We have a misconception of what the insurance companies job is. There are two reasons for insurance companies to exist in the current scheme of things. The first reason is to aggregate risk. That is to share risk amongst a large number of people. This is similar to car insurance or fire insurance. The second reason is to negotiate with providers for reduced rate that means to represent their members. It is reasonable that a company doing this should be able to charge a mark up to cover reasonable costs and profit. The problem is that do to lack of proper regulation the exemption from the anti monopoly laws, insurance companies have decided that their real service is to provide profits to their owners.
I should say that the idea that everyone pay the same amount does not make sense just as charging driver the same for car insurance without taking into consideration their driving record does not make sense. That means that the insurance companies are have to decide what is fair to the other members. But they have distored this role to help them obtain better profits. They also have to decide what is reasonable medical care under the insurance otherwise some members might abuse the insurance and spend much more than needed. But frankly, I hate to see a profit based business making these decisions.
To make matter’s even more complicated, we all of an interest in each other’s well fair. People who are ill cost all of us money in reduced productivity, use of other services etc.
It appears that our government thinks they can improve things by adding some additional regulations. I doubt that will work. I believe the concept of medical insurance is a bad idea in these times.
I believe that we need a single payer system even with all the problems that will bring that is not tied to profit making. We need to do the following:
- Establish a single payer system (by slowly increasing those that can be on Medicare)
- Abolish the employer based medical insurance structure which will improve the competativness of our industries
- Provide a tax credit to every family to cover the amount presently needed to provide reasonable health insurance. This money will not have to be used for health insurance. The government will pay for all costs above this for on a reasonable basis (difficult topic which needs more work).
- The government must invest substantially more in medical research (take the money from defense since we have the larges force in the world by a factor of twenty and one of the worse health outcomes of any developed country).
- The government must invest in education and other actions that can effect life style