What's wrong with a pool-style health care system?

  • by Admiral
  • May 12,2016
  • 8 answers

Keep in mind that the model outlined below is very rough and unrefined:
So what are the problems with a health care system in which everyone pays forth a standard sum at the beginning of the period, which is them vowing to help pay for the medical expenses of anyone who gets sick, in return for their medical bills getting subsidized should they get sick? Basically, all 100 people pay forth $100 each month, and anyone who gets sick in the next month gets subsidies from that pool of $10,000.


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Insurance Answers (8)

Flower 6 months ago

That is what a health care exchange is. Some types of communities have those like farmers or Christian ministries. The insurance exchange in every state is loosely based on that concept. But you cannot have enough money in a pool to cover more than one person because health care costs so much. $10,000 wouldnt go very far, even to cover one person's surgery.

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Ladyluck317 6 months ago

If you want to transfer the responsibility from health insurance companies, to the government, then it would probably be a good idea to research how well "medicare" and "medicaid" are working out. alot of medicare recipients have other coverage to suppliment, since not everything is covered. this is where people don't like the idea of a government or monopolized coverage system... because they get to make the rules and you can't look else where. they get to decide what's covered and not covered. just becuase you have health insurance doesn't mean everything is covered. you might want a certain migraine medicine to be covered because you suffer from migraines. currently you can shop around at different plans and see what would be willing to cover more of your needs. if it all goes to government, or one entity, they will just have the flat out final say. no we won't cover this medicine. its ONLY covered if you have cancer, etc. or maybe you only get coverage for therapy if you're a certain age. beyond that age you don't get it, etc etc. that's what can happen and what gets people upset. they want full coverage for everything and anticipate they will be getting it but when they go to use their benefit it wasn't part of the plan. and from what i hear, medicare doesn't cover a lot

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Casey Y 6 months ago

You need to realize that your numbers are completely out of the ballpark. A good example, the cost of treatment for tougher illnesses and diseases. I have a client whose child was born with "issues." $5mil later (paid for by insurance) and the child is ok.
That's what makes this so tricky, the inconsistencies in the cost of treatment.
This is already, exactly how health insurance works. The Medical Loss Ratio built into the PPACA requires insurance companies to return premium to their customers if they don't spend 80-85% (varies based on other factors) of the premiums to pay claims. My wife has received returned premium from this program, so it is definitely being used.
So, my question for you, what do you think is different in your suggestion?

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Insurance Pickle.com 6 months ago

You answered your own question. Yes, that's a very rough explanation of how insurance works. IF the government would run that multiply all of the expenses of the operations of that system by a number that is much greater than the profit and expenses of an institution that is actually looking how to save costs.
If that doesn't make sense, find someone that works in a finance department at ANY government entity, and you will very quickly realize how bad an idea it is for people to be responsible for a large pot of money that doesn't belong to them. I have a friend that worked at the FDA, and in a 4 year time frame (around the '08 period mind you) that saw a consultants income go from about $150k per year to $400k per year for the same responsibilities the whole time. That's what happens in government.
Also, keep in mind that there are many, many non-profit insurance companies that aren't any better/cheaper than the for profit ones. When people are rewarded for efficiencies and innovation, then the output of work is much greater. That's why the US, while only 5% of the world's population generates 25% of the world's productive output. While not perfect, our system is pretty awesome. We just need to make some adjustments to make sure it stays that way.

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jmm2112 6 months ago

You've just described, in general terms, what insurance is. It's all about "pooled" or shared risk. But the "pool" has to be very large.

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Zarnev 6 months ago

There are plans like that, and they've been approved as compliant with ACA regulations.
The problem you run into is what happens when several people have very expensive medical problems. So you have two of those 100 come down with cancer and need the expensive $4000 per month medication on top of $1000 monthly doctor and clinic charges. That doesn't leave anything for anyone else, so everyone else would drop out because there is no money for them.

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mbrcatz 6 months ago

Well, that basic outline is exactly how insurance works! Not just health insurance, but ALL insurance.
They have more rate categories, to make it more "fair". That's why the guy with 3 DUI's pays more for car insurance than the guy with a clean driving record, and the guy with a $1,000,000 house pays more for house insurance than the guy living in an apartment.
The biggest problem with doing healthcare that way, is that on average in the USA, medical bills AVERAGE $800 per month, per person. So $100 a month is NOT enough money to cover all the bills, let alone return any money.
Since the average American spends over $1300 a year on prescription medications ONLY, you're not even collecting enough to cover the cost for the drugs.
That's why health insurance costs so much, and that's why people buy it, instead of putting $100 a month into a savings account to pay for their own medical bills.

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StephenWeinstein 6 months ago

The first problem is that $100 each month would not be enough. There wouldn't be any unused money at the end of the month. The money would run out much sooner. A pool of $10,000 might last for two weeks, some months. Some months, it wouldn't even last for the first three hours.
If someone has to go to a hospital and get surgery, it can cost over $10,000, just for that one person. If someone has to go to the ER, it can cost over $10,000, just for that one person, for a few hours.
If someone needs an organ transplant, that can cost a few million dollars.
A $10,000 pool really isn't going to be enough to do any meaningful good.

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