Even before the event, insurance does not pay losses. Insurance merely performs a pooling service.
If you face a one-in-hundred risk of a $100,000 illness, insurance allows you to trade that for a $1,000 cost-certain, as the premium.
We only feel insurance pays for healthcare because of a blunder in the 1940s, which made employer-paid premiums a pre-tax benefit.
No defense of insurers here, only a note that the only social purpose of insurance is price discovery for risk, NOT wealth transfer.
we must break the association of insurance and healtcare, with examples like "food insurance" or "car maintenance insurance," so that the populace understands they only get what they pay for.
Even before the event, insurance does not pay losses. Insurance merely performs a pooling service.
ReplyDeleteIf you face a one-in-hundred risk of a $100,000 illness, insurance allows you to trade that for a $1,000 cost-certain, as the premium.
We only feel insurance pays for healthcare because of a blunder in the 1940s, which made employer-paid premiums a pre-tax benefit.
No defense of insurers here, only a note that the only social purpose of insurance is price discovery for risk, NOT wealth transfer.
we must break the association of insurance and healtcare, with examples like "food insurance" or "car maintenance insurance," so that the populace understands they only get what they pay for.