The American public believes in and demands math impossibility

2017-01-14 12:55 by Karl Denninger 
 in Editorial , 2312 references

Why We're Doomed

Let me start from the beginning when it comes to insurance of any sort.

The cost of insurance is determined by the following arithmetic formula:

$ = p(event) * cost(event) + profit(insurance company)

This is not my opinion it is a mathematical fact.

Those who deny mathematics are idiots, frauds, thieves or all three at once.

Now let's ask a question: If you have just totaled your car what is the price of collision insurance on your car?

p(event) is 1.0 (probability of a collision) since the wreck already happened.

Therefore the price of said insurance will be the cost to replace your (now-totaled) vehicle plus a profit for the insurance company (without which it will not stay in business.)

In other words it is always cheaper in that instance for you to just go buy another car because you are paying the insurance company a profit for no reason at all.

It is usually not all that hard to figure out what the cost of an event is; given enough of a data set it's actually quite easy since an insurance company cares only about the average cost of the event across all of those people it insures of like sort and with like limits.  The hard part is the p(event) piece, and if you get that wrong as an insurance company in the wrong direction you will go bankrupt fast.  For this reason insurance companies pay actuaries quite a lot of money to get as close to the true value of p(event) as is humanly (and, with all the computers we have now, analytically and computationally) possible.

For this reason those who argue for "health insurance" for pre-existing conditions are either ignorant or worse, they are actual thieves who deserve to all be thrown in prison because what they are demanding is the ability to steal from everyone else.

That sounds harsh, and it is.

It's also absolutely true and if you actually adovcate and try to get enacted into law anything that forces such a paradigm on the public then you are personally a liar, a fraud and you deserve to go to prison as well for the crime of being an accessory both before and after the fact to their theft.

There is only one way that such a person, arguing for such a thing, can have a position that makes any sense at all.

He or she must argue for rationality in the cost of the treatment of such a condition.

Further, if such is achieved then "insurance" that covers same would be stupid since you then would simply be paying more for the treatment of said condition with the involvement of said insurance company than if you just paid for it yourself.

We have the mess we are in today in health care because the American public believes in and demands the mathematically impossible and nobody in the political class is willing to stand up and tell them that what they're demanding is impossible and, if they don't stop, our national economy, markets and all asset classes including all government support and assistance of any sort will be ruined...

所有跟帖： 

• 美国人一看公式已经晕了。另外人要是跟车一样，一算total掉更省钱，就也可以total掉换个新人，估计医保就便宜了。LOL -greenoasis- ♀ (0 bytes) () 01/15/2017 postreply 18:31:10