And along those lines, auto insurance companies do offer discounts to people who, for example, buy safer cars or install anti-theft devices that make a car less likely to get stolen. They’re perfectly happy to pay for predictable items if those things will have a material effect on their claim payouts.
You would buy it in case something happens so that the benefit you would require would be way above what the insurance cost you. And of course, hope that the insurance you bought will NOT be worth the cost.
And as a counterpart to your question: who would start an insurance company if the benefits they paid out were more than the insurance premiums brought in?
Offer discounts - yes. Pay for such devices - no.
Money is fungible.
Obviously the company will take in more money. I don’t see what that has to do with the question. The grocery store takes in more money, too, but I don’t take a loss at the grocery store.
Exactly what I said earlier. Offer discounts to people who buy birth control.
If we are suffering from an epidemic of unplanned births in the middle and upper classes, I’d like to see it. Otherwise, it’s up to the pro free birth control to demonstrate that a majority of people in the US would not buy birth control if they didn’t get for “free”.
Until then, I say, subsidize birth control for people who can’t afford it, and let those who can buy it themselves just like they buy toothpaste and dental floss.
The grocery store is not an insurance company.
If you self-insure your life-time medical costs are X. If you buy insurance, your medical costs are Y+Z where Y is premiums and Z is out-of-pocket costs.
On the average, in the above situation, X < Y+Z (absent government subsidies). Thus, on the average, when you buy medical insurance, you lose money compared to not buying it. QED.
If you add government subsidies, it still holds, but the number of variables increases.
Offering discounts to people who do X is not materially different from paying for people to do X. Note, though, that I have no problem with your policy position of just subsidizing birth control for poor people. That’s not what I was arguing against, though. I was arguing against this position:
Which, to me, seems to imply that if a cost is predictable it shouldn’t be covered by insurance. I’m saying that it’s perfectly rational for insurance companies to pay for predictable occurrences under some circumstances.
What is “worth the cost” is not as clear as you might think. The curve for losses is steeper then the curve for gains, so a $1,000 loss hurts more than a $1,000 gain feels good. Thus people are willing to pay a bit more to avoid losses than the expected value of the losses. Insurance companies also market to put the idea of a loss in your mind (thus the driving the hearse to the back door strategy) which makes you think a loss is more probable than it actually is.
In addition, the cost of covering an old person is greater, while the cost of covering an old car is less, since the value of the car, and thus the maximum the insurance company would pay, goes down.
Of course if your mother is a car, all bets are off.
Under what circumstances? Insurance is for the unpredictable. No one with half a brain would sell you insurance for known costs. Insurance is for spreading risk. If you know the cost, there is no risk.
Insurance doesn’t cover the cost of a routine procedure to save you the cost of that procedure. They pay for the procedure to save the cost of paying for something else that might happen if you don’t get the procedure.
The problem here is that there is a fundamental asymmetry. If you were on the hook for both the preventive action and the consequences of not taking that action, then it wouldn’t make sense for the insurance company to cover the preventive action. But that’s not the reality: the insurance company is on the hook for the consequences, so it’s not surprising that in certain scenarios it behooves them to incentivize, in some way or another, the prophylactic action. In some cases, that incentive might take the form of paying for the preventive procedure.
Imagine the following abstracted scenario: I have sold you insurance to cover some eventuality X that will occur with probability P and cost me C to cover. Now suppose there were some action A that I, the insurer, could take, with cost C’, that would reduce the probability of X’s happening from P to Q. It seems clear that, irrespective of what A is, I should do A as long as C’ < C*(P - Q).
Thank you for that. It was all very confusing for a moment.
That was not what was to be demonstrated. I have never denied that buying goods and services costs money.
We don’t need an abstract scenario. Women who can easily afford birth control are not going to forego using it because they don’t get if for “free”. Period. It’s a stupid subsidy to the middle class and to rich people.
When the wealthy and businesses are asked to pay into society via taxation, you grumble because of disincentives. But when women are asked to pay for birth control, suddenly that changes nothing. If you accept that people are always on the margin, then people are always on the margin. Don’t pick and choose.
It doesn’t save insurance companies any money. Contraceptive coverage costs the insurance company about $16 per month. Having no contraceptive coverage doesn’t mean that women are suddenly going to start having babies every other year.
Insurance companies aren’t complaining because:
(a) Obamacare is a HUMONGOUS boon to them
(b) the Obama administration is in the midst of issuing regulation in connection with Obamacare and it can go well for them or it can go badly
(c) beating up on Obama doesn’t look as attractive as it did 6 months of a year ago
(d) they don’t want to get in the middle of this and if paying $16 for women that work at catholic universities and hospitals keeps them out of the conversation, they consider it a bargain.
The reason to cover contraception is because it ia a common health care cost (in fact it is the MOST common prescription drug). We probably consume more birth control pills than we do aspirin or even tylenol.
This isn’t Obama saying “I have an agenda and that agenda includes making all your white daughters promiscuous” this is a blue ribbon panel of health care experts telling Obama that a basic health care plan should cover (among other things), birth control.
The evangelical christians of today are doing exactly what they accuse the gay community of. They don’t want equal rights, they want special rights. And unlike the gay communities request for “special rights” to give them rights analogous to what everyone else already has, the evangelical christian community is asking for special rights that do not even resemble rights that anyone else might have.
It goes away a great deal. You get rid of the whipsaw. Insurance companies see some of the benefit of reduction in pregnancy expenses.
My health insurance pays for my annual check-ups, teeth cleaning, the tests I have to get when I reach certain age milestones, drugs to deal with my cholesteral. All tehse costs are entirely forseeable at the individual level. It is even MORE forseeable at the group level and yet its all insurance.
In what way is a birth control pill any different than my cholesteral medicine? Or my annual checkup?
Because its not the sort of thing people will get and flush down the toilet for shits and giggles. You don’t get waste by virtue of the low price tag and access to birth control is an integral part of a basic health care system.
Well shit it sounds like youa re saying we should collect insurance premiums from everyone adn just spend it on the poor people. Why not just expand the medicare and medicaid system to cover everyone but the rich and increase taxes accordingly?