Baby Denied Health Care Coverage For Being "Too Fat"

I'm not going to suggest that this situation is ideal - but for the sake of disagreement, insurance does a lot more than 'exchange money', they manage risks and are massively essential for the economy (20% of the LSE is owned by insurance companies). The article almost makes it sound like underwriting is a bad idea!Are health insurance companies allowed to make an underwriting profit? Does the health reform seek to change this? Is there some valid acturial justification for not covering babies of these dimensions?

Hypothetically? Sure - big babies get dropped more often or there is a correlation between large babies and certain expensive diseases or disorders.

And my customers The risks are not people's lives. The risks in question are specifically financial ones. That is: if there is a 10% chance that you will take a $100,000 loss sometime in the next year then a risk averse individual may want to manage that risk by paying $10,000/year instead.It doesn't matter why that $100,000 loss occurs. This is a simple fact of reality: You cannot expect that there will be 'no expense spared' to keep all people alive at all times. It'd be nice, but it isn't realistic.I'm from the UK, so while I can use private medical care, I am also paying some amount of money towards the NHS.However - there are some treatments which are very expensive (eg., some drugs cost $5,000/month) and they might not be covered. It's people's lives - but money is created by the actions of people's lives. If we spent recklessly, we'd be out of money for little benefit. These two assertions are contradictory. Insurance is by definition anti-individual. The entire point is that many individuals protect each other from large unmanageable losses by sharing risk. They are cooperative in nature. Not necessarily. If that is what they are doing - then your financial system is to blame. The purpose of insurance is to manage risks by pooling them using the principle of large numbers with a view to indemnifying people for genuiune losses while repudiating the very large numbers of fraudulent claims. The premiums should be proportional to the payouts (ie., there should be little to no underwriting profit), and the only profit created should be in investments the insurer has invested in using the premiums that its customers supply. Yes - the system in the US has seems to be broken. To be perfectly fair, there are many broken systems throughout the world - the US's system maybe broken and it may be fixable - but its still not close to the worst system out there I don't know about the US but you only need a million quid to start your own insurance company up over here. I'm sure you could start up your own if you think you have found a better way. Still - there are probably some legislative necessisities before it is possible for such an ideal system to exist. While I prefer having the NHS and optional private cover - it must be pointed out that having the government make these decisions is not ultimately superior to having private companies make them. They will still need to mitigate their losses somehow and that will mean people will have to sacrifice more of their own money to pay for an increase in coverage.To be clear: I'm not defending the US system - but it is easy to get carried away criticising it!

Of course. I do

Yes, ideally. But profiting from insurance (either as an insured or as an insurer) is against the principles of insurance and leads to precisely the problems the OP points out (among others - such as large insurers artificially increasing the premiums to mutually increase their profits). Not only is there no need - but it is fundamentally against the principles of a free market.Thankfully, neither the USA or the UK are entirely free markets. Regulation of the financial industry, it should be readily obvious, is essential. The concept of the moral hazard doesn't go away because of a dream of a perfect free market state.

For most definitions of 'basic health care' - yes. Now that I am warned - I'm also curious. Do you have a problem that I am making my living as a result of the insurance industry (I'm not an organ grinder or anything, just a monkey)?

They do invest 'their' money elsewhere. It's actually their customer's money. As I said - 20% of LSE is owned by insurance companies. That's where they should make their money. The motor insurance industry in the UK often runs at an underwriting loss (one year I remember it was about 100million) but the insurance companies don't collapse because they make a lot more money investing their customers money. It's not a monopoly - that is when only one company can provide the goods or service and especially is in a position to prevent others from entering a market. Price fixing is illegal, as is insurance fraud. But making things illegal does not remove the concept of moral hazard in finance. As we should know only to well. The goal of a free market is regulate profits by legislation? Really?

Yep - and it should exist. It is my view that a government should provide healthcare for all its citizens who in turn should pay an income adjusted tax or insurance towards running this. It depends how much it costs. The NHS won't pay for all treatments. They will refuse certain drugs that cost too much, and then you have to beg with the local NHS trusts and we get what is often called a 'postcode lottery'. And if you are still out of luck you might need to go somewhere else, like the USA or Switzerland or something. It ain't perfect over here

Yes I understand the concept that giving money to someone means that the someone assumes ownership of it However, the point remains - they take the money that their customers give them and they invest that money. They do not need to make money on underwriting versus payouts in order to increase the amount of capital they have. How much money do you think one can make by owning a 20% stake in all of the companies on the london stock exchange? Agreed. And any shopkeeper will tell you that it is a good idea not to make it easy to steal from them...thus they don't just let the customers declare what they have bought and trust them to pay the correct amount. Well - the goal of insurance providers is not necessarily to make profit, though some do and for some that is their goal. If making an underwriting profit is the priority - then significant problems come up in realizing the goal of insurance, the mechanism.

Actually - that was pretty much how modern insurance started Quoth wiki:

quote:

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Fire Insurance has over 200 years of history in America. Famous fires include the Chicago fire of 1871 and the San Francisco earthquake and resulting fire of 1906. The early fire marks of Benjamin Franklin's time can still be seen on some Philadelphia buildings as well as in other older American cities. Subscribers paid fire fighting companies in advance for fire protection and in exchange would receive a fire mark to attach to their building. The payments for the fire marks supported the fire fighting companies. If the protected building were to suffer a fire, only their fire fighting company would attend the call to extinguish the fire. Even if competitor fire companies were closer to the fire they would not do anything to prevent further damage or extinguish the fire. This brought the fire mark system into disrepute. Municipal and rural fire departments support by local taxation became the more popular solution.

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As ever, Ben Franklin saw the future and got into that racket first.

Yes. It is good.