Just to remind myself in the future, that Ezra Klein is a water carrying political hack, not an impartial reporter

This:

The individual market — which serves five percent of the population, and which is where the disruptions are happening — is a horror show. It’s a market where healthy people benefit from systematic discrimination against the sick, where young people benefit from systematic discrimination against the old, where men benefit from systematic discrimination against women, and where insurers benefit from systematic discrimination against the uninformed.

The point of an insurance market is that it is supposed to discriminate. Flood insurance is supposed to make you not build on a flood plain….unless it’s federal insurance of course. Crop insurance should be about what crop you’re growing where and when….unless it’s federal insurance of course.

And I’m entirely happy with health insurance, as long as it’s the Singapore/Brad Delong insurance. Actual insurance, based upon risk. I’m even just fine with single payer catastrophic insurance.

But keep in mind Klein’s part above. Yes, insurance, health insurance, it is supposed to discriminate against the old. And the sick. And, yes, if “insurance” is held to cover very stupid ideas like contraception and cervical smears, against women too.

No, neither of those are stupid ideas: only that insurance should cover them are.

But Klein reveals himself here as an ideological hack, not a reporter. Which is fine, of course, I too am an ideological hack: it’s just that I don’t pretend otherwise.

21 comments on “Just to remind myself in the future, that Ezra Klein is a water carrying political hack, not an impartial reporter

  1. Hmm. I think you misunderstand (a) how the insurance market actually works (hint- good risks often subsidise bad ones, not just because insurers can’t spot the bad ones);

    (b) how people (US in particular) expect insurance to work (hint, if you have to rely on private insurance, lots of US peeps don’t think those with congenital illnesses shouldn’t be left to die.)

    Not a good article, but really just a illustration of why a pure insurance market for health does not meet most people’s views on basic justice.

  2. @ Luke
    An insurance company that goes bust is worse than useless – much much worse.
    So you are*wrong* on (a). Good insurers discriminate and bad risks tend to pay more – thanks to regulators they actually pay more relative to claims than good risks because the insurer has to carry more capital per £ of claims or premium.
    On (b), admittedly some people think insurers have unlimited funds and should pay for everything (“magic money tree”); this includes a number of members of Congress. However what we are seeing in this article is that people are expecting everyone else to pay for the cost of their care but revolt when they are asked to pay for it themselves. If you want a policy with lower exclusions you can get but it will cost much more because there is no incentive to minimise costs for minor accidents or injuries.
    Going off on a tangent, the way to make healthcare affordable in the USA would be to ban paying lawyers fees for suing for medical negligence – only pro bono legal representation would be permitted. The largest single item in US healthcare costs is insurance to cover lawsuits. I

  3. “Not a good article, but really just a illustration of why a pure insurance market for health does not meet most people’s views on basic justice.”

    I see… and a non-functioning Obamacare insurance market coupled with millions of involuntary cancellations are your idea of “basic justice”?

    Today North Carolina announced it had successfully enrolled ONE person. That person had not yet paid his premium, and according to reports, has already had the personal information he provided upon enrolling hacked and used by internet scammers. Of course, that bit of “basic justice” is overshadowed by the rousing successes in Vermont. They’ve had FOUR people enroll.

    “Basic justice”? My fat white ass.

  4. Luke – “Hmm. I think you misunderstand (a) how the insurance market actually works (hint- good risks often subsidise bad ones, not just because insurers can’t spot the bad ones);”

    Well mainly because the insurers can’t spot the bad ones. That is the point of an insurance market – they spot all the bad ones they can spot and charge roughly by risk. I rather doubt there are many people who are known bad risks who are not charged for it.

    “(b) how people (US in particular) expect insurance to work (hint, if you have to rely on private insurance, lots of US peeps don’t think those with congenital illnesses shouldn’t be left to die.)”

    That is the problem then. They do not understand what insurance is or does. If people do not want those with congenital illnesses (and what are those anyway?) to die, they need to set up some sort of Federal funding scheme. Not force private businesses to carry the risk – or to force young people to buy insurance to subsidise the old.

    “Not a good article, but really just a illustration of why a pure insurance market for health does not meet most people’s views on basic justice.”

    That is a completely different argument. If you or Ezra want to make it, by all means, make it. But that is not the argument that has been put forward is it?

    Obamacare is such a spectacular f**k-up I think I will withdraw my previous assumption that it was all a vast conspiracy to force Americans into a single payer scheme. It was, rather, incompetence and arrogance on an enormous scale. This is what happens when you put liberal arts graduates in charge of things that matter.

  5. SMFS

    you show an interesting cultural bias:

    ” This is what happens when you put liberal arts graduates in charge of things that matter.”

    So if science graduates had enacted this scheme, all would be well? And science graduates have a monopoly of good ideas…and I recall that your knowledge of history is essentially at a zero base

  6. So if science graduates had enacted this scheme, all would be well?”

    I know both scientists and liberal arts grads… and I’m going to guess – based on experience – that the scientists would have the common sense to hire a few insurance executives and competent IT project managers to put the thing together instead of a former hospital administrator, a former governor and a community organizer.

  7. Diogenes – “So if science graduates had enacted this scheme, all would be well? And science graduates have a monopoly of good ideas…and I recall that your knowledge of history is essentially at a zero base”

    I am not sure. But everything the government does has slowly stopped working in the West, and I think the fact we are ruled by people with nonsense degrees has a large part to do with it.

    Do science graduates have all the good ideas? Again I am not sure. But I am pretty sure that if anyone had any good ideas, they would not be doing a Liberal Arts degree. It is even worse than that given that a modern Liberal Arts degree is about taking moderately bright people and telling them reality is optional and accountability is for Dead White Males. That is hardly going to produce an optimal outcome.

    Certainly people are capable of running large-scale IT (and even government) projects on time and under budget. I would think that they are people who were educated and now work in environments that are tough on accountability and results, ie places run by rather old fashioned men. That is to say, not the modern Western education system or civil service. Those are run by the sort of people who get upset when the CEO of Lululemon says that maybe Fat people should not be wearing his yoga pants.

    I am impressed you remember so much about my historical views. Although how an in depth knowledge of Elizabethan Chick Lit would help run an IT project I do not know. Maybe you can explain that for us?

  8. SMFS:
    Well mainly because the insurers can’t spot the bad ones. That is the point of an insurance market – they spot all the bad ones they can spot and charge roughly by risk. I rather doubt there are many people who are known bad risks who are not charged for it.

    In theory, if health/life insurance risk profiling is honed to perfection, which it at one point might be, the product itself will be useless except for mitigating the risk of externally imposed accidents. You´d be better off with savings or saying goodbye to your family in good time.

  9. John 77, SMFS, sorry, I think you may be having a bit of an ideal market fantasy. The insurance market is subject to massive political pressure (eg in England not to reject people who live in floodplains). Second, brokers have massive power – a Lloyd’s underwriter told me brokers controlling the aviation business made it perfectly clear that you could not have a line on BA or QANTAS without also taking a bit of Sudan Airways or equivalent crud. Similarly, brokers don’t give you the (profitable) D&O business unless you also take the crappy professional negligence business. (Directors are protecting themselves with their shareholders’ money, so they are not price sensitive.) That’s what happens. Not all the time, not in every market, but pretty often.

    SMFS, on your second point I think we are actually agreeing with each other. The point of Obamacare is that it is not really proper open market insurance. Rightly or wrongly, the healthy/young/richer subsidise the older/sicker poorer, whether directly through the premiums they have to pay or indirectly the tax system subsidising premiums for low earners.

    That’s why the original article is bad – it says that until now the healthy have been subsidised by the sick. They haven’t been. And under the new system, the healthy/good risks (crudely) will be subsidising sick/poor risks. That’s the whole point. You could say it’s rough justice, ‘cos those who would have cheaper premiums now will overweight 50 yr olds one day.

    None of this is to say it’s right. Just that it doesn’t really make sense to complain that a deliberately rigged insurance scheme is in fact a deliberately rigged insurance market.

  10. SMFS: Do science graduates have all the good ideas? Again I am not sure

    The world of uncertainties is infinitely large so it’s nice to be able to pin down something incontrovertible!

  11. SMFS: Do science graduates have all the good ideas? Again I am not sure

    Probably not. But on average they’re less likely to believe in the magic money tree, or that government is magic and just makes things happen.

  12. John77:

    The real solution is single-payer law. Make the lawyers operate under all the restrictions they wish to place on the doctors first.

    After all, there’s nothing any lawyer does that’s worth more than minimum wage.

  13. SonicJohan – “In theory, if health/life insurance risk profiling is honed to perfection, which it at one point might be, the product itself will be useless except for mitigating the risk of externally imposed accidents. You´d be better off with savings or saying goodbye to your family in good time.”

    Which is the point of the Singaporean system. The routine payments have to be made by individuals. The State only provides catastrophic cover. Which is surprisingly cheap. Singapore clearly has the best system in the world by most measures. We ought to look at it. The equivalent for the US would be a high deductable. That would make most people pay for the routine GP check up but not the costs of being hit by a truck.

    And once you adjust for accidents and gunshots, the US has the best health outcomes in the world. They should for what they are paying for it.

    Luke – “I think you may be having a bit of an ideal market fantasy. The insurance market is subject to massive political pressure (eg in England not to reject people who live in floodplains).”

    That is true. I have lived in countries where insurance companies are not allowed to charge old people more. And where people with HIV are not allowed to be charged more either. But that does not change the point about what insurance is. It is just a political constraint on sanity.

    “The point of Obamacare is that it is not really proper open market insurance. Rightly or wrongly, the healthy/young/richer subsidise the older/sicker poorer, whether directly through the premiums they have to pay or indirectly the tax system subsidising premiums for low earners.”

    Well indirectly through the tax system usually takes from the young, who have few assets but do have some income, and gives it to the old, who have a lot of assets but no income if they have retired. Never have I seen a scheme designed so well to screw over the President’s core base. Although there is a large racial element – in America it will also be a scheme to make the White and Asian populations pay for the Black and Hispanic.

    “You could say it’s rough justice, ‘cos those who would have cheaper premiums now will overweight 50 yr olds one day.”

    Where is the justice? You think this scheme will last that long? It looks like just another way for the Baby Boomers, the worst generation I can think of, to loot and pillage before they die. Leaving behind a smoking mess of a ruined country in their wake.

    abacab – “Probably not. But on average they’re less likely to believe in the magic money tree, or that government is magic and just makes things happen.”

    A reasonable number of scientists were hard core Marxists. Especially in biology. Which is why we all have to pretend race is not a biological fact. But I think they are more likely to want their ideas tested and more likely to think there are actual realities against which policy can be tested. Whereas your average Liberal Arts graduate seems to think reality is oppresive and if she holds her breath long enough it will agree with her cute little opinions.

    Ted S. – “The real solution is single-payer law. Make the lawyers operate under all the restrictions they wish to place on the doctors first.”

    I have said before, funding for the poor ought to come from the Law Society. They are the ones that benefit – and the ones who have created in the system in the first place. So there ought to be a requirement for the renewal of anyone’s law licence that they have done a certain number of hours of pro bono work in the previous year. The Law Society can decide how much lawyering needs to be done and then make sure their members do it. The rich lawyers can subsidise the system either personally – doing the pro bono work – or by paying a less competent lawyer to do it.

    That would make the legal community think long and hard about frivolous law suits and the stupid laws that lead to them.

  14. I posted a reply to Luke which has disappeared, not a good move at this time of the night
    So this is brusquer that the previous
    Luke has been drowned in bullshit. I do talk personally to aviation underwriters as part of my job and his comment is 180 degrees from reality. The prestige airline accounts like BA are habitually loss-making and accepted by some syndicates as a condition imposed by brokers for the opportunity to make profits from third-world airlines. The best aviation syndicate, Hardy, can choose not to insure BA. The best insurer of speciality lines like D&O and professional negligence is Beazley, whose Syndicate 623 has made profits every year from foundation until after Andrew Beazley died and Nick Furlonge retired, and professional negligence has been consistently profitable
    while there was a blip on D&O after the 2008 crash.
    “Political pressure on insuring houses in floodplains” perhaps – but that is utterly irrelevant and in my case evil – I am penalised because DEFRA could not be bothered to do a proper analysis and when I pointed out that they put a mediaeval castle and a mediaeval church in separate towns in one flood plain despite neither having been flooded for at least 800 years they just redrew their map to exclude them but include my house. Before that the insurance companies had looked at reality – flooding only occurred on the other side of the river which was lower so now I and my neighbours cannot get alternative insurance quotes even though we do *not* live on a flood plain

  15. Re arts graduates causing all policy disasters – SMFS, et al: is it an arts graduates problem, or a problem with never having had to earn a living, that is, people going into politics and public administration with no experience of doing Anything worthwhile. I readily accept that most such people are likely to be arts graduates, but that’s not what makes them incompetent, it’s what makes them self-important.

  16. “is it an arts graduates problem, or a problem with never having had to earn a living, that is, people going into politics and public administration with no experience of doing Anything worthwhile”

    I think its a practical experience thing. The Socialists of 60 or 70 years ago, the Attlee generation, were actual workers. Men who had driven steam trains, unloaded ships, mined coal, built ships. Their socialism was tempered by practical reality – they knew that no amount of intellectual theory mined coal or created stuff. There was a physical reality that existed above the notions of socialism.

    Contrast to nowadays where virtually no-one in power (and in that I mean not just MPs, but just as importantly the swathe of people who run the State apparatus) have any practical experience of physical reality. They have never laid bricks, or dug a trench, or operated machinery, or generally battled the forces of nature in order to achieve something. They have existed in an intellectual world, and thus have no boundaries as to what is achievable. It is enough to say ‘Let it be so’ and it just happens. Hence why Obamacare is been run by a career politician/lawyer with a degree in political science, and is proving to be a total fuck up in practical reality (whatever one thinks about the principles of the policy).

  17. Do we really want (in an ideal system) health insurance costs to be based strictly on risk, with no renewal guarantees? The implication is that only the rich would be able to renew their insurance once they got sick, so, unless we were willing to leave the sick untreated, the state would end up paying a large part of healthcare costs.

    Increasingly there will be genetic tests for disease risk – BRCA mutations are an existing example. Do we want to discourage people from taking the tests for fear of having to report a higher risk to insurers?

    Health insurance is not very much like flood insurance. If you don’t like the costs of living on a flood plain, you can move. And that will discourage the building of houses on flood plains – the market doing its stuff. But if you don’t like the costs of living in your body, and you’ve already taken all reasonable lifestyle steps, your only alternative is not to live.

  18. Others have argued this better and more pithily than me – if we look at the actual consequences of a perefectly rational and risk assessing market in health insurance, do we like the outcome? Not really.

  19. once you adjust for accidents and gunshots, the US has the best health outcomes in the world.

    Have you got a reference for that please?

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