Health Insurance EV question

[JayLeno]

Move to Denmark. Here we dont have to pay health insurances - and the doctors dosent have to be affraid that some twisted fool will make a lawsuit cause the doctor broke his ribb while doing heart massage.
We pay tax - alot - but noone have to be affraid to die because they dont have money for an operation or medicin.
We are an industrial country u know....we dont leave people to die in the streets.....

[Bikeboy]

No one is left to die in the street in the US. You don't know what you're talking about.

[grinin]

[ QUOTE ]
we dont leave people to die in the streets.....



[/ QUOTE ]

Get your facts straight.

We just shoot them here. If they happen to die in the street... meh

[etizzle]

well, its really actually always modeled that way. I dont really feel like looking for links but an easy one is http://web.mit.edu/14.41/www/PS4_2005.pdf

Check out problem 4. Thats pretty much how it always is in my experience.

[adios]

Given the fairly new laws regarding Health Savings Accounts (HSAs) I can't see why it would be practicle to be without health insurance.

Here's a linky to explain them a little further. Basically you get a high deductable, lower cost policy and get to contribute the amount of your deductable every year before taxes and the amount of the deductable that you don't use grows tax free.

Health Savings Accounts

[Poker Cat]

HSA's are by far the most sensible innovation in U.S. health care in decades. Unfortunately, hardly anyone knows much about them. MSA's, their former incarnation, had the same problem.

MSA's had a fatal flaw: they didn't allow deductibles over $2000/yr. (Why? Apparently, politicians consider high-deductible plans to be "well-person plans" -- i.e., for the rich.) HSA's now allow up to a $5000 deductible.

There's no guarantee HSA's will last, as they are quite controversial. But for now, the time and trouble of setting one up is likely a very good investment.

[Uglyowl]

[ QUOTE ]
Also most people under 35 will not have any major illnesses except an injury from an auto accident. Accident related injuries are usually covered by your auto insurance.

[/ QUOTE ]

Correct that most won't, but life is unpredictable and it is all too common for weird medical issues to arise.

$75,000 later worth of chemo, scans, etc. I would disagree with you that thinking you can go without insurance. One of the reasons those who play poker professionaly and discount the value of medical insurance as a benefit bothers me.

Also get life insurance while you are still eligable and it is pretty cheap! I have some, but not as much as I wish I did.

I am great today and expected to live a full life, just don't qualify for anymore life insurance right now.

[punter11235]

Thank you for that link
My concern is that utility function must have upper bound to be reliable, here is why.
I may be way off here but I suspect that some kind of logarithm function is often chosen becaue logarithm is first function which come to mind when you seek for function increasing slower and slower.

Best wishes

[MentalNomad]

There's some good info in this thread, but a few points:

1. Bill Gates would have insurance. He would have to have insurance because it is required to have a mortgage. He would have a mortgage because he could make more on the money investing it elsewhere than he could by leaving it in the house. (The house will appreciate, and he will earn that appreciation whether or not he has a mortgage -- but he can borrow the money at a low interest rate and invest it quite safely and get more money than that.)

2. The question isn't merely what is the EV of insurance -- we also need to ask about the variance. That's what people are keying in on when the talk about the potential for a huge cost -- critical care carries an enormous variance.

3. There is value to maintaining your economic stability. Perhaps you have enough capital to self-insure; lets say you have $100,000. It's not cash. If you end up in the hospital for a month with critical care need, you may need to pay $50k now and another $50k over the next few months in followup. Is everything fine? You have the money, right?

Well, where do you have the money? Part of it is invested in stocks; is it the right time to sell them? The market is down and you were waiting for specific product announcements for you stocks to peak. . . And part of it is invested in the multi-family house you live in. You can't sell it, you need to live somehwere, and the rental income will support you while you can't play. And part of it was invested in a start-up business some aquaintances were doing. It's a good investment, but the money can't be pulled out right now. . .

After you've cashed everything out, and paid the bills, where are you? Broke. Having enough to survive the event isn't enough -- you need bankroll to make more money, or you need money to invest to earn money. And, after the hit, you no longer have the money to self-insure, and now you need insurance!

So my point: it's not just the risk of having to pay out; it's the disruption caused by the paying. Having to limit your investment options to accommodate the sudden need, as well as the consequence of having to lose all or most of the money in an unlikely event.

Stability is key for planning well -- that's why mortgage companies require insurance!