BM, you present a lot of interesting information. But you also don't seem to grasp my point, which is not about the details of the existing capitalistically managed insurance delivery system, which may explain why you think that I think my insurance coverage is an illusion. I haven't said that, and I don't think that. I'm not interested in trying to discuss that in this thread.

I see that what I am thinking about is probably a bit narrower issue than the title of the topic indicates. You being in some form of the insurance biz, I'm sure you are thinking from that viewpoint. Let's take a more specific form of insurance that relates to my issues of interest - worker's compensation insurance.

I am in the construction biz, part of the time, and have a need for employees on occasion. In my state (WCI is a state mandated insurance), rates are assigned according to classification codes (roofer, painter, demolition, general carpenter, etc.), which each have been determined through actuarial processes. The system is administered through private insurance companies, who do everything they legally can to insulate themselves from risk (are there insurance policies for insurance companies?) That includes upfront payments on the WCI policies based on worst-case projections, based on the assigned "pool" of workers (usually some regional boundary), with class rates reflecting costs incurred by the pool over some period of time. As in virtually every system like this, you've got "cheating" going on with both sides - the insurance provider (they like to limit allowable employee class codes to the higher risk and more expensive class); and the "insureds" (they try to underreport and hire under the table).

All that monkeying around causes the paperwork and risk to the employers to be a huge barrier to taking on jobs, especially smaller jobs. It can easily cost $15,000 just to get "set up" to legally employee one or two people for a $5,000 job. The awkward dance that is required to maintain being "set up" is also expensive in both time and dollars, and is very unpleasant to the mom and pop business. The WCI system contributes heavily to disincentivizing a large segment of potential employment and economic activity.

I am not advocating for not providing such insurance to workers. I believe that it is a positive social benefit to see that workers have support when injured.

I believe that making it as easy to work as possible has very significant benefits to society as a whole.

I don't have a problem with incorporating the cost of WCI into projects, but I can't manage the system of doing it where the costs are all upfront and biased to protecting the interests of the insurers.

There need to be mechanisms for disincentivizing irresponsible workplace safety.

What I don't see is why this system of providing social benefit needs to be operated as a capitalistic system, with it's inherent tension between the insurers and the insureds over risk to profit and its economy deadening effects on small employers.

A socialistically managed system seems to me to be much better suited to administering a social benefit that a profit motivated system is.

Forgot to mention - I stopped employing people about eight years ago because of the scenario described above. I would like to employ folks intermittently in my small construction business, but I would also like to lead a relatively normal life.

You never change things by fighting the existing reality.
To change something, build a new model that makes the old model obsolete.
R. Buckminster Fuller