Monday, July 27, 2009

Still mystified today

Quoting myself....

I just don't get why people don't seem to get some things that are blindingly obvious to me. For example, it seems blindingly obvious to me that there are some things that profit incentives are just not suitable for supplying.

If making a profit is the only suitable incentive, where services are not profitable, they will not be provided. The classic example is rural electrical services. While it is wildly profitable to provide electrical services (or rail services or phone services) where populations are dense making provisioning relatively inexpensive, it is unprofitable to provide the same service where populations are not dense which makes provisioning relatively expensive. The only solution is to provide incentives and mandates from governmental entities which spread the higher cost of provisioning for rural areas to the lower cost urban areas. Historically, this is what happened with railroads, then electricity, then telephones. The public mandated these actions because it was recognized that it would benefit the entire country for everyone to have these basic services.

So why isn't it just as obvious to anybody with brain cells that since the profitable way to provide health insurance is to only provide it to those who aren't sick, a private health insurance company out to make a profit will make every effort to exclude anyone who is actually sick or might get sick, in other words, anybody who might actually NEED it.

IF you accept that everybody should have health insurance because they might need it and SINCE it can be mathematically proven that insuring the entire population is the least cost per person way to provide insurance THEN it follows that the profit incentive cannot accomplish the goal. Therefore, government intervention of a time-honored type (equalize profit opportunity for provisioning low profit or actual loss making service areas using tax dollars or other government policy, remember, we did the exact same thing for railroads, electricity and telephone services) is required.

But when you design your program, keep in mind the goal is to PROVIDE INSURANCE FOR EVERYONE, not guarantee profits for the insurance industry, 'cause you can bet the insurance industry will be in there pitching for anything that lets them make a bigger profit. The voter's best choice is for the program that comes closest to providing universal coverage as that will spread the cost widest and result in the lowest cost per capita. So why do voters keep buying the nonsense that private health insurance is better? Logically and empirically that's just false.

Ask yourself this question. Why have so many large entities such as municipalities, school districts, large corporations and even states chosen to self-insure various risks? Because all insurance is just a bookie's bet that your insurance premiums will exceed your insurance claims and THE HOUSE ALWAYS WINS. If you are big enough, better to be the house yourself and save the difference.
May 8, 2008

1 comment:

Joan Harris said...

Hooray! I couldn't agree more. Medicare works, why are people thinking that their coverage will change - that they won't be able to choose their doctor. I'm amazed who great Medicare works. Government can do more than insurance companies want to do. Why can't the general populace understand what the insurance and medical lobby is doing to Congress. Jh