Capitol Hill Blue Forums Science and Technology Health, Medicine & the healing Sciences Insurance is inherently socialist

One of the effects of forever chewing on the same bones is that sometimes a slightly different way of thinking about the bone comes to light and one's understanding of it clarifies a bit more.

My wife and I were discussing her father's health insurance situation over coffee this morning, as his "secondary" policy is terminating soon, because the provider is "getting out of the insurance business". My first thought was, "How can an insurance policy fairly terminate, given that insurance is a long-term contract to pay into a pool in return for being able to stick a straw in that pool and suck money back out when needed?"

It's not fee for service.

It's not a savings account.

It's a social contract, where a large group of people pool resources in order to have a safety net whose strength is not strictly defined by their individual contributions.

In short, the concept of insurance is inherently socialistic. If we were to accept that, maybe there wouldn't be so many problems and so much expense caused by trying to manage a socialist operation with an overlay of capitalist interests.

Insurance is socialistic only if you look at the matter from the buyers perspective.

The capitalistic nature insurance becomes clear when you look at the matter from the sellers perspective. The seller wants to make as much profit as possible. So ideally seller would like highest possible premiums lowest possible pay outs. In short the ideal insurance contract charges the highest possible premium while giving only the illusion of coverage or benefit.

By the way, the above posting is not a screed against capitalism....
just pointing out that unalloyed capitalism does have its faults

My core point is only that the concept of insurance is inherently socialist, where the idea is for a large number of people pool resources against unknown and unequally distributed impairments to the individuals that make up the pool.

That system could be managed through a more socialist approach, ot through a capitalist approach as we do in this country. I see the capitalist management of a socialist system to be very disruptive to the intent of insurance, as well as being much less efficient and more costly.

yes I agree with your core point, and was trying to support it in an indirect manner. By pointing out that a completely capitalistic approach to the issue tends not to deliver on the promise.... since the promise of the capitalistic approach is focused elsewhere.

The term of your health insurance expires annually and must be renewed so, there is no reason to believe that an insurer may elect not to renew on the policy at end date, should he decide to leave a given market. You are buying coverage for a year at a time.

Still, being an aleatory contract, the insurer stands to lose much more to each insured in a calendar year than the total of premiums paid by any individual policy holder.

Which is, of course, part of the capitalistic management corruption overlay - part of what makes it more costly and less efficient as a policy of insurance.

There are forms of insurance (typically life insurance) in which the buyer can renew at either the same fixed rate (level-term) or some contracted incremental rate each year, for some defined number of years. This makes the policy more valuable (and more expensive initially) than one that has to be renegotiated each year.

This is one of the primary differences between ACA exchange policies and pre-ACA individual policies. Most comparisons (read as "complaints") ignore this fact, though the guarantee of future coverage is one of the most valuable aspects of an exchange policy.

I do wonder why we are paying those health insurance companies 20% (was 30-35%) of every health care dollar for their "services". Medicare pays them less than 5% for all their claims processing, and the insurance companies seem to make a profit doing that. My health insurance company sends me an email or two each year urging me to exercise and eat healthy. Does anybody else have an insurance company that supplies anything worth that 15% difference? (Other than negotiating lower prices with providers, which makes the company's rates more competitive.)

I think Bored is pointing out the legal right to cancel, and Log is saying that arrangement somewhat misses the point of insurance.

As an example, Blue cross can cancel your policy, the British national health service cannot cancel.

I can understand Log's point of view that he would prefer that insurance be more dependable come what may. I am not sure what the advantage is of having a policy that can be canceled.

And I am particularly not clear on why people would prefer not to have the option to have medical insurance that could not be canceled

The Democrats big mistake on ACA was when they let Republicans nickname it "ObamaCare". They should have put the name "RomneyCare right in the bill to reflect its origins.