Understanding Insurance: Obamacare compared to simple insurance

By Jake Holder

Let’s really think about the concept of Health Insurance or Insurance in general. The Law of Large Numbers with lots of people paying a few dollars to spread the risk or cover the cost for when and if a situation occurs, requiring a larger amount of money to be paid than one person can afford.

Did you know that State Farm, the largest by far auto and home insurance company in the country is a mutual insurance company, and they have probably the lowest rates (or cost people the least) for the same amount of coverage. Everyone involved in the process is paid for their services. BUT, there are no Corp Bosses trying to maximize shareholder wealth by paying less for everything possible (like body shop work, medical expenses, injury claims and their workers) and charging the most they can.

In a mutual insurance company, any distributed surplus funds are paid entirely to policyholders, whereas in a proprietary or stock company (one with shareholders) a proportion of the surplus is paid to shareholders while the balance is held in reserve by the insurer.

All health insurance companies in the United States should be required to be mutual insurance companies where “a proportion of the surplus is paid to the shareholder” (taxpayers).

Health Insurance Companies that are “for profit” is what drives “costs” up. UnitedHealth Group is the largest health insurance company in the USA. In 2011, they made $5 Bil net income – that’s AFTER all expenses – like paying the CEO ridiculous amounts of money (I don’t even really care about that). But if they only made $4 billion (or all the $5 billion went back to the policy holders or taxpayers if the government required health insurers to be mutual companies) because they had to provide a billion more in “costs” and they were not allowed to increase premiums to cover this extra expense so they can maintain NET INCOME, would that be a problem? So the wealthy few stock holders only got $4/share dividend check rather than $5/share. Would that be a problem? I don’t think so. The “costs” that you speak of that projected to be so high and bankrupt the US gov’t are just money the insurance companies are trying to make in PROFIT for the wealthy few. Most people don’t see and understand this like I do, and the republican big business supporters, who have much to gain on the receiving end of these “costs” on the backs of the middle class taxpayers, just don’t want to pay out too much and make less. That’s WHY they are saying if we try to cover too many people for too much stuff it will “cost” us too much and we won’t be able to make so much money !!! We all agree as a society that we should be able to pay for the care of all those who are sick. The republicans want to “make money” for themselves on this concept while the democrats want to provide the care for the people without making so much money. And if you don’t think I’m right, ask any republican WHY any increase costs to provide more coverage for more people needs to be offset by higher premiums and see what they say. It will some bullshit like “what’s wrong with making money?” That’s all most are able to muster. Remember, in my model, EVERYONE related to health industry (fine hard working American people) make money along the way for their services provided. It just won’t “cost” the people so much along the way so the wealthy few at the top can have their Big Profit after everyone is paid. The management at the high end get paid handsomely too! But do they need $5 billion left over?

Do I sound like socialist? Trust me, I’m NOT, and this is not a socialist policy. It’s just that some industries that are so important for the overall well-being of society might best be served by companies that are not motivated by PROFIT!

I look at the big picture and do not try to fix problems within the context of a “system” that might not be best for society.

Leave a Reply

Your email address will not be published.