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

Good point Ardy but what you and Log are referring to is socialized medicine, not health insurance.

Not at all, BM.

I began by saying that the concept of insurance, where a large number of people pool their resources in order to spread the risk, is inherently a socialist manifestation. Do you disagree with that concept?

But then, Insurance has never been anything more than a capitalistic business. One can either elect to buy the policy to indemnify their self from loss or retain the risk for themselves. It has worked well for protecting wealth and as a business stimulant as in property coverages. You can't buy a home or a car on a contract or mortgage without insurance.

In a mutual or profit sharing health plan, or say, a whole life plan one might get a return on premiums as a dividend on their investment but, insurance is purely a pay for service contract and not an inherently socialist program at all.

Yes I do, in a monetized society the pooling of large numbers of risk is an actuarial function of the insurance business, not the insureds. If it were not for a large number of similar losses to insure, not only would it be impossible to write standardized forms but it would not be profitable.

Even in a mutual insurance exchange a fee for service applies, the only difference is that if the company shows more profit and less losses at the end of the year they return a portion of the premium dollars to the members.

You can if you don't borrow money from a bank.

In the case of worker's compensation insurance, the rates for specific classifications are all about the size of the pool of insureds.

There may not be sufficient society-wide impetus to pool on every item that might be insured. Or an individual might want more "insurance" than the average interest of society.

The examples you have proffered are all permutations presented by the capitalist manipulation of the concept. Are there some ways in which those capitalist versions are better than a more purely socialist version where people simply pool their resources in order to share and spread risk?

Why does it have to be a business? Why does someone have to profit?

I see... to a capitalist, the first order of importance is profit. Does the existence of profit make the insurance better or cheaper?

When a group of people make agreements of mutual aid it's not really insurance per se. Insurance is technically a business and not a social program. Reference modern day insurance beginning with Lloyds coffee shop in London.


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In the case of work comp, it is not an indemnity plan, they limit coverage amounts for a finger, arm, eye and even loss of life. Your employer pays this premium as an inducement to being in business. He cannot legally employ people without buying work comp. Unless he wants to, and has the means, to self insure.


Not in this type of society, we need the insurance coverage unless we have the money to not only pay cash for our house or car and be able to afford to lose it if it burns down or gets crashed. The same goes for your health coverage, if you can afford to pay up or die then, you don't need it.

Most of us are not that wealthy so, in that sense, insurance isn't really a bad thing either. Could it be managed or regulated better?.....sure.

Even in the insurance game, there are exclusions such as flood on a homeowner policy and limitations on cash and jewelry so, not everything is insurable. If they insured everything, there would be nobody that could afford the premium.

In a purely socialist medicine society the taxes are so very high that it makes it unattractive for American's at this point in time. Perhaps in the future that may change.


Even a mutual insurance exchange must make a profit, if for no other reason than to create a surplus large enough to cover catastrophic losses.

The insurer's are the ones that must come up with the money to pay all claims even if it is more than they took in that year in premiums.

The way I see it, our government is already overdrawn and there's nobody minding the bank account already. The last thing we want them to also be on the hook for is a catastrophic loss or even the illnesses that affects millions everyday.

While the insurance company would like to charge as much as they are legally allowed to, they also must be competitive with other insurers. Some add endorsements to make policies more attractive or marketable and others reduce rates to beat the other guy out.

I disagree with your assessment of insurers because I am a property claims adjuster, have been for about 18 years.

I have never been told by my superiors to offer to settle a claim for less than the insured had coming. I can be fired for not paying what I owe as easily as I could for overpayment of a claim. I am basically instructed to treat my claimants as I would expect to be treated if I were the claimant.

The insurance contract is specific and coverages are uniform based on value of the property insured. I'm obliged by law to pay every cent I owe to every claimant I deal with, not a penny more and not a penny less.

If you think your coverage is an illusion then I suggest you read your policy to see what is covered and what is not.

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.