Flash: Insurers Charge More for Higher Risk

Ooh, this is right up my alley! Matthew Yglesias points to a piece by Igor Volsky that uncovers unmistakable signs that the health insurance industry is scheming to link insurance premiums with expected benefit payout costs! Read what Volsky has to say in the Think Progress Wonk Room:

AHIP [America’s Health Insurance Plans] is all for “affordable” coverage on the government’s dime. That is, rather than agreeing to end premium discrimination based on age or sex, it wants the government to issue tax credits and cap total health expenditures for lower-income individuals to protect Americans from bankruptcy. The plan calls on the government to ensure affordability, while protecting industry profits.

So I guess right-thinking people are supposed to grant that discrimination based on age and sex is a bad thing for insurers to do, or is merely a profit enhancement measure. Well, here is one of the reasons why I do not fit in the progressive club. Insurance is by definition a trade of regular premium payments in return for protection from risk. It is a bet between the insurer and the insured. Why would either party in this bet not make use of available information on the risks being transferred from the insured to the insurer? What is wrong with that?

It makes me wonder if Igor Volsky has ever heard of actuaries, or knows what they do.

I am not an economic conservative. I favor progressive taxation, taxation of capital gains, environmental and safety regulation, financial controls, government support of science and art, laws to promote labor organization, and a minimum wage. I also think the American health system belies the wisdom of letting market forces reign. Still, I never thought the solution to health insurance troubles was some universal health collective where everyone pays the same amount to be covered for everything.


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