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Database Nation by Simson Garfinkel

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Rethinking Medical Care And medical Insurance

Most Americans consider their medical records to be the most sensitive pieces of personal information they have. But for HMOs and insurance companies, medical records are merely scoreboards for an elaborate game of musical chairs. Insurance companies know that if they wait long enough, there's a good chance that any given patient will soon be covered by another insurance company—because that person (or their company) switched carriers, because they lost their job, or because they turned 65 and are now covered by Medicare—the United States' socialized medical insurance program for the elderly. Insurance companies that have a high churn rate actually have an incentive to avoid offering preventive care and to close their eyes during the early, cheaper stages of most diseases—hoping that by the time the disease progresses, the patient will be somebody else's financial responsibility.

When they are taking on new contracts, insurance company underwriters use medical records the way a bookmaker uses a sports lineup—as rate cards for calculating odds. Underwriting, in fact, is the real devil of health and life insurance. Fundamentally, the underwriting process weighs the premiums paid by the insured and the profits on that revenue against the chance of a possible payout. It's an inexact science, but one that is getting increasingly more accurate as insurance companies consider more and more pieces of information. And there are few limits on what ...

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