If we got rid of insurance companies and everyone took care of their own needs, wouldn't we all be richer on the whole? I'm talking about people putting money to the side for emergencies, trips to the dentist, trips to the doctor's, etc. Those are all expensive things, but if our employers didn't have to provide us with insurance, they could pay us a lot more. With that extra money responsible individuals would easily be able to provide for those services (doctor's fees, dentist fees, emergencies, etc.). Think about all the money that is wasted on insurance companies and their bureaucracies. What if we instead just took care of ourselves? That might in fact encourage us to take better care of ourselves. I think some people might think at some level, "I don't need to take care of myself. My company's insurance program will provide me with an artificial heart, angioplasty, etc." The government could give us recommended guidelines for how we might provide for ourselves and might provide special loan programs for emergencies where we might get money for emergencies that even their recommended guidelines can't provide for. But if people were responsible, couldn't we do a lot better without insurance? What am I overlooking?
Risk tolerance. An insurance company is better able to cope with the financial risks and liquidity crises that emergencies can create than Joe Average. Take an extreme case, if the bread-winner of a new, single-income family develops cancer at (let's say), 25 years old, it's very hard for him and his family to have the savings needed to cover the surgeries, treatments, lost income due to the illness, etc. The insurance company has much greater liquidity than this family and can reduce the overall hardship on its own cash flows by pooling risks (insuring lots of similarly situated bread-winners) in a way that a single family cannot. Risk pooling and different risk tolerances are why insurance makes economic sense. In fact, the benefits are so great that insurers usually but insurance ("reinsurance") from entities that pool insurance industry risks.
The average cost of a heart transplant is around $300k. Most people wouldn't be able to save that much money even if they tried. Worse, even if someone could actually save that much money, they probably won't every actually need a heart transplant, so the money will be sitting around unable to be spent. Even most people who could afford to save $300k would probably rather pay a few hundred dollars/month for $300k worth of insurance, rather than actually have their $300k going to waste.
These are extreme cases. What about everyday expenses? No one would think of using their auto insurance to cover an oil change, or even a transmission repair. We carry auto insurance to cover things well beyond the everyday expense (trashing someones Ferrari, for example). So why do we insist on our medical insurance covering something like an annual physical, or antibiotics for a simple infection? One advantage of medical insurance for these everyday expenses is reduced prices through volume discounts. Insurance companies have the clout to negotiate prices down, kind of like WallMart. Is it worth it? I would prefer to have the option to have 100% insurance for expenses over some limit, but 0% for expenses below that limit. Within that limit, I should be able to take care of myself and my family without all the frickin red tape.
People can barely save enough money to eat, if they had more they'd spend more! That said I would like to see less government tax on middle income and more on high income earners - like 50 - 60% on those over 150K/year. Also, I think land lords should be taxed so f*ckiner hard they invest their money instead of leaching off people's need to live somewhere. It's not like land lords look into building nice houses or nice apt. buildings - they build as cheap as the government will let them and rent for as high as they can get. Those two things will go a long way to correcting things Please Register or Log in to view the hidden image!
The technical term for insurance is "risk transference." No one knows whether he will be the one to get cancer. But the odds are so high--if you're over 25 your chances are something like 1 in 8 that it's what you'll die of--that no one can reasonably afford to ignore it and just take the chance. Even if they were willing, as a matter of public policy we can't let one out of eight families go through that kind of a crisis, it would cripple our culture. So we transfer the risk from that one person to the other seven who will not get cancer. Not only do we divide the cost eight ways, but we also spread it out over their entire lifetimes so they pay a little of it every year instead of getting hit with it all at once. You might say that a responsible person would put a little aside every year anyway... but I had a friend who got cancer when she was 37. No way she could have saved enough money to pay for it. As for people being more responsible when they have to pay for something, that's not exactly true in America. We are a nation of risk-takers. We don't worry about the shit until after it hits the fan. Besides, a lot of medical risks are just bad luck, not the sort of thing you can avoid by eating right and doing your exercises.
Your thoughts about landlords is just a bit unrealistic. I've seen lots of VERY nice apartments. I don't know where you live, of course, maybe there aren't any there but there's sure plenty of them all across the U.S. And the other thing is if the landlords did as you suggest, there would be NO apartments for people to rent at any price. So you really need to rethink that whole thing through a little more completely.Please Register or Log in to view the hidden image!
What are you overlooking? The rather obvious, I'm afraid.Please Register or Log in to view the hidden image! Insurance is an excellent means of spreading risk over a very large number of people. They work from a statistical basis that something like only 10% will ever need services that cost what those individuals paid in. The other 90% (or whatever the actual numbers really are) will stairstep down from that. And while they're holding the money waiting for claims to come in to be paid, they invest it in thigs that pay a greater return than the average person could get. Also, as others have said here, only a very few people could even save enough to cover one serious medical hit. Even fairly common tests today like EKGs, EEGs and MRIs can be very expensive and quickly wipe out what little you've saved. Tale a tip from companies that are self-insured on their motor vehicles. Only the biggest ones like GE, GM, AT&T, Ford, Verizon can afford to do that. A single accident that's shown to be the fault of the company driver could result in a payout that could completely bankrupt smaller companies. So, like I said, the rather obvious.Please Register or Log in to view the hidden image!
