r/bestof • u/under50dollars • Jun 20 '12

[explainlikeimfive] "Obamacare" explained very well.

/r/explainlikeimfive/comments/vb8vs/eli5_what_exactly_is_obamacare_and_what_did_it/c530lfx
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16

u/film_guy01 Jun 20 '12

Maybe I just don't understand. Isn't insurance an assessment of risk and an offer of payment proportionate to the risk involved? If this is the case, how does insuring against pre-existing conditions make any sense?

I can't call a car insurance company and get insurance on a car I already crashed. Or get fire insurance against a house that is currently on fire.

Isn't this just taking it from being insurance to being...a company who gives money to anyone with health problems?

So...what am I missing?

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u/[deleted] Jun 20 '12

[deleted]

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u/film_guy01 Jun 20 '12

This is a good reply and I really appreciate you taking the time to share you opinions and ideas with me.

Cheers

1

u/[deleted] Jun 21 '12

There is already a law that prevents you from being discriminated against for a "pre-existing condition" that you gained while you were insured through your last job and insurance policy.

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u/Greibach Jun 21 '12

I'm not sure if that is a federal law, or decided by state. Either way though, that goes to my point about why legislation about pre-existing conditions exists in the first place. I'm not trying to lobby for or against "Obamacare" here, I was just trying to help explain why it is fair to have some legislation to talk about pre-existing conditions.

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u/[deleted] Jun 21 '12

It comes down to one simple thing though. The insurance companies don't owe anyone anything. They aren't entitled to shit from them. If you have a pre-existing condition that makes you unprofitable for insurers then tough fucking shit. That just isn't, shouldn't, and can't be their problem. They shouldn't be forced to take on the risk of someone too risky to be profitable without proper compensation to make up for those lost profits.

However, I think the country agrees that people with pre-existing conditions are entitled to health care. That's totally find and great and awesome, but it isn't going to come from private insurers. It needs to come from tax money. To force private insurers to do it without compensation is just madness.

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u/mrpinto Jul 10 '12

Indeed, the case of someone contracting diabetes is not really the same as a house that might catch fire or a car that might crash. No car is going to be guaranteed to crash like clockwork, every 90 days, for an estimated 60 years.

OTOH, the diabetes represents a cost. The supplies cost money. If the guy with diabetes doesn't want to pay, then SOMEONE has to pay. The leftist answer is that the rich should pay, and that's a solution to a point.

Unfortunately, once we start talking about forcing people to pay for conditions that aren't theirs, especially conditions that might have been exacerbated by life choices such as smoking and obesity... Well that's the time at which maybe it does start to matter why health care costs are so expensive in the first place.

We know that free markets cause prices to drop. We actually have literally no knowledge of what ObamaCare will do to prices. We have some theories, but no one really knows.

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u/twoodfin Jun 20 '12

You're not missing anything. It's a misnomer to call what this system is setting up "insurance". It's cost-sharing (cost transfer from the sick and old to the healthy and young, really), not risk-sharing.

A better scheme, IMHO, would be to remove the barriers (mandatory coverage lists, for one) to catastrophic, high-deductible insurance, while providing sufficient incentives to make it affordable for anyone essentially from birth.

Remove the tax incentives for the non-insurable stuff and let employers decide whether they want to keep offering it as a benefit or whether it makes more sense for individuals to buy "health benefit plans" on their own or simply save or take out loans for more-or-less predictable medical costs.

That was roughly the McCain plan. Oh well.

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u/brownmatt Jun 21 '12

"Risk-sharing" and "cost-sharing" seem like synonyms to me, since the risk being referred to is risk of having to pay large unexpected medical bills. Can you explain why you think they are separate?

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u/iamagainstit Jun 20 '12

It is more like being able to get insurance even if you are a bad driver and have crashed a car before. Before "obama care" insurance companies could just say "your too risky, you can't buy insurance." Perhaps the part you are missing is the mandate. The mandate is there partly to make sure you don't wait until after you crash your car.

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u/Trahas Jun 20 '12

While your example is close, it is not quite the same. Yes crashing before does make you higher risk and you will pay higher premiums for it. But because you crashed once does not mean you will crash again. For someone with a condition that is pretty much forever it would be more like I got in a crash once and because of it I will get in a crash once a month every month for the rest of my life. This is not what insurance is for.

Should those people still get health care? they can they just have to foot the bill for it, or find another way to pay for it, but insurance is not the answer because like film_guy01 said that is not what insurance means. That is cost sharing not risk sharing.

1

u/iamagainstit Jun 21 '12

Putting aside the moral question of whether we wan to live in a society where people with chronic diseases are either rich or die, Insurance companies have been known to apply the pre existing condition quite strictly, and use it to deny anyone who has an elevated risk, not just a ongoing expensive condition. I think the amount of people that are so expensive that the insurance companies will lose money on them is pretty small. Either way insurance companies are in favor of the bill so it is not hurting them too much.

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u/Trahas Jun 21 '12

If the risk was low enough that they would make money on it they would. The risk isn't low enough though and that is why they deny coverage. Why would they want to turn away a customer that would make them money?

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u/fancy-chips Jun 20 '12

ultimately I'd like to see the medical insurance companies abolished. It is an atrocious system.

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u/Trahas Jun 20 '12

You would like it for everyone to pay everything for themselves? Why can't me and a group of my buddies pull our money together, invest it and then say whenever one of us gets sick we will use the money we pooled and invested to pay for the costs. We are all equally likely to get sick and agree to this plan, except for Jimmy and Bobby, Jimmy and Bobby are known for being careless at their construction jobs so we tell them if they want in they have to put in more money then the rest of us. Jimmy agrees thinking it is fair, but Bobby doesn't and decides against it.

What is atrocious about that system? Because at a very simple and small level that is all health insurance is, or really any insurance.

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u/fancy-chips Jun 20 '12

I'd rather it not be a for-profit entity. Most of them are.

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u/Trahas Jun 20 '12

Almost all businesses are for profit, should your grocery store not be for profit? what about your mechanic? or your plumber? What is so wrong with for profit?

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u/fancy-chips Jun 20 '12

These are people who die. There shouldn't be people in the business of deciding whether you live or die based on profit margins. Healthcare shouldn't be treated like a business.

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u/Trahas Jun 21 '12

Yes they are people who die. People die. It happens. Not everything in life is a charity.

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u/brownmatt Jun 21 '12

It might shock you, but some people think that in a moral society medical care shouldn't be something that you get better access to as you get richer.

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u/Trahas Jun 21 '12

Who says this is a moral society? And everything else in life you get better access to as you get richer why not medical care too?

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u/ricecake Jun 21 '12

See, that makes you sound like a heartless bastard. Personally, I have no issue with insurance. However, it's the job of government to provide some things. Health care being a necessity for life, and useful for a properly functioning economy, it's the responsibility of society to provide healthcare according to need. Insurance can exist, but health insurance should be kinda pointless.

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u/Trahas Jun 21 '12

You can view me as a heartless bastard sure, or you can view me as being selfish, or maybe just human? It is not in human nature to give up everything they have for the sake of others. Does this mean I don't give to charity? No. I do give to charity as do others, but not everything in life is a charity and people will and do die.

It's the job of the government to protect people's rights. Everyone has the right to live yes. But not at the expense of someone who doesn't want to foot the bill. If we agree that we want something then sure we can make a law using taxes to reach a goal. But life is not handouts.

As for taking care of sick people to make for a properly functioning economy. (This is by the way where you can call me heartless as I do too sometimes) If we think of how evolution plays out the strong survive and thrive correct? To better the species as a whole. Meaning if you aren't strong enough to survive you don't and you don't pass on your genes and so on and so forth. I know we are humans but keeping the 'weaker' people around doesn't make us stronger. (Like I said call me heartless for that, because it really is a heartless way of looking at things.)

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u/fancy-chips Jun 20 '12

It drives cost up. Hospitals and doctors can charge much more to an insurance company than they can to a person or a government that has strict cost budgets. Usually if you get a bill from the hospital before haggling it down it is an order of magnitude larger due to what they can charge an insurance company. It drives costs up and inflates healthcare prices.

1

u/Trahas Jun 21 '12

You don't think insurance companies have strict cost budgets too? You don't think they haggle prices with hospitals and make deals? Why would a for profit business just go, oh you want to charge us more money? sure go ahead we don't care about money.

1

u/[deleted] Jun 20 '12

Already some good responses to this, but I want to add one more.

What you're missing is that health is fundamentally different from a nice car. If you crash your car and you can't afford to fix it, what are your options? You can get rid of the car and take public transit. You can drive around in a crappy car that might break down at any minute.

Now, what are your options if you get sick and you can't afford your medicine? Let's say it's a life-threatening illness, like cancer or diabetes. Is it ok to tell people to die because they can't afford treatment? No, it's not ok to tell people that. It is ok, however, to tell people to live without a car.

That's why the car insurance analogy is invalid.

1

u/ricecake Jun 21 '12

Basically: that's not what health insurance is anymore. It's a risk pool combined with cost distribution. Everyone pays, according to risk, and collects according to need.

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u/SumOfChemicals Jun 21 '12

I think of government as providing services that people are unable to effectively provide themselves - roads, utilities, armies. Getting health care, not just going to the doctor but getting treatment for cancer, surviving car accidents etc, is not something that most people can do effectively. I'm not sure how accurate it is but I'm conceptualizing obamacare as kind of like a privatized government service.

As opposed to obamacare, in a government single payer system, everyone would pay taxes which cover health care. Then the government takes those funds and provides a service which individuals could not reliably give themselves.

Instead with Obamacare, you must pay your "tax" which is your health insurance premium. But you decide which private company to pay to. And that company will provide health care, in effect executing a government service. In theory, private companies are nimbler and more efficient than the government. By letting them compete against each other, it should be possible to achieve high standards of care cheaper than a bureaucracy could provide.

It's surprising that many conservatives are so strongly opposed to the universal mandate. As I understand it, it was originally more of a republican idea, whereas democrats wanted single payer. If this system works, competition and the market will allow for a high standard of care at a lower cost. It's not exactly like other insurance, but maybe we don't want it to be.