In Defense of the Insurance Industry

The insurance industry consists of millions of employees in thousands of companies, each with its own procedures, policies, practices, operating under different state and federal regulations depending on the size of those companies. To vilify an entire industry is no more rational than attacking an entire race. Claiming that the insurance companies are driving up health care costs is no different than saying the Jews are driving up health care costs, or the blacks. This is lazy irrational thinking; and it is dangerous thinking.

Insurance companies are first and foremost companies, and a company’s primary concern must always be the dreaded bottom line. This is to ensure that their employees are provided for, as well as all those people whom they insure. The average profit margin of an insurance company is about 2%, less than most other comparable industries. These profits come after meeting payrolls, providing payment for claims, licensing fees and supplying the federally mandated surplus they must have on hand to ensure claims are covered. And more often than not, those profits are sunk back into research and development to provide new procedures, equipment and medications so that people will live longer and healthier, thus preventing the company from paying out so many claims.

Let me make one thing perfectly clear. Insurance companies DO NOT deny care. Insurance companies deny coverage. They deny payment for service. This in no way prevents you from getting that service. Medical care is expensive, and often the coverage that is denied is treatment for rare or terminal conditions. This kind of care is even more expensive, often more than people suffering such illnesses can afford.  However, there are private foundations and non-profit organizations that can help. There are friends and family, and even complete strangers, that are willing to voluntarily donate money to cover such costs.  And when all else fails doctors and pharmaceutical companies have been known to donate their time and services, free of charge, to assist their clients and patients. Insurance companies do not prevent people from getting care, but it is all too easy to imagine a system in which this kind of community support is not only discouraged, but prevented by law.

In the Seventies, Ronald Reagan made a very good point regarding health insurance, when these same kind of attacks were made. We buy car insurance, he said (and I paraphrase) because the chances of an auto accident are actually very slim. Statistics say we will all have at least one, but they are relatively rare. Health insurance is a completely different case. We will all get sick, we will all get old, and we will all eventually die. In this view, health insurance is a losing prospect. Speaking in a strictly financial sense, it is a very poor bet. And yet there are brave men and women who took that chance, and provided a service to ensure that, when the horrible happens, we are at least partially protected.

What’s so evil about that?