Friday, July 31, 2009

On Villainy of Insurance Companies

Demonizing the insurance industry in the call for socialized medicine is not as strong a strategy as people think. Both funding mechanisms suffer the same flaw. Both systems transfer control over health care that should belong to the individual.

An oft repeated partisan theme is that insurance companies systematically deny claims because they are motivated by greed, while government agencies approve claims because they are motivated by altruism.

The truth, of course, is that the motivations behind both funding mechanisms are remarkably the same.

Both the claims adjusters in private insurance and government pools are driven by altruism. Both are constrained by economic reality.

The partisan theme that insurance companies exist for the purpose of denying claims is absurd when one considers the purpose of insurance.

Insurance companies exist for the purpose of lavishing resources on people in times of need.

This lavishing of resources is their product. Insurance companies are judged on their ability to deliver their product. The manufactured partisan theme that insurance companies don't pay claims is absurd.

Insurance companies scrutinize claims. They do reject claims. This is not unexpected as the companies are judged on their ability to handle claims.

If anything, insurance companies are guilty of not giving medical expenses the same scrutiny that individuals were they spending their own money. The spendthrift nature of insurance is a primary reason for the rising costs of insurance.

There are many serious problems with fraud. Even worse, since pooled insurance wants to impress powerbrokers, they will lavish more resources on insiders to the cost of outsiders. Government run insurance has exactly the same problems. The system will try to impress decision makers at the cost of commoners.

Even worse, when politicians have their hands on the purse string of health care, the system will be used in the game of rewarding friends and punishing enemies.

Government controlled healthcare necessitates a system of lobbyists and political intrigue for individuals to get the care they need.

The system will necessitate that doctors pay lobbyists to protect the interest of their specialty.

The current press to attack insurance companies as enemies of the people will backfire as soon as people realize that the power grab simply moves the pool from one rogue entity to another.

The two forms, socialized medicine and insurance companies, have the same form. They are pools that transfer health care decisions to third parties. Both private and public insurance are driven by a desire to appear as great altruists. Both private and public insurance are constrained by economic forces.

The well funded and carefully orchestrated effort on the part of the left to frame insurance companies as villians is meaningless because the socalled reforms really aren't fundamentally changing the form or short comings of funding health care through a third party pool.

1 comment:

Reach Upward said...

Indeed, we would simply be exchanging somewhat privatized socialism for public socialism. Even the current system suffers from being supported by government subsidy and government mandates, so that the private insurance firms act somewhat as an extension of government.

While it is true that there is just as much greed and profit motive in the government system (just not as transparent as the private system), transferring the power directly to the government would not keep things on and even keel.

Right now we have decentralized control. Aggregation of control to a single entity with the coercive powers of state would introduce and entirely new and heightened level of control that does not exist in a decentralized system, even if that decentralized system has similar negative features.

Is it wise to exchange bad for extremely bad?