"Attorney general seeks death penalty for Luigi Mangione."
(media.scored.co)
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What is the ideal insurance company from the perspective of the customer? What is the ideal insurance company from the perspective of the stockholder?
What is the purpose of an insurance company from the perspective of the customer? What is the purpose of an insurance company from the perspective of a stockholder?
Also, how do you calculate the expected value of a bet?
It depends, are we calculating for a business that actually has an incentive to exist, or a magical altruism portal that runs on fairy dust?
The former. Money doesn't come from nothing, but all overhead is taking from the money that should be going back to the customer. The ideal insurance company from the perspective of the customer is one which has zero employees, zero rent, and zero stockholders. All premiums go right back to the customers.
From the perspective of the Stockholders the opposite is true. They want absolutely nothing to go back to the customers. In their ideal world everyone would be required to buy insurance and they never have to pay out.
Thus the CEO's job is to maximize taking money from the customers that would otherwise be spent on keeping said customers alive, thus killing them in part.
No, the ideal insurance is one that pays out legitimate claims when the customers need it and at a premium that is justified by the risk variance. Customer doesn't give a shit about anything else.
In fact, people will pass over insurance that's too low.
If people believe the value of the insurance is 20% over amortized payout because of high risk variance they'll not buy insurance at 2% over because they'll suspect something is wrong; if people are willing to pay 20% extra to not roll the dice and you're only charging 2% then they'll expect the company to not pay them when they need it (and they'd be right).
Everybody in the US that has private insurance believes it's a better deal to have it instead of rolling the dice. There's no individual mandate. If it's not worth it for you, roll the dice - or get catastrophic insurance that pays for your casket.
This has nothing to do with the ideal insurance company. You completely (and everyone else) missed the point.
I'll spell it out in a simple example for you.
There are 7000 customers who want insurance on their next 1d20 roll. They want a payout of 3000 dollars for a nat 1. Thus the expected payout for the insurance company is 0.05 * 3000 = 150 dollars per person. The ideal insurance company has to charge 150 dollars per person. Some of the people won't "win" the insurance, some will, but the law of large numbers says the insurance company won't lose or gain money. A non idealized but ethical insurance company will have to charge a small additional amount to their customers to cover their overhead: salaries, rent, fees, and reinsurance. The more they increase their overhead, or their profits, the further they are from ideal.
The problem comes in when you get Board members, CEOs, and stock holders involved. They want to maximize their profits so they charge 1500 dollars per person. They lie to everyone about the odds saying the odds of rolling a 1 on 1d20 is 50%, so instead of taking in and paying out 1.05 million dollars, they take in 10.5 million dollars and still only pay out 1.05 million dollars, getting 9.45 million dollars profit. Or they just increase the overhead via increasing salaries and claim no profits because it is all going to buy their next yacht and summer home. That lets them screw both the customers and stockholders.
Right. My point is that that literally doesn't exist, and won't exist, because it can't exist. Nonexistence is rather a strike against "ideal." Insurance isn't—or at least, it doesn't work as—a magical pot of money whose job is to pay all of your medical bills. It is a hedge. The point is to pay a nominal, affordable monthly fee in order to guard yourself against the possibility of being surprised with a sudden, unaffordable, massive fee, like if you get hit by a car or develop a nasty tumor. The insured's benefit is that in a catastrophic circumstance, they have options beyond "curl up and die." The insurer's benefit is that if they set the odds right, they can make take in enough money to cover their overhead (which is necessary to hire employees to process claims. I don't know why you imagine it isn't), pay out claims that meet the standards, and still pocket some left over as profit for their time, effort, and risk.
Unfortunately, somewhere along the way, we lost the plot on what insurance is, and now we have people like you who think it should be paying for every single medical bill they have. This is obviously not sustainable for a whole host of reasons, such as the lack of incentive for any insurer to exist, supply and demand issues with medical care if everything is free, and massive potential for fraudulent medical billing.
Obviously, insurance was never without flaw... but your insane idea of what it is and what it should be would make nothing better, and many things far worse.
You have completely inverted my point. See the example I posted above.
If you are concerned that idealized scenarios are not useful, then I invite you to model all 10^23 molecules affected by your bullets before the next time you go shooting. No cheating by using idealizations like the Naiver-Stokes equations. You have to model each individual collision.
I was just asking about the formula. I understand the idea of being in the best interest of the company to not pay insurance but the formula would need to be how many claims for life saving are being denied that caused the person to die do to either poor care or debt.
The point would be that the insurance needs to be useful, bad insurance policies can tank a company. So ideal would be one that offers good / great service while also being expensive enough as to bring in profits.
You didn't answer his question
Solvency is a prerequisite. I know the ACA tried to create Healthcare via insurance companies, but its an idiotic approach even if you're an advocate for "free" healthcare (especially if, really).
Of course it is, and you are retarded for implying otherwise. An insurance company that doesn't exist after you pay into it is the same as an insurance company that doesn't pay out.
As for not answering his question, I already gave it more respect than it deserves by giving him some questions to think about to get to the answer. He wasn't asking in good faith because he is one of those "Won't you think of the poor CEO's" type.