(1) Insurance by definition is the transfer of risk from one party to another for a premium.
(2) If people did not have to get insurance until something catastrophic happened then nobody would and insurance would not be a transfer of risk. it would be the most expensive medical payment system in the world. No healthy people would have it.
(3) They do make a profit, but profit drives efficiency. Without it there is no driver for efficiencies and that is why if you take two identical businesses, one is run by the govt and one is run in the private sector, it costs the private sector 1/3 as much to run it. That si where the profit comes in and why the government should leave more up to the private sector.
(4) You liberals claim that people are just getting kicked off insurance as soon as they get sick, but that is very rare. If insurance companies got a reputation for doing so, then the free market would kick in and nobody would use that insurance company. I know my work would drop a company at the drop of a hat if they found out someone was refused payment for something that should have been covered, or was dropped.
MA high deductible health insurance
Tags: Efficiency, Insurance, Reputation
I don’t.
However, I do think they are a little out of control. Health insurance company overhead is 20%. Here’s an article documenting overhead among California insurers: Medicare overhead is 2-3%. Does that help you see the issue? They have stopped competing against each other. It happens from time to time, and that’s why we have regulators.
I worked for a few years doing software in the office of a group of cardiologists. The office people complained incessantly about the insurance companies. They were forever changing their forms and requirements, denying claims and then allowing them on resubmission. The insurance companies were playing games just to delay payment to the doctors.
And our office (and hospitals too) had to hire more pencil pushers just to deal with the obstreperous insurance companies. One army of bureaucrats working for the insurance companies and trying to deny or slow down claims and another army or bureaucrats, working for the doctors and hospitals, battling the first army. And patients end up paying for it all via insurance premiums. What a waste!
By the way: if you really believe the private sector can do a better job, then you have nothing to fear from the “public option.” If your beliefs are true, the public option will cost more and deliver worse care, and the market will decide in favor of the private insurers. So what’s to worry about?
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Around of the turn of the century one had to buy a coin from a firehouse, and post it in plain view on their home.
If your house was on fire, and you had no coin posted, your house would be passed on by. this caused the birth of city fire dept. and insurance co.