Actuarial Outpost
 
Go Back   Actuarial Outpost > Actuarial Discussion Forum > Health - Disability
FlashChat Actuarial Discussion Preliminary Exams CAS/SOA Exams Cyberchat Around the World Suggestions


Reply
 
Thread Tools Search this Thread Display Modes
  #21  
Old 10-05-2018, 07:07 PM
Locrian Locrian is offline
Member
 
Join Date: Apr 2008
Posts: 1,740
Default

Agree with DTNF. There's also a trust component, as well. People don't have the same level of trust in car mechanics they have in doctors, and that has wide-ranging implications on an insurance company's ability to manage cost.

(To be clear, I'm not saying this is the way things should be; people should trust doctors much less than car mechanics.)
__________________
Spoiler:
Quote:
Originally Posted by Andreas View Post
The most important thing I have learned from the career forum is that the gurus in this field and keepers of supreme knowledge regarding all matters pertaining to the actuarial profession are unlettered actuarial students with < 5 years of experience.
Reply With Quote
  #22  
Old 10-08-2018, 09:57 AM
WhosOnFirst WhosOnFirst is offline
Member
Non-Actuary
 
Join Date: Mar 2015
Posts: 122
Default

Quote:
Originally Posted by Dr T Non-Fan View Post
For most goods and services, one doesn't live with them or else die without them.

You will see this with some people's pets, spending thousands to keep them alive for a few more months (or maybe years).

You won't see this with, say, cars. Insurers decide that the salvage value is less than the repairs, give you the money and done.
People don't have a "salvage value" when they need repairing.
Unless you think having one could solve the "health care crisis." A health insurer simply saying, "We ain't paying for that, as your worth is $50,000 and your surgery will cost $250,000. Here's $50,000. We are settled." Interesting idea you have there (no, it was not MY idea! I simply read your mind!).
We used to do that pre-ACA. It was lifetime limits but people hated them. Personally, I have a hard time justifying $1 million plus expenses for myself. Frankly, I'm not certain my NPV is worth it.
Reply With Quote
  #23  
Old 10-08-2018, 11:34 AM
George Frankly's Avatar
George Frankly George Frankly is offline
Member
SOA AAA
 
Join Date: Aug 2011
Location: CO
Favorite beer: Sam Smith Oatmeal
Posts: 10,004
Default

Quote:
Originally Posted by Dr T Non-Fan View Post
For most goods and services, one doesn't live with them or else die without them.

You will see this with some people's pets, spending thousands to keep them alive for a few more months (or maybe years).

You won't see this with, say, cars. Insurers decide that the salvage value is less than the repairs, give you the money and done.
People don't have a "salvage value" when they need repairing.
Unless you think having one could solve the "health care crisis." A health insurer simply saying, "We ain't paying for that, as your worth is $50,000 and your surgery will cost $250,000. Here's $50,000. We are settled." Interesting idea you have there (no, it was not MY idea! I simply read your mind!).
I'll pile on to that...

Even for health care that's not live and die, you can see some pretty big dollars. The 'insulation' that insurance provides, where the true cost isn't paid, distorts what gets consumed. The high deductible plans are likely putting a dent in that, but I can't say for sure or how much.

In pharma you see a lot of manufacturers handing out assistance, sometimes paying the copay, sometimes reducing the price. And nobody (well, almost) is comparing the efficacy of generics vs brand to see if you can get by with the cheaper drug. There's no incentive for manufacturers or physicians to do so, although things are slooooowly changing wrt physicians. Insurance companies can and do manage formularies to some extent, but generally don't get too involved in trying to practice medicine, for obvious reasons.

There are all of the issues around in vs out of network, which can hit you pretty hard for emergency services or planned inpatient stays.

Much of the healthcare space isn't that competitive. Many drugs are branded and sometimes there isn't a cheaper alternative. And, if there is an alternative, you may still get the brand (see point above re: pharma). Physicians aren't in the business of knowing how much drugs cost, they are in the business of clinical outcomes. They went to medical school, not business school. Much of the medical device market isn't competitive either. And on the provider side, that's often not competitive either. You likely have quite a few choices for a primary care physician. But if you have MS, or need a retina specialist, or have cancer, your options may be pretty limited.

Physicians spend a lot of money trying to optimize billing, often called 'coding creep.' Over the years I believe this has added a fair amount of cost to the system, though I've not seen it quantified.

I'm probably missing about ten other things.

So all over the board, there are issues driving costs inexorably upwards. In short, if you look at what all you need for a competitive, efficient market... basically none of those assumptions hold true for healthcare.
Reply With Quote
  #24  
Old 10-08-2018, 11:36 AM
George Frankly's Avatar
George Frankly George Frankly is offline
Member
SOA AAA
 
Join Date: Aug 2011
Location: CO
Favorite beer: Sam Smith Oatmeal
Posts: 10,004
Default

Quote:
Originally Posted by WhosOnFirst View Post
We used to do that pre-ACA. It was lifetime limits but people hated them. Personally, I have a hard time justifying $1 million plus expenses for myself. Frankly, I'm not certain my NPV is worth it.
I've never worked on the payer side. I seem to recall someone else (?) here that WAS on the payer side saying this doesn't add all that much, like 1% or something, to overall cost. Perhaps I'm remembering that wrong, would like to hear someone knowledgeable weigh in here.
Reply With Quote
  #25  
Old 10-09-2018, 09:57 AM
exponentialpi's Avatar
exponentialpi exponentialpi is offline
Member
SOA AAA
 
Join Date: Nov 2008
Location: Po
Studying for ACA
College: Graduate of hard knocks
Favorite beer: Cold Smoke
Posts: 1,437
Default

Quote:
Originally Posted by George Frankly View Post
I've never worked on the payer side. I seem to recall someone else (?) here that WAS on the payer side saying this doesn't add all that much, like 1% or something, to overall cost. Perhaps I'm remembering that wrong, would like to hear someone knowledgeable weigh in here.
Only an anecdote. Iowa had that massive rate increase a few years back for ACA and 10% of it was solely for one individual.
Reply With Quote
  #26  
Old 10-09-2018, 01:32 PM
WhosOnFirst WhosOnFirst is offline
Member
Non-Actuary
 
Join Date: Mar 2015
Posts: 122
Default

Quote:
Originally Posted by George Frankly View Post
I've never worked on the payer side. I seem to recall someone else (?) here that WAS on the payer side saying this doesn't add all that much, like 1% or something, to overall cost. Perhaps I'm remembering that wrong, would like to hear someone knowledgeable weigh in here.
It may have been me, the price increase due to elimination of the lifetime max was between 1% and 5% depending upon the product. Most of our plans at the time were closer to the 1% range. The number of people that actually hit the lifetime max was very low, maybe five people a year out of about 1 million. If I recall correctly the caps ranged from $1 million to $5 million. There was some wiggle room in the pricing though because once you exhausted your lifetime cap you were eligible for other programs (like state high risk pools) so people would term on our plan and roll over to a new one where we couldn't track additional spend.
Reply With Quote
  #27  
Old 10-11-2018, 01:46 PM
dude cool dude cool is offline
Member
SOA
 
Join Date: Jun 2003
Posts: 54
Default

The vast majority of health care is not live or die. And I would argue that there are other goods & services that are at least as "live or die" as health care. How about transportation safety? How about defense attorneys? I don't think that health care has to do with health explains why spending is so out of control.
Reply With Quote
  #28  
Old 10-11-2018, 02:48 PM
dgtatum's Avatar
dgtatum dgtatum is offline
Member
SOA
 
Join Date: Sep 2013
Location: Louisville, KY
Favorite beer: New Albanian Anything
Posts: 2,664
Default

Quote:
Originally Posted by dude cool View Post
Interesting post, dgtatum. I'm curious why health care is so different from everything else. After all, doesn't EVERYONE have a profit motive? Why don't we see these sorts of spending increases in other products and services?
Sure, but you don't have to buy anything else. We also generally have much more knowledge about anything else we buy. I play golf and buy golf stuff. I know whether or not a driver is worth $500. Other golf customers do as well. When a driver doesn't sell at $500 it is discounted until ti does sell. Maybe it only sells for $100? I don't know.

There is no mechanism like this in healthcare. No one knows anything about the price or the quality of the treatment they are receiving. Other than liking someone no one even knows if their personal Dr. is any good or not. The entire industry is a black hole in regards to quality and cost. Throw tax money, corporate benefits money, etc. into that black hole and $'s skyrocket.
Reply With Quote
  #29  
Old 10-12-2018, 08:24 AM
act2106 act2106 is offline
Member
SOA
 
Join Date: Apr 2010
Posts: 1,244
Default

Quote:
Originally Posted by dude cool View Post
The vast majority of health care is not live or die. And I would argue that there are other goods & services that are at least as "live or die" as health care. How about transportation safety? How about defense attorneys? I don't think that health care has to do with health explains why spending is so out of control.
The vast majority of health care also isn't what drives inflation so much - it's mostly the expensive stuff, which tends to be more live vs die, or at least live somewhat comfortably vs very uncomfortably.

I can't think of many industries where there's such a direct link to quality of life (or lack of life itself). Sure, transportation safety might affect me, but probably not, regardless of what mode of transportation I take or anything about me personally. If I have a certain health condition then healthcare will definitely affect me.

I don't know about defense attorneys. Maybe they (especially the best ones) have a high inflation rate, too. Maybe they don't because the vast majority of people whose lives would be affected by their performance can't really afford one. You might have a valid comparison there, but I would guess there are other factors at play.
Reply With Quote
Reply

Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off


All times are GMT -4. The time now is 01:44 AM.


Powered by vBulletin®
Copyright ©2000 - 2018, Jelsoft Enterprises Ltd.
*PLEASE NOTE: Posts are not checked for accuracy, and do not
represent the views of the Actuarial Outpost or its sponsors.
Page generated in 0.14504 seconds with 9 queries