Thread by @AltWASONPS

Since healthcare and insurance is most definitely going to be a really really hot topic for #2020Election, let me take a moment to explain how insurance works.

[Thread]

Way way back in the day insurance didn't exist. If something unfortunate happened, like say a family member died, you had to cover expenses for things like a funeral in full.

The unfortunate problem is that you never know when it's going to happen, so..

You don't know if you are saving enough or if you will have enough money to cover the expenses.

So people came up with a creative solution. While they couldn't predict when someone would die, they did know how much it cost. They also knew that not everyone dies at the same time

So instead of people just saving on their own, they began to pool their funds together. Essentially, everyone paid the same and the pool would pay for the funeral (or whatever the pool was specifically for).

Over the years this evolved into a business. It certainly had some quirks.

For instance go back into early American History and look at Alexandria, VA. If you look at some of the old historical building you will see these small round emblems on the building.

Those are indicators that the home owner had fire insurance...

And there were these fire brigades that kinda just went around and (generalizing this) looked for buildings that were on fire. If the building had one of those emblems they would put the fire out...

Well, it was more of a try to contain the fire and get as much stuff out of the house before it all burnt situation.. but back in those days, with the building materials used the fires burned a lot slower....

Anyhow. So if the got to the building and did their thing, the insurance company would pay them for their service. (This isn't 100% accurate, but is the gist of it).

Some people even purchased two sets of insurance...

Of course you don't see many buildings with two emblems on them because, well, the two fire brigades would end up getting into fist fights in the street because they both wanted to get paid and the house would end up burning down.

And, again of course, if you didn't have the insurance they kinda just let your house burn down.. so yeah.

With fire insurance, that kinda disappeared... Partly because of some of the great fires like in Chicago, where a small fire burnt like half the city (probably more)...

To the ground. And well, we decided that as a society it's probably better to just permanently fund a fire department that covers everyone.

But, obviously, there was more than just fire insurance. You also have health insurance which is what this is about.

Going back just a bit.. it was kinda the same. Because people didn't know when something would happen, they pooled their money together..

Eventually companies figured out a way to make a profit on it..

It's really just math. (On average x happens so often, and x costs this much.. so let's charge a premium of x+ profit margin)

At first, you would think you can just charge everyone the same.

Except that, if you do that, if you just look at the total risks of the entire population, you are opening up room for competitors....

Take West Virginia as an example they have (well had) a huge population of coal miners.. well black lung is more common there, then say California.

So I charge people in West Virginia a little bit more (more black lung risk) and people in California a little bit less..

That makes my prices more competitive and means it's more likely that I get a consumer to use my insurance.

But I don't stop there.. I can go through and list out every single medical condition catergorize the risk based on age, sex, location, etc.

I could even (theoretically) look at their religious preference.

Now this kinda makes a bit of sense, why make people pay for more than what they are reasonable at risk for.

It keeps the prices low, it keeps people happy, and I can make a decent (as in multi billion dollar) profit.

And that's the catch. You see, as an insurance company to offer all that crazy risk adjust insurance, I need to make money. Nothing wrong with that it's just a fact of life.

Of course, doctor's and hospitals also have to make money. We certainly want to pay our doctors who are generally trained and educated on how to not kill us.

So if you have insurance. It's relatively easy to get treated for whatever as long as it's covered. This is because you have pooled your money through the insurance company and they are guaranteed to get paid.

If you don't have insurance, it's not so much of a guarantee. So the doctor could do a credit check to see if your good for it.. or make you pre-pay,...or they can turn you away.

Doctors usually want to help people.. but they still need money. And if they provide that service but people don't pay the only way that they can make up for it is by either taking a hit.. or charging everyone else more to compensate.

Of course, there is another problem in this. Some hospitals are also businesses that need to make a profit and the doctors in that hospital are essentially contractors... And they contractual have to pay doctors a specific amount (really generalized here).

So, as you would expect some people didn't pay and costs began to go up. And up, and up.

But they risked not being profitable or as profitable as needed/wanted.. so they started turning people away and denying them medical care.

And then people started dying because of it. (This was in the 80's)

Well, we as a society said that was pretty messed up and that it shouldn't happen... And required that people be able to get emergency medical care

Of course, this wasn't perfect (as things rarely are)..

Some people couldn't get insurance. In some cases they couldn't afford it. In others the insurance companies would not cover them

So two things happened.

Some people, a small portion, realized that they couldn't afford medical care.. and would just go to the ER.

Others, the much much larger portion.. were denied insurance because because of a pre existing condition. Usually, they initially had coverage.. and thought they would...

Be ok. But then the insurance companies dropped them because they were costing too much. Or they changed jobs, and the new job didn't offer the same providers.. and the new provider wouldn't take them

So they would get sick. Really really sick. And then go to get treatment. Which usually costed a whole lot more than if they had got early treatment.

And, well, who can afford a $200k medical bill.

So, we again decided that it wasn't right.. that everyone should be able to have insurance. And ACA (Obamacare) came to be.

It wasn't perfect. And some people's premiums went up. And well some people really don't want to share responsibility.

I get it, like I don't...

Want to have to pay more than what I have to.. and I certainly don't want to pay for others.

But.. as long as they get care. Someone has to pay the bill.

With the upcoming elections.. we have some choices.

We could go back in time and just let people die. That will make things cheaper. Not necessarily better though.

We could expand health savings programs.. but that only helps the people who can afford to save (and about half the population can't)

We could go single payer, understanding the issues that some countries have had..

Or we could do some combination of them all.

The truth is, we don't know what works best. But we do know what doesn't work.

Personally.. I think we should go with the later.

At the same time, I support single payer systems. My concern with this though is insufficient funding and/or improper management due to political attempts to sabatoge something that would and should work