Obama wins, saves economy single-handedly while defeating economy-hating Republicans

[KrazyHorse]

Holy ****, you are stupid.

That's not insurance, you ****ing moron. That is adverse selection.

[Al B. Sure!]

If you know you are going to get work done, it isn't financial risk, and you just scammed the insurance agency.

No... with $30 a month premium and a $1200 annual benefit cap... If I need dental work done any time within the next 40 months, I'm better off with insurance than without it.

Yeah I think that's a reasonable cause for insurance.

[Hauldren Collider]

Albie is demonstrating why pre-existing conditions should not be covered by insurance

Obamacare

[Hauldren Collider]

No... with $30 a month premium and a $1200 annual benefit cap... If I need dental work done any time within the next 40 months, I'm better off with insurance than without it.

Yeah I think that's a reasonable cause for insurance.

*facepalm*

afhogvo87we r7834r8734ryowe74few7 this is just making me angry

ALBIE.
READ UP ABOUT ACTUARIAL SCIENCE. THIS IS NOT THAT HARD. I UNDERSTOOD THIS IN MIDDLE SCHOOL. $#@*&$^#&*(@%$

[Hauldren Collider]

Okay, I'll try to actually explain why Alby is wrong in this post.

A properly designed insurance plan will not result in the customer ever actually being ahead financially. In the aggregate, the total amount paid to the insurance company by all planholders has to be greater than the amount paid out to the planholders. This is why you LOSE MONEY unless you literally cannot afford a certain financial risk at any point.

If you get *lucky* (really, unlucky), and have a bunch of tooth problems, you've come out ahead, but this is the exception and generally people try to AVOID this because while free candy is nice, free trips to the dentist are pretty ****ing ****ty christmas presents.

[Al B. Sure!]

it's really simple... if dental work will prove to be a burden to someone... anyone... it makes sense for that person to insure...

Not anyone can just fork over a few grand for dental work in one payment

[Al B. Sure!]

HC:

In the aggregate, the total amount paid to the insurance company by all planholders has to be greater than the amount paid out to the planholders.

That's not true. In fact, many years, claims exceed premiums. Insurers make money off of investing the float, not off of 'excess premiums'.

I had a lengthy thing with your brother about this and I cited things like financial statements of insurance companies and what not. I can find this stuff if you don't understand how insurers really make their money. It's not off of premiums. Insurers typically operate with an underwriting loss.

[giblets]

Insurance is good because money has diminishing marginal utility. But if dental insurance is vulnerable to adverse selection then maybe it's not a good idea to get it, because you're paying for the cheaters.

[Hauldren Collider]

Insurance is not good because money has diminishing marginal utility.

Insurance is good because it offsets risk.

[Hauldren Collider]

HC:



That's not true. In fact, many years, claims exceed premiums. Insurers make money off of investing the float, not off of 'excess premiums'.

I had a lengthy thing with your brother about this and I cited things like financial statements of insurance companies and what not. I can find this stuff if you don't understand how insurers really make their money. It's not off of premiums. Insurers typically operate with an underwriting loss.

What you demonstrated was that insurance companies don't always pull a profit. Congratulations?

Insurance companies in the United States generally don't provide insurance, in any case. We have a bizarre system tied to the employer, which is the origin of the pre-existing condition problem. Insurance companies do nothing more than approve claims.

Incidentally, getting rid of the tax deduction on insurance would make it much easier to phase this retarded system out and replace it with consumer-driven healthcare, which is as far as I can tell the only long-term solution to the United States' healthcare problem. Apart from getting rid of Medicare, that is.

[Al B. Sure!]

HC, you're not responding to what I'm saying

it's really simple... if dental work will prove to be a burden to someone... anyone... it makes sense for that person to insure...

and I'm not saying that insurance companies don't always pull a profit! I'm saying that underwriting profits are just a bonus! They're not the primary source of income for insurers. Typically, insurers operate with an underwriting loss but still have net profits because of investment revenue.

Insurers are in the business to make money off of the float, not underwriting profits!

[giblets]

Insurance is not good because money has diminishing marginal utility.

Insurance is good because it offsets risk.

Risk aversion makes sense because money has diminishing marginal utility.

[KrazyHorse]

That's true, gribbler, but the point is that 1200$ of benefits are not even close to enough to demonstrate non-linearity in utility for virtually anybody in modern society other than the most liquidity constrained (e.g. those without access to a credit line, friends or family).

[Al B. Sure!]

HC, if you don't believe me, maybe you'll believe Warren Buffet... here's a part of the 2009 Berkshire Hathaway Shareholder Letter:

Insurers receive premiums upfront and pay claims later. In extreme cases, such as those arising from certain workers’ compensation accidents, payments can stretch over decades. This collect-now, pay-later model leaves us holding large sums – money we call “float” – that will eventually go to others. Meanwhile, we get to invest this float for Berkshire’s benefit. Though individual policies and claims come and go, the amount of float we hold remains remarkably stable in relation to premium volume. Consequently, as our business grows, so does our float.

If premiums exceed the total of expenses and eventual losses, we register an underwriting profit that adds to the investment income produced from the float. This combination allows us to enjoy the use of free money – and, better yet, get paid for holding it. Alas, the hope of this happy result attracts intense competition, so vigorous in most years as to cause the P/C industry as a whole to operate at a significant underwriting loss. This loss, in effect, is what the industry pays to hold its float. Usually this cost is fairly low, but in some catastrophe-ridden years the cost from underwriting losses more than eats up the income derived from use of float.

In my perhaps biased view, Berkshire has the best large insurance operation in the world. And I will absolutely state that we have the best managers. Our float has grown from $16 million in 1967, when we entered the business, to $62 billion at the end of 2009. Moreover, we have now operated at an underwriting profit for seven consecutive years. I believe it likely that we will continue to underwrite profitably in most – though certainly not all – future years. If we do so, our float will be cost-free, much as if someone deposited $62 billion with us that we could invest for our own benefit without the payment of interest.

Let me emphasize again that cost-free float is not a result to be expected for the P/C industry as a whole: In most years, premiums have been inadequate to cover claims plus expenses. Consequently, the industry’s overall return on tangible equity has for many decades fallen far short of that achieved by the S&P 500.

[KrazyHorse]

gribbler

Remember, the NPV of earnings for most individuals is at least in the high six figures.