Re: "1. If people buy something, they expect positive net value from doing so. If they do not buy something, they expect negative net value from buying."

I think insurance is an "irregular" product in the sense that consumers typically don't really expect "positive net value" from buying it. (Is there an existing term to represent this concept - analagous perhaps to the concept of an "inferior good"?)

Consumers buy insurance with the expectation of RELATIVE net value: consumers are willing to accept a modest negative net value (the cost of the insurance premium) as a hedge against the greater negative net value of an uninsured risk loss.

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Only education through high school is free. College is expensive.

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I'd like to know how the world would be different if people paid for their own health care and, as a result, many purchased cheap high-deductible/catastrophic policies (i.e., policies that only covered medical expenses that exceed $10k in a year).

I'd guess that we would have

less skiing and cycling

fewer kids and grown-ups playing contact sports or sports that stress the joints (football, soccer, basketball)

more people buying Volvos

fewer osteopaths and physical therapy providers

far fewer people on anti-depressants (or the prices for them falling a huge amount).

I don't know if we'd have a breakdown of the provider networks that the big insurers have now. Insurers would still demand that costs be reasonable when deciding whether to pay claims above deductibles, and they'd need some way to be comfortable that a doctor and his charges were reasonable.

But I wonder how much we would change our approach to the risks that insured people take and the minor treatments that people undergo as a matter of course today. My own guess was that joint-type surgery (knees, etc..) would worry me if I had high-deductible coverage most since it would be expensive but might largely fall under caps.

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Bill that is still awfully vague can you estimate some numbers on it.

have to forgo assisting a child in their education

Education is free in the USA as is also most schooling.

having to pick a less effective course of treatment because of cost

Again Still to vague. Is that before they moved into the $300/month rent mobile home or grandma's basement or after? There are people making $70K who say they cannot afford health insurance and people making $25K paying for health insurance.

It is just too vague. BTW when I was 30 (I am about 50 now) years old I lived a mobile home that I bought for $3,000 lot rent was $150 per month.

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If you get really sick,such as having invasive cancer you can get Medicaid.Over 65,Medicare. If you break your neck ,agencies are out there that will find you care. So,we have no such thing as "no insurance" That is why you can't determine what "no insurance " means.What needs to be discussed is the effect of insurance on preventative care. If preventative care results from insurance,it may be of some generalized benefit.Since there are only a few really effective screening tests that really extend life,why not publicly support these. For example blood pressure,cholesterol and PAP smears. There are already publicly supported disease categories,such as renal dialysis costing billions. Some of these cases could be obviated by timely screening.

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Actually, I checked with an in house attorney at a life insurance company. Their actuaries have this in their modeling, and if you are not insured, you are flagged for getting a physical.

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My definition of afford would mean that a parent would have to forgo assisting a child in their education, having to pick a less effective course of treatment because of cost, forgoing dental work for children. It does not include cable television.

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Does the "showing that you care" theory make testablepredictions?

If I understand it correctly, suppose A is making a medicaldecision for an ally B. A will prefer a publicly visibletreatment to an invisible treatment, even if A believes theinvisible treatment is more effective. Is that something anexperimental psychologist can design an experiment around?

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When you buy life insurance you do NOT need to provide information about your health insurnance. Virtually every life insurance company requests a brief insurance exam that involves a blood draw and urine sample plus a questionnaire. Some don't but virtually all the best rates are provided this way. Don't make statements that aren't true. Life insurance risks are based on your overall health -- not whether you have health insurance or not.

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Another interesting point is that if the treatment restores health the typical person in the USA could amortize a $300,000 set of medical bills. Keep in mind that there is very little evidence that health insurance saves money buy encouraging earlier treatment. Insurance does increase overhead so significantly more than half or people with insurance will loose by having it.

I have insurance even though my job does not provide it. I keep the policy to avoid a big hit on my net worth and because they negotiate prices for me but I get the highest deductible that I can which is $10K per person per year. So I do see value in insurance. I have paid some big medical bills in the past. My wife was treated for breast cancer and we paid the $10K on $60K bill. She had another problem that was not covered by insurance and I paid $30K for that.

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One of my pet peeves is people in these discussions who use the word afford but do not define it. For example we in the USA expect people to be able to live just above the poverty line, so one could assume that if all a family's money above the poverty line amount is greater than their healthcare bills (insurance or amortizing a hospital bill) then they can afford it. I doubt that is what most people mean when they claim that people cannot afford medical care.

So what do you man by:Those who cannot afford insurance–those who do not qualify for medicaid and who cannot afford insurance–are those who are affected.

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Ok, how much does that affect of the total indigent population?Be an empiricists, not an advocate.

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Not all indigent have medicaid. States set their own qualifications; in most places, if you're a childless, non-disabled adult that doesn't have any money, you're just screwed if you want anything other than emergency room care.

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It seems to me that the relevant "theory" (which may or may not be what Matt had in mind) is that there are diminishing returns to medicine. If health insurance is going to do anyone any good, it should be the people who are on the margin between having it and not having it, and who therefore consume the least health services (relative to their needs). And since by revealed preference people who are nowhere near this margin seem to think that health insurance has positive benefits, that would suggest that the benefit for the marginal people is substantial. This seems like a valid use of the word theory.

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Yglesias needs to focus on health care, not insurance, if he wants a solid argument. If we look at actual health care, there is a large gain from health care vs the alternative of no care.

We have a natural experiment to test the life expectancy for those who forgo medical services. JAMA 1989 has an article by Simpson studying the longevity of presumed Christian Scientists vs. a similar cohort. He in fact finds a statistically significant difference in longevity, something like 4 years, iirc. Of course, these people may have in fact used medical services when they really needed them, so the effect could be much larger.

If there are people out there without access to health care then yes, we can see an impact. Of course, the amount of care needed to reach relative parity may be small. Medicaid or subsidies for the very poor seem to be a decent policy, if we can keep the subsidies low. Of course, that last part is the problem.

Keeping the issue of health services separate from health care is important. It is this conflation that muddles the arguments and facts comming from Yglesias and others

Sorry for the long comment, not trying to hijack.

Article link here:http://jama.ama-assn.org/cg...

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Here are some points to consider.

The indigent have medicaid.The persons who can afford it have insurance.Those who cannot afford insurance--those who do not qualify for medicaid and who cannot afford insurance--are those who are affected.If you become indigent from medical care, you qualify for medicaid.

So, you are looking at a wedge of the population.

Second, you, if you value yourself as an empricist, should ask this question: how would the market prove or disprove the hypothesis that the lack of health insurance would affect mortality.

Think for a minute: who would make or lose money in the market based on the outcome of this question.

Answer: life insurance companies.

When you fill out a life policy, the underwriters demand that you give them the history of who has provided you with health insurance and whether you currently have health insurance.

If you do not have health insurance, you are more likely to have your policy request being conditioned on getting a physical.

Call any life insurance actuary or life insurance underwriter. But, don't bother talking to an economist.

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