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Thursday, September 05, 2013

Health and Life insurance

The problem with health insurance, and even more so with HMOs like Kaiser, is that as far as they are concerned the best thing that can happen to you (at any age) is a sudden death. While admittedly some here may agree with that, and while there is probably universal agreement that a protracted, expensive death is a bad thing, it would be nice if everybody with influence over your health care had an interest in you having a long and healthy life. (What's cheaper -- to find out about cancer early enough to treat it and survive, or so late that there's nothing to be done? Who gets to approve or deny expensive diagnostics?) Toward that end, it seems to me that health insurance should be bundled with life insurance.

Running the tables to get a ballpark on cost, however, reminds me how short life is (or, specifically, how likely it is to die in any given year). Figuring you'd want a roughly constant monthly payment over the course of your life, such that the payout (on death) would decrease the longer you lived, and ballparking a million-dollar incentive for insurance companies to want you to live through the year at age forty, the table (for men, based on http://www.ssa.gov/oact/STATS/table4c6.html) looks like this (for just the life insurance component, not counting overhead):

At age 10, $200/mo payment gives $26,373,626 payout
At age 20, $200/mo payment gives $2,146,691 payout
At age 30, $200/mo payment gives $1,691,332 payout
At age 40, $200/mo payment gives $1,074,306 payout
At age 50, $200/mo payment gives $448,850 payout
At age 60, $200/mo payment gives $217,273 payout
At age 70, $200/mo payment gives $98,007 payout
At age 80, $200/mo payment gives $38,948 payout
At age 90, $200/mo payment gives $14,256 payout
At age 100, $200/mo payment gives $6,784 payout

Probably not something to bother with when you're 10, but, dang, a million dollar incentive at forty would cost $200 a month, and twenty years later for that same price your HMO is back to hoping you will die quickly.

Obviously you could have the payout go to your kids or friends or favorite charity, but an extra twist is to have it pay to an anti-insurance company which pays your monthly payment for you until you die. They in turn would want you to die asap, but fortunately they don't have any influence on your health care. (Caution for backroom deals of course.) You'd still have to pay something per month to cover admin costs, but much much less than $200, and you could probably get a much higher incentive payout too.

Of course when you average this all out, accounting for adjustments made on all sides in response to evolving statistics, what this really amounts to is a bonus to HMOs or health insurance companies for having their customers live longer than average (or longer than last year's average), which could probably be codified more directly... But still, there's something viscerally satisfying in knowing that your health insurance company will get dinged a million bucks if you die. I have to think they'd take more seriously things like the stress they cause people from dicking them around, or the real value of that diagnostic scan they didn't approve.

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