Let me add some math and street savvy to Dennis The Menace’s fantastic remark (provided in BuelahMan’s post here). Private health insurance is *identical* — INDENTICAL — not *like* not *analogous* not *I’m being clever* — to a street-corner 3-CARD MONTE GAME.
For anyone who is not familiar with the game here’s a tutorial on the hustle with the cards themselves as the “crew” (*insurance company*) would set up business and lure you in.
http://www.youtube.com/watch?v=o2kO_5cNF5k&feature=channel
Let’s say, though, that the insurance company, like a 3-Card Monte crew, is subject to law. Let’s say that what they’re doing with the sleight of hand weren’t legal at all, even though it is. Let’s say they were merely doing their best to throw the cards speedily and you’d take a shot at guessing where the winning card was. If you had average eyes and were comfortable in the hustle and bustle of a New York City or Buenos Aires or Lima or London street corner (which MOST Americans very much aren’t — they’re either White, scared or both), you’d pick the winning card 1/3 of the time.
Fair enough. You are being paid EVEN money in a game in which you are a 2/1 underdog. I’ll spare the boring calculations of this and get right to the math of it. You are being paid 50c for every insurance claim when you should be paid 67c. The insurance company, knowing everything about you, acting in a completely forthright manner, not even charging outrageous deductibles is making 17% return on their money. Any business which can do that in volume is going to be very, very, successful. To make 17% a year, every year, puts a totally honest business in the upper tier of success.
Now, how can the insurance company, even acting honestly, just playing the odds, guarantee these kinds of profits? Easy. They have something you all should have, but either don’t bother getting or don’t have or don’t care about. These are called “actuarial tables”. Here’s an example of an older one that the Social Security uses:
http://www.ssa.gov/OACT/NOTES/as117/as117.pdf
Here’s a more general link: http://en.wikipedia.org/wiki/Life_table
So, insurance companies know more about you based upon your risk profile than you know about yourself. That’s just insurance companies doing honest business and playing the odds. Even when they have to make major payouts on claims or a lot of minor ones, those have been figured in, and they’re making way more off all the healthy people who don’t make claims. Deductibles add a tremendous amount to the profit % of insurance companies, making their expected return behaving honorably now around 22%.
Insurance companies don’t behave honorably. They cherry-pick healthy people. They question and delay every claim. They intimidate and duck and dodge, knowing they have the full support of the government plus they have the best lawyers on the planet and YOU HAVE NOTHING. You are not David fighting Goliath. You are an ant fighting Goliath. You make a legitimate claim. They accuse you of insurance fraud — a custodial felony — what the fuck are you going to do about that? Can you pay a top class lawyer $700/hour to DEFEND you?
I write this as someone who understands math and capital markets intimately. I consider myself an economic conservative but social and foreign policy left-wing extremist. I’ve been hustling with math my entire life and I’m well-off. Yet, both my social left-wing extremism and my economic conservatism inform my belief that free, high quality, guaranteed, single-payer health care is the best option for the individual person and family as well as the economy. The long-term success of an economy (see Robert Solow, economist, on this)is determined mostly by the return to the society’s “unit of labor.” This means a society’s economic success is dependent on having the most productive, healthy, educated, safe, responsible, and creative workforce. In this environment, everyone gets richer.
In the UNFRIENDLY/FRIENDLY FASCIST “President” BushBaManuel Cheney reverse Robin Hood imperialist state, the richest 1000 Americans get much richer. The richest 500,000 Americans get somewhat richer. And it all comes out of the remaining 299,400,000 pockets because of rackets like “for-profit” insurance.
(Posted on kelso’s behalf by BuelahMan: taken from the comments section of the linked post and added because it was so Damned Good, hope that’s ok, bro’)