Many people argue that we must have private health insurance companies in order to drive competition, and competition is good because it reduces the cost of insurance. They’re asserting the “market” for insurance is the same as a commodities market – a tool for setting prices of scarce commodities. An insurance market isn’t a commodities market. It’s a risk market. Instead of companies selling their toasters, televisions, or tomatoes to consumers who want them, the companies in an insurance “market” are buying personal risk at negative prices. You pay them (negative price from their perspective) to take on your risk of needing healthcare services. A toaster or a tomato is something the consumer wants. Risk is something nobody wants. Risk is something everyone wants to reduce or eliminate. Insurance companies are under great pressure to only insure low-risk people, avoid high-risk people, and write contracts that allow them to dump as much risk as possible back on to you by denying services. Denying service as much as possible is a key business model in the insurance industry. This is one way how insurance companies reduce their risk.
Here’s a fact that’s less obvious. Competition in the insurance industry drives costs up, not down. Mathematically, if two healthcare systems must deliver the same services to the same people, the system with the fewest, largest risk pools will always have a lower cost-per-person across the whole system than a system with more and smaller pools. Always. The system with the fewest, largest pools that covers everyone is the system with one single pool of everybody in, nobody out. Any system with more and smaller risk pools will necessarily cost more for the same services delivered to the same people. A system that allows private insurance either won’t cover everybody (not covering the same people), or will cost more per person than a single payer system – or both, as our current system demonstrates.
Imagine we have a universal single-payer system with one big risk pool, everybody in, nobody out – the most cost-effective system. Now imagine we allow private health insurance companies to participate. Each private health insurance company builds its own collection of risk pools. At least one pool, often more. Each private insurance company that gets involved adds more pools to the healthcare system. More pools dividing up the same number of people means, on average, smaller pools. Every private insurance company increases the number of pools, and decreases the average size of the pools in the healthcare system. Therefore, every private insurance company we allow to exist drives up the cost of covering everyone.
Every argument for private insurance is an argument for less healthcare at higher costs than a universal single payer system.
The private insurance industry is a wealthist policy implemented by the federal government. It’s a government handout to the 1%. The only thing it’s good for is to concentrate wealth into fewer hands. As insurance companies merge and acquire each other, and major insurance industry shareholders buy stock in multiple companies across the industry, there are fewer companies with fewer major shareholders – wealth concentrated in fewer and fewer hands.
Insurance companies have huge incentives to merge and acquire each other – that’s the only way insurance companies can bring fewer and larger risk pools under their control, which drives their costs down. Reducing competition in a risk “market” drives costs down, while fewer companies to compete against allows them to hike up the prices they can charge you. Wealthists want to capture the widening spread between costs and prices for themselves. To do that, they’re happy to increase the total price per person across the system – and therefore the total cost to you and me for the healthcare system as a whole. And of course deny services and refuse to cover many people.
The extra price we pay is their profit. It’s an accounting identity. Add up all the insurance industry profits – plus the money they spent on advertising, bloated executive compensation, and denying services – and that’s the minimum we overpaid for a lower level of services than under a universal single-payer system – with the same hospitals, doctors, nurses, and other care providers, just a different group of people holding the money and paying the bills.
Wealthists believe they have a “right” to behave this way. They believe they have the “right” to bill the community hundreds of billions of dollars more than the healthcare services they middleman are worth, and provide nothing in return. Nothing.
Wealthists are thieves.
Private health insurance is an illusion built of legalese and hyperbole, for the purpose of ripping off everyone who isn’t a health insurance executive or major shareholder. Private health insurance companies literally serve no other purpose. They’re Rube Goldberg machines that use a maze of complicated language and euphemism (“premium” instead of “price”, for example), to hide the fact they do nothing but funnel money to the bank accounts of the wealthy.
Markets are tools for setting prices of scarce commodities. Health risk isn’t scarce and isn’t a commodity. It isn’t something people want. Risk doesn’t belong on a market. Risk “markets” don’t behave like commodities markets. More competition drives up costs, and less competition drives costs down. Mergers and acquisitions reduce competition, which reduces cost, while prices can be increased because there’s less competition.
Private health insurance isn’t even a market capitalist policy. It’s a wealthist capitalist policy. Market capitalism is a collection of tools for setting prices of scarce commodities. Wealthist capitalism is a system for concentrating wealth in fewer and fewer hands. It’s what animates the Koch brothers and their ilk.
Biden, Buttigieg, Harris, and Warren, understand this – if they don’t, shame on them and shame on their advisers. They’re selling us out – many of us will die because of their explicit policies or their failure to fight for universal single payer.
Biden’s plan doesn’t even cover 10 million people. He’s straight up shilling for the 1%. He’s not even trying to hide it. “This is America” he told us all when Sanders pointed out we spend double the price for significantly less healthcare – and we don’t even cover 27 million people. Apparently he thinks Americans are being patriotic by overpaying for healthcare, supporting billionaires, helping them line their pockets with our hard earned money, and throwing the less well off under the bus. Does that sound patriotic to you?
Buttigieg offers a public option, while leaving private insurance companies in the market. This means everyone’s healthcare will cost more, and everybody will pay higher prices – including those who use the public option. This is half the reason a public “option” is a bad joke – it’s an excuse to allow the 1% to rip off the American people and the US government. What’s the other half? Insurance companies will cherry pick the healthiest people, and leave only the sickest people on the public option. This will drive up costs for the public option, and tax payers, even more. Buttigieg’s plan is to stick the public option with the sickest people, increasing costs to tax payers, and ensuring private insurance companies can rake in massive profits. It’s a scam. It’s a plan for the 1% to rip off everyone. Not surprising considering the amount of money he’s taken from wealthists. He’s bought and paid for.
The same goes for Harris who even “consulted” Kathleen Sebilius, a health insurance executive, on her plan. Biden, Harris, and Buttigieg have all taken a lot of money from Wall Street, which is of course heavily invested in the success of private insurance companies – an industry that moves hundreds of billions through the big banks, funds that would dry up under a universal single payer system. Not to mention many of them are no doubt personally invested in the health insurance industry.
Warren said she plans to start taking money from big donors if she wins the primary. Then she said she wouldn’t. Then she clarified that of course she will. She’s waffling on Medicare for All now. Once she’s dependent on wealthist donors to fuel her campaign, she’ll come under more and more pressure to implement wealthist policies, like private health insurance.
In the introduction to her recently published healthcare plan she writes,
The basic business model of an insurance company is to take in as much money as you can in premiums and paying out as little as possible in health care coverage.
That leaves families with rising premiums, high deductibles, and fighting with insurance companies to try to get the health care that their doctors say they and their children need.
Insurers protecting their bottom lines restrict your networks of providers and stand in the way when you want to see your doctor or need to see a specialist without going broke.
Just a few paragraphs after this strong condemnation of the insurance industry, she says “in addition to the right to physical health care, we must prioritize affordable, high-quality mental health services” and she promises to “hold insurers accountable for providing adequate mental health benefits” (emphasis added). She’ll regulate them, but allow them to continue their thievery. “Insurers” are part of her plan. She doesn’t plan to eliminate them. She’s not “with Bernie” on that.
The plan on Warren’s website says “Medicare for All”, but lacks specifics that would nail down what she means. That gives her “quite a bit of leeway to define what Medicare for all really means at some later date,” Larry Levitt, executive director of health policy at the Kaiser Family Foundation, told Business Insider.
These candidates know private health insurance is a scam for the 1% to rip off the people and the government. They should be honest about it. Advocating for private health insurance, even with a public option, is flat out admitting the insurance industry, and allied industries like the big banks, have bought and paid for their loyalty – or will, once the general election gets going.
They’re not for the people.
They’re for the corporations.