The murder of United Health CEO Brian Thompson has engendered a discussion about healthcare and health insurance in America. Somewhat unexpectedly, many on the right are in agreement with the left that health insurance is broken.
His death is not going to change anything. He will be replaced by someone who will continue the same policies as before. It’s far cheaper for United Healthcare to hire better security than to adjust its business model to being less profitable.
Insurance has always sorta been a scam. Insurers take your money and look for any excuse to not pay out. Even Warren Buffett and the late Charlie Munger said so. Being that they run insurance businesses, they would know.
In economics parlance, insurance is affected by what are called moral hazard and adverse selection. In the former, insured people are inclined or incentivized to take extra risks. In the latter, applicants are incentivized to downplay or hide preexisting conditions unbeknownst to the insurer.
Both of these lead to higher prices, as actuarial models must adjust for these undisclosed risks. If insurance companies notice they are paying out too often relative to the calculated risk factors, then premiums will go up.
So insurers are looking for any excuse to deny coverage, and customers seek to downplay risk before getting the policy, and then increasing risk after getting it. It’s an inherently adversarial market in which information is incomplete.
I have seen some blaming Obamacare. Yeah, because insurance and healthcare was a breeze before the ACA. Healthcare has always been expensive and a pain.
Too many people are overweight or obese and this pushes up premiums in the long-run.
Much of healthcare spending is about trying to create marginal improvements of life or a few extra years of life expectancy, typically at great cost.
Same for too much preventive care. As discussed earlier, a lot of healthcare spending is about screening for disease, that turns up nothing but costs a lot when multiplied by millions of people annually. This includes routine blood work, prostate tests, colonoscopies, echocardiograms, etc. These are also impervious to technology or other automation, so labor costs are a major factor.
Are Americans paying too much for procedures and drugs relative to foreign countries for those same drugs and procedures? Yes. But also, Americans consume a lot of healthcare overall and have high expectations for short wait times and the latest and experimental treatments. Americans want Ozempic as an easy and effective obesity fix, not the diet and exercise, and who can blame them.