Health care insurers

Insurance

Insurance (Photo credit: Christopher S. Penn)

From The Predator State by James K. Galbraith:

“A successful private insurance company follows an ancient formula: it stratifies its clientele by risk class and charges premiums adapted to each class. The most successful companies are generally those that manage to exclude the riskiest clients.

“Public universal health insurance schemes like Medicare do not evaluate risk. Since they are universal, they do not need to. Therefore, they save the major cost of providing private health insurance. They pay their personnel at civil service salary scales and are under no obligation to return a dividend to shareholders or meet a target rate of return. Insurance in general is therefore intrinsically a service that the public sector can competently provide at a lower cost than the private sector, and from the standpoint of an entire population, selective private provision of health insurance is invariably inferior to universal public provision. Private health insurance companies would not exist except for their political capacity to forestall the creation of universal public systems, backed by their almost unlimited capacity to sow confusion among the general public over the basic economic facts.”

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