As the corporate dominated congress struggles to perpetrate the greatest insurance scam ever upon the American people, it might help to put the concept of insurance itself in perspective. The deliberations’ secrecy is a big clue. The attempt to eliminate health insurance coverage for some 23 million or more Americans and destroy Medicaid for the poor, to fund yet another big tax cut for the super-rich whose political power is far greater than that of the people ought to enrage every ordinary American. The one percent of the one percent are about to Trump American democracy once again with the greatest Insurance Scam of all times.
Insurance is a concept fraught with contradictions in U.S. culture. For most of us, it is something we must pay for to protect ourselves from likely bankruptcy resulting from the costs of some major tragedy in our lives. If we crash our car, causing someone to be maimed or killed, most Americans do not have the resources to pay the massive costs for which we may become liable. The medical costs of a life-threatening disease or severe injury reach far beyond the pocket book of most Americans. That is why we pay insurance premiums. In theory, if everyone pays a small premium, the resulting large pool of money is available to pay the costs of whatever adversity befalls an insured person of family.
However, it is much more complicated than that. Over time, the insurance business has become a “cash cow” for the corporations involved. We understand our insurance simply as an individual or family’s way of protecting itself from the risk of financial disaster or the risk of lack of access to medical treatment. After all, we live in an individualistic culture and it is up to us to take our own precautions or risk catastrophic consequences. But it was not always like that. Other options were available. Today, not so much.
In 2014, $1.274 Trillion was spent by Americans on insurance premiums. Now, setting aside the administrative costs of managing an insurance program, the amount of money taken in by insurance companies today far exceeds the amount paid out in “benefits.” Insurance companies invest the difference, their large profits, in any number of ways. Often, they invest in large-scale projects such as big real estate developments. Today, most insurance companies are stock companies, that is, private corporations owned by their investors and managed in the interests of the company with the use of funds collected from customers in the form of premiums.
The Cooperative Approach
Mutual insurance companies are different; their members, who are also their customers, own them. Mutual companies are rare today; many converted to stock companies decades ago when management sought to operate for profit instead of for the “mutual assurance” of members. The underlying principle remains the same, pooling money from many customers to provide payment of benefits to those who “qualify.” Many “exclusions” restrict qualification. The added cost of corporate profit is the big difference for the “insured,” whose coverage may be less than expected.
Mutual insurance companies were more like cooperatives, such as credit unions. Because their owners are their members, cooperatives eliminate the cost of corporate profit, to the benefit of their member-owners. I got my mortgage through my credit union simply because it offered the best interest rate of all financial institutions I compared. At the end of the year, I get a dividend based on any surplus revenue the credit union has generated, and the proportion of that revenue generated by my financial activity. In other words, the credit union equitably shares any surplus revenue is among its members. Cooperatives are simply more cost-effective for their member-customer-owners than stock companies whose interests require profits to outside owners and higher stock prices in quarterly reports.
Congress Amplifies the Scam
In the U.S., medical insurance business has evolved into a giant fraud, sanctioned by the federal government. By excluding as many categories of persons or conditions as they can, the insurance companies work hard to avoid any risk of insured individuals needing coverage. Every other nation in the industrial world has some form of universal health insurance in which the government pools the money through taxes and pays doctors, hospitals, etc., for their work. Citizens (members) use health professionals and facilities as needed. The costs are far lower because these systems eliminate both the profits of a business and the complex private insurance bureaucracies needed to restrict access to increase profits. Even more important, the health outcomes are superior to those in the U.S., since the focus is on health, not corporate profit. The Republican health care bill would make things far worse for Americans.
As one European doctor put it, “You Americans treat medicine as a business; we treat it as a profession.” Doctors in most industrialized nations do not think about insurance billing requirements or business profits; they work for respectable professional salaries. Most likely, they also feel less stressed. These differences result from a distinctly American cultural defect that inhibits cooperative behavior in service to the neo-liberal economics of the corporate state. That defect allows insurance to operate as a fraudulent institutional practice that drains the meager resources of the American people.
As long as we continue to hold to the extreme illusions of individualism fostered by the corporate media and the corporate-controlled congress in support of corporate exploitation of the population, the grand insurance scam will continue. The elites that exploit government as well as the people perpetuate the lie that “private enterprise” is more efficient than government. It is very efficient at exploiting people and politics for corporate profit and the enrichment of corporate elites. But it is clearly less effective at providing health care to the people. The insurance scam continues. The people remain exploited and ill served by medical organizations and practices that serve the insurance companies and other profiteers, not the people. Where is the outrage?
 Federal Insurance Office (2014). Annual Report on the Insurance Industry (PDF). Washington, D.C.: U.S. Department of the Treasury. p. 45. See https://en.wikipedia.org/wiki/Insurance_in_the_United_States