Tuesday, September 1, 2009

Insurance Companies Are The Mafia

Now hear this: The corporation is not your friend. Repeat: The corporation is not your friend. Cool, that should have scared off any lurking Freepers.

I read a post earlier today of someone wondering why his health insurance premium was going up by 29%. The form letter the insurance company sent to him didn't offer any kind of explanation and he wondered, in today's economy, what could possibly have caused such a huge rise? Really, the answer is simple. Why was his insurance company raising his rates by nearly a third? Because they can.

Really, this is not hard to understand. Businesses exist to make a profit. The bigger the profit, the better. All fair so far. Basic market economics says that when the price of something gets too high, consumers will move to another vendor or drop out of the market altogether (mentally circle that last one, it's important). That mechanism keeps prices as low as possible, allowing the market to reward good companies and allowing consumers to get the best deal, right? That's what we all learned in Econ101, isn't it?

It's horseshit.

For many things, hamburgers for example, the free market model works well. If the price of a Big Mac gets too high, you go to Burger King or you skip lunch. But healthcare is not like a Big Mac. We all need healthcare (or, at least, the option of it) and we need it all the time. That means you are what is called a "captive market". You cannot drop out of the market without great risk to your life and/or health. Essential services always lead to captive markets, it's the nature of them. We can't do without electricity, water and healthcare (one could make an argument for putting mail in there too) and that allows the corporations that control the market to game the system, charging as much as they can and keeping prices within a few dollars of one another. Over here (Britain), we lived through privatisation mania under Thatcher (and, to a lesser extent, Major and Blair). All our essential services were privatised; water, gas, electricity and mail were all privatised. What happened? The same thing that always happens when essential services are privatised: Prices soar, standards drop and service is taken out back and shot. The "invisible hand" (and I wish people would read Smith, he was not in favour of this stuff) does not select for the best company, it selects for the most ruthless.

And it happens because corporations are not your friend. Corporations are not in business to provide a service, they are in business to make a profit and the corporation has no soul. The corporation doesn't care how it makes a profit, it just cares that it makes one. Were it not illegal, you can bet your bottom dollar that Blue Cross would sell crack. All corporations care about is profit. Legally, that's all they are allowed to care about. And that is why your insurance company will cut you off if you get sick (recission), why premiums continue to soar, why pre-existing conditions are screened out. Because pre-existing conditions undermine profit. Henry Ford, scumbag though he was, said at least one thing that bears repeating: "The ultimate goal of the industrialist should be to make the highest quality of goods possible, at the lowest cost possible, paying the highest wages possible". Ford was a clever man and he parlayed that into becoming very rich but his flaw was that he thought small. He thought in terms of actually providing a product, an exchange of cash for goods.

The new insurance lords do not think so small. They aren't a business, they're a protection racket. You pay a sum every month in exchange for your health, which will be preserved only if the collectors can't find some way to avoid it. If you actually need the service, they cut you off. So, in reality, this isn't insurance, it's a protection racket, a lottery. The insurance industry is the Mafia. Henry Hill is collecting your premiums. It is not in the insurance corporation's interest to preserve your health. It is in their interest for you to fork over your money and then die without claiming. Should you claim, it is in the corporation's interest to find any way it can to deny your claim. And the insurance corporations, like the mafia, are very good about remembering to kick some of that moolah back to the law enforcers (in this case, Congress). They convince you to buy into a lottery, pass some of the cash to the only people able to stop them and those people then vote to keep the lottery going. How is this not organised crime?

Right about now, some fuckwit reading this is calling me an anti-capitalism socialist. First off, my dear braindead, don't use words you don't understand. That's not what "socialist" means. Crack a book, if you can read. Secondly, I am not anti-capitalism. I am anti-corporatism. "Corporation. noun~ and ingeneous device for obtaining individual profit without individual responsibility". A Mom N' Pop insurance company, if such a thing could exist, would not fuck you over or would think very carefully about doing so for two reasons: A) Because they actually meet and therefore have an emotional tie to their customers and B) Because you can sue. Now, you can sue Blue Cross/Blue Shield too but they're big enough to afford a whole squadron of lawyers who can keep the judge buried in motions until the Last Trump. Mom N' Pop's can't afford to do that so they're forced to be reasonable. Nor is that an argument for tort reform because malpractice insurance premiums bear absolutely no resemblance to malpractice payouts. Actual payouts for malpractice have remained fairly static. So why have premiums continued to soar? See above, because they can.

The corporation does not care about you. The rule of the corporation is not the rule of Henry Ford. The rule of the corporation is: "Take all you can, give nothing back". That's why it used to be possible to support a family in half-decent style on one full-time wage and now, you'll struggle on three. Because the corporation's ideal situation is to have a small class rich enough to buy their product and a large class of potential workers who can be paid as little as possible, used and fired at will. The corporation does not reinvest the money and hire more workers if you give them a tax break. The corporation hires exactly the number of workers it needs for the work it needs to do and pockets the rest. And often not even that. I got laid off about a month ago. From a department of twelve, there are two left and there's still the same amount of work. So FOX (yes, I know but I was there before the buyout) are now expecting one person to do the work of six. I still speak to one of them. Yes, he's struggling. If the corporation decides it needs to expand, it will leverage it's assets, raise the capital and expand. It has nothing to do with how much liquid capital they have.

I'm not sure when the USA started to forget the lessons of the Great Depression. I suspect it was because right-wing bastards spent a lot of time and money brainwashing people into forgetting. But over the course of the Cold War, the USA seemed to become committed to the fallacy of the excluded middle, if the USSR was at the extreme of the economic left, we must be at the extreme of the economic right, completely unregulated dog-eat-dog capitalism. And unregulated capitalism always tends toward corporatism. Say it with me now: The corporation is not your friend.

Health care isn't a Big Mac. Health care isn't a commodity, it's a service. You put money in and you get good health out. It doesn't matter if it makes a profit. Let's try and remember that.


  1. Charles R. ReeseMarch 5, 2010 at 2:05 PM

    I wish that more people would realize the danger of corporate(Mafia)domination. This article is the best and truest assessment of our present day problems.

  2. Worker's compensation is a classic example of mafia-run insurance company. They have made it law to have this ridiculous insurance and if you don't, the "government" will fine you.


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