The Long Way Home

The  media–social and otherwise–lit up lately with stories about how the American people are upset about what passes for health insurance. The tone makes it seem like they’re surprised that folks are ticked off. Many of these crack editors and reporters always seem to be living under a rock.

All this has come about because the CEO of UnitedHealthcare, Minnesotan Brian Thomp­son, was gunned down in gangland fashion on the street in New York City.

The so-called mainstream media went wild with reports of people in the online world ex­pressing delight that an insurance executive bit the dust. All commenters had tales of insur­ers gumming up the works of healthcare for themselves or their families. Accusations that insurers themselves were murderers, especial­ly when they denied claims, spread on the web like wildfire.

I’ve despised the health insurance racket for most of my adult life. Some say it’s an absolute necessity, but it isn’t. I disapprove of vigilan­tism, but what purpose do health insurers serve?

Any insurance company must provide its cus­tomers with financial protection against poten­tial losses. You pay your protection money (pre­mium), and the insurance company pools yours with money from others. It then pays the medi­cal provider under a byzantine set of guidelines when an accident or illness happens.

To survive as a business, the insurer must pay out less than it collects. That means it denies a certain number of claims—some estimates are as many as a third.

No wonder a broad swath of our public is pissed off at these guys.

Insurance, as a concept, has existed almost as long as we’ve been walking on two legs. It wasn’t that long ago that business and prop­erty owners in many US cities paid “protec­tion” money to people known for eating pizza for breakfast and injuring those who didn’t buy the protection they were selling. Whether called La Cosa Nostra, mafia, the mob, or organized crime, they sold “financial protection against potential losses.”

“Nice business you have here. Would be a shame if something happened to it.”

Legitimate protection rackets called themselves insurance companies; people wore suits and ties and retained white-shoe law firms to protect their interests. Some from the old protection markets became legit, to no longer worry about law en­forcement or interference from other gangs.

Mr. Thompson’s murderer has seen a startling amount of support from the public, who see him as a hero. The fact that he is an East Coast, wealthy Italian named Luigi becomes fodder for jokes showing the insurance industry in a bad light.

Health insurance became popular during World War II when the government capped salaries. Em­ployers offered free health insurance as compen­sation to attract and retain employees who hadn’t received raises in years. The insurance compa­nies were “the middleman” between patients and their doctors and hospitals.

People don’t like intermediaries and perceive them as adding unnecessary costs and complexi­ty to transactions. However, not all intermediaries are created equal.

Some intermediaries provide valuable services that add value to the transaction. Real estate bro­kers help buyers and sellers find the right prop­erty. Produce brokers buy from farmers, arrange transportation, and sell to retailers.

Bookies are intermediaries between gamblers. The vigorish, or vig, they charge on each bet is how they earn money to operate. They don’t lose.

I was a freight broker, a classic intermediary that matches available hauling capacity with busi­nesses shipping products. We call ourselves the travel agents of freight, and travel agents are also intermediaries.

So, I’m not opposed to intermediaries.

But unlike freight brokers and the others out there, the health insurance rackets provide no added value and cause actual harm and anguish for people already suffering through illness or loss. I bet every one of you has a story about it.

The most elusive number in the health insur­ance racket is the percentage of premiums paid into it that are paid out for health care. Under the ACA (so-called Obamacare), the vigorish health insurers retain is capped at 20%—a rate bookies would kill for. Anything over that has to be re­turned to policyholders.

We were covered under a Blue Cross ACA plan before I was age-qualified to join Medicare five years ago. Every year, yes, every year, we received a rebate from Blue Cross because they let the vig go over 20%. The argument that the 20% we spend could be used better elsewhere is hard to ignore, even though our politicians seem to be doing it.

The average cost of health insurance is al­most $9,000 annually for an individual and over $25,000 for family coverage—a lot of money for the aggravation we collectively experience.

Happy Holidays, loyal readers. And Merry Christmas to those who celebrate.