Thursday, December 17, 2009

What Digby said

Read it here

And I have to say I agree. I had an argument the other day that I may or may not have commented on here concerning insurance companies and how poor of a business model they claim with respect to both progressive and conservative agendas. Take for example car insurance.

In the state of Ohio, if I have a driver's license and I want to register a car in my name, I must sign a piece of paper that opens me to regular checks by the state to ensure that I'm insured for the state minimum. This law came out of issues with people(customers of insurers) that were getting screwed out of settlements when the other person in the accident didn't have insurance. It was a "can't take blood from a stone" problem. This guy doesn't have the insurance to cover his mistake and he can't afford to pay the damages so what can you do?

The state's response was to mandate insurance. If you want to legally drive, you must pay your money to a company to make sure IF you get in an accident and IF it's your fault, YOU'LL be covered(meaning the other person will get a small portion of that money you paid over time).

Now my problem with this is my problem with the Insurance scam er I mean business is that when the government mandates it, I the consumer is forced to contribute to that business. In essence that business doesn't really have to do more than compete with other like businesses. There's no true incentive for that collective of businesses to provide better service other than competing with each other.

From a free market perspective, this is government at its worst. If auto insurance is a good thing and as a consumer I should want it, well then it should be super easy for the insurance company to prove that to me as a consumer. The government doesn't mandate that I buy a television set, yet those folks have no trouble getting sales, even in a crappy economy. It should fall on the business to make the consumer feel their product is necessary. And it should be priced to allow that. One of the biggest changes in auto insurance was that "minimum coverage" was created to bridge this mandate gap. Can't afford insurance, but need it? That's ok, we'll offer you super crappy insurance at a super discount that's so low anyone can afford it(well almost anyone).

So now we move to another insurance scam. Medical insurance. This is me paying some company to make decisions about what I should or should not have dealt with at the doctor's office based on whether or not the premium I'm paying will allow that company to still generate a profit by screwing the hospital and the doctor out of the amount they wish to charge for services. Then add to that the increase in cost of services distributed by the hospitals and doctors to offset the large discounts they provide for insurer's that don't pay them for what their services are worth to begin with.

Now breath.

Now consider that rather than having a public option which would very simply allow for regular people to purchase cheaply or be given coverage using the medicare system that already works very well for many we're more likely to get a bill out of Congress that forces people that aren't being insured by their employer to purchase that insurance from a private insurer.

Well now why shouldn't the insurance companies follow the previous example. They'll create a catastrophic plan that allows big payouts for big problems and almost no payout for little problems. So in essence you'll still be paying egregious amounts of money for basic care AND paying a premium to a private company not well regulated by the government and oh one more thing... there is zero incentive for costs to go down, services to improve and overall care to improve.

There will still be large numbers of people uninsured or under-insured. There will still be bankruptcy because of failure to pay medical bills. And the booming industry of health care will still be seen in skyrocketing growth of two industries: insurance and pharmaceuticals.

This is not progress, this is failure.

Another opinion here

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