice my own happiness for someone or something else — like that of any major religion or of utilitarianism or of radical environmentalism — could justify it. It is, therefore, lamentable that the only major political faction (supposedly) aligned against the gradual government take-over of medicine is one taking Christianity as its moral foundation.

“Re Mike’s comment (#21): A rich irony of this is that many of the very people who are most opposed to health reform would turn up their nose at the Japanese diet.” I agree with this. Actually, I think many who favor health reform would turn up their nose at some details of an actual Japanese diet, too. I think it’s obvious members of both groups would respond more favorably to an American equivalent to the Japanese diet. But I think the diet explains Brian’s comment about lower healthcare costs in Japan compared to American healthcare costs despite having a population that lives longer. I don’t think you can ignore a 32% obesity rate for Americans and just blame healthcare costs on inefficiencies within the system.

OK, fair comment.

What I mean to say is twofold. Rich people always have choices, far more choices than those not so advantaged. Critics of the Canadian system like to carp on about it’s tendency towards homogeneity, and wait times and the like. Then they point at the American system and how it doesn’t have those problems. OK, that’s correct as far as it goes.

However a rich person can get whatever level of healthcare they want. They can hire a doctor as their personal physician for goodness sakes! They can leave the country and go to Frankfurt, or Tel Aviv, or Buenos Aires or anyplace else. The wealthy always have options that (can) place them outside the bounds of any institutionalized system.

My second point is that the system in the US is rather biased towards those who can pay. The more you can pay, the more choice you can have.

What does this add up to? We don’t need or want to design a healthcare system for the extremely wealthy. They will acquire healthcare services no matter what. As a matter of public policy it’s important to design a healthcare system for the poor and middle class. Those are the ones who need a “system”.

That’s the part the industrialized world, excluding the US, has understood and implemented. In Canada, illness is not generally feared as a financially devastating event. Illness is feared because, well, you’re sick and might die. However financial wipeouts are uncommon (note that illness might prevent you from working and force you on to social assistance).

The healthcare debate in the US often centers around issues that have nothing to do with healthcare. People are grinding political axes, or trying to explain the current situation with bizarre commentary, as though they desperately seek to justify the situation in terms other than what it is. It’s immigrants! It’s fat people! It’s the racial mix of the population!

Um, no. You think Canada isn’t a nation of immigrants? That there aren’t lots of obese people here? That large minority populations, including visible minorities exist, to the point that the sum of all the minorities are starting to form majorities? The same goes, with minor variations, for Britain, France, Germany, Belgium, and the rest.

America spends too much on healthcare considering what it gets in return. What Eric Dennis (above) doesn’t understand is that it doesn’t matter “who has the right to spend my money on other people”. The US healthcare system is so expensive and inefficient that Eric is spending far too much money on HIS OWN healthcare. That’s direct costs, direct benefits. The 3rd party subsidization is trivial in comparison.

Boiled down to the essentials, here’s what healthcare reform opponents don’t want you to know: The US pays champagne & caviar prices for meatloaf outcomes.

Is that what you want?

I agree with the rest of your post, but want to take issue with the quote above.

That it is better for average folks and especially poor folks to be sick somewhere outside
of the USA is clear, but even for rich folks I don’t think one can claim that US healthcare
is the best.

I contracted (the same type of) cancer in 2004 and 2008 and am not only alive but, as
far as I know (and it is checked regularly), completely healthy. I underwent chemotherapy
and stem-cell transplantation at the university hospital in Frankfurt (in Germany, not
Kentucky). I honestly think there is no better place for cancer treatment. It seems that
Farrah Fawcett spent some time there as well. Of course, some people, like Fawcett, are
so ill that they can’t be helped anywhere, but I assume that in her case money was not
a problem and that she could choose where she wanted to be treated.

I suppose my original comment is unfair in that context as there are other places on the internet which are better suited to providing answers to my questions.

It get’s worse (albeit funnier). From a recent op-ed:

At a recent town hall meeting, a man stood up and told Representative Bob Inglis to “keep your government hands off my Medicare.” The congressman, a Republican from South Carolina, tried to explain that Medicare is already a government program — but the voter, Mr. Inglis said, “wasn’t having any of it.”

What disturbs me is the targeting of the Senators and Representatives that are taking this month to speak to their constituents. There have been reports in NY times of conservative groups heckling and preventing presentations of Health Care Reform proposals by intentional interuption and intimidation. Can we all agree that this is wrong?

Lets have the discussion, and take the vote.

“It is my money. I earned it.”

Eric,
I am basically sympathetic to your view: I want you to have as much as possible. But I also suspect that the social and economic systems in the United States facilitated your ability to earn that money working in our country. Maybe you could have made just as much money toiling in Tasmania or the Galapagos Islands, but, if that is the case, I think you would be in the minority in that respect. If your view is that you owe nothing in return, perhaps you are correct, but you have not convinced me yet. I, in my own life, am sometimes torn between feeling I owe nothing and acknowledging that I benefit from living in a society. I am sympathetic to your expressed point of view because to a certain extent I share it. You ask us to produce a “moral [reason]” why you should contribute to the health and well-being of your compatriots, but there are so many moral systems that I am not sure which one you want us to use. Are we talking Christian morals, secular humanist morals, …what? I infer that you must have had something in mind when you chose the word “moral.”