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wundayatta's avatar

What benefit do health insurance companies add to the health care system?

Asked by wundayatta (58714points) August 18th, 2009

Insurance companies have been getting a free ride from the public. Government pays for all the sick people (elderly and poor) and the private insurers get to fight over the healthy people. What makes this sickening, is that we, the public, are paying for everything, anyway. In essence, everyone is already insured, but in a backwards way.

Hospitals must provide care for anyone who shows up. Some of these people can’t or won’t pay for their care. This is called uncompensated care. Hospitals receive some extra payments from the government (all taxpayers) to cover uncompensated care. The rest is made up by raising the rates for patients who have private insurance (insured taxpayers). This is called cost shifting, in the health care business.

So we, the taxpayers of the United States, pay for the health care for everyone, already. We do it in a very inefficient way that adds billions in administrative costs to our system. All so one sector of industry (health insurers) can make a profit.

Why are we subsidizing the health insurance industry? Is there any benefit for taxpayers in allowing the private sector to compete to insure healthy people, while we pay for the much more expensive care of sick people, and we all pay for uncompensated care through taxes or cost shifting?

They say they are introducing competition by involving the private sector, but why should we let companies compete over handouts from us, when we have to pay for everyone’s health care, anyway? Is it all in the name of ideology? What do we get for these increased costs?

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8 Answers

marinelife's avatar

I agree, @daloon, but once entrenched it would difficult to dislodge them as we are finding out now. They are willing to expend an awful lot of money to avoid even the appearance of what they view as the slippery slope to a single-payer system.

robmandu's avatar

Health insurance ≠ health care.

Health insurance is a tool to mitigate financial risk.

From that perspective, the primary benefit I see insurance providing is that it helps ensure service providers actually get paid… so they can continue to provide health care.

wundayatta's avatar

@robmandu Why would so many different payers help to make sure providers get paid? It seems to me that insurers spend most of their time trying to get out of paying, by finding ways to deny coverage. Why wouldn’t one guaranteed payer make more sense?

dpworkin's avatar

Health insurance companies provide an huge infusion of cash to shareholders and executives. In the last few days, during which time the “Government Option’ began to look less likely, the major companies have shown huge gains in the face of a retreating market. Between 2000 and 2007 profits for the sector are up 700%. This is why they are willing to go to any lengths to destroy true reform.

MrKnowItAll's avatar

About 20 years ago, Wall Street decimated the insurance business, by taking Mutual companies, and converting many of them to for-profit. This is one of the root causes of our current mess. Republicans have sold out to insurance and drug companies, relying on the ignorant, un-educatable, southern white bigots, as one of their last bastions of support, along with right-wing christian nut-cases, not that I wish to denigrate them.

And for you Republicans: Denigrate means ‘put down’.

benjaminlevi's avatar

A lesson on how to rid ourselves of parasites?

Zuma's avatar

Private for-profit insurers do nothing but divert resources from actual health care delivery. They are now the chief impediment to improving the nation’s health. They are in business to make money, and the way you make money is by chiseling people out of what they have paid for rather than delivering actual service.

Strauss's avatar

@pdworkin GA on that. The concept of insurance was originally that of mutual companies. When profit is the bottom line, to look out for the benefit of the insured will surely conflict with that interest.

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