Sign Your Health Insurance Policy Contract with a Gold Pen or you will be out of Place

The three most basic reasons why the concept of insurance is not appropriate for financing health care are:

(1) Insurance is for things that are not supposed to happen, seldom happen, and rather often never happen to individuals in a lifetime. But health care is inevitable and therefore insurance is not by itself an appropriate funding mechanism for health care. The vast majority of people need health care during their lives at some point, usually due to both one or more accidents and to one or more sicknesses. Even if you live and die without ever getting sick or getting injured, you are still by rights supposed to get preventive care such as annual or biannual check-ups.

(2) Insurance was invented as a luxury product for wealthy people. The real purpose of insurance was and still is to protect most of the wealth of well off families if they happen to suffer a major misfortune or two. To this day, insurance has not really lost its' association with the high income and high wealth population. Simply because of the nature of and the mathematics of wealth itself, insurance is much less valuable to those who are not well off than it is to the well off.

Quite frankly, lower income and lower wealth people who "load up" on insurance are rightly regarded as kind of foolish by most financial people in the know, and even by insurance sellers themselves, who if they are honest at least caution people of lesser means to avoid going overboard on buying insurance that they can not afford and/or that will not prevent them from becoming impoverished if and when misfortune strikes.

(3) Health insurance in the US, to anyone who is neither relatively poor nor very rich, is an absolute necessity since health care itself is an absolute necessity unless you want to take risks of dying young. The health insurance industry therefore has a captive market, which gives them far more power with which to charge higher prices and with which to dictate fine print terms in contracts in their favor.

But during the 20th century, in the most economically successful countries, things which people desperately need were gradually removed from the vagaries and ravages of the private sector and into the public sector. It was more and more understood in the successful and well off countries that people should not be at the mercy of private, profit-making companies always free to just say no (and free to go out of business) for things which everyone perceives that people absolutely have to have.

America, however, much more so than other countries, resisted the trend over the decades of the 20th century. While between 1900 and 1980 other countries were making utilities such as electricity and local bus service public, the U.S. resisted, although certainly not entirely. For example, even in the U.S., the interstate highway system built starting in the 1950's was considered a public enterprise.

But in the late 1970's, in much of the world the winds shifted against the common good in favor of private interests. The well off moved to take control of things. In the last 30 years, while the US became a very right wing economy indeed and moved to privatize enterprises among its relatively small number of them, the countries with the most public enterprises (such as in Europe) reduced them but certainly did not eliminate them entirely or renounce the concept the way the US did.

This is the context or background for the scrapping of for profit insurance companies in favor of public financing of health care in most of the world outside the US. There were ebbs and flows between public and private world wide, and in some places the common good made much more headway than in others. But while most of the rest of the world accepted the concept that health care (and certain other absolute necessities) are not appropriate for the private, profit making market because for one thing people are absolutely desperate for the product, the U.S. never accepted the concept and, indeed, didn't much accept it for anything else.

ORIGIN OF INSURANCE
Insurance companies began about 1680 (about 330 years ago) in England and the first policies insured ships, which were about the most expensive things in existence at the time, especially considering that England was at that time in its' fairly lucrative mercantile and colonial era. Obviously, it was well off people who owned the ships.

One of the most well known insurance companies has always been and is still today Lloyd's of London. This company was founded in 1689 by a group of men who met in Lloyd’s coffee house in London, and originally sold only ship insurance. From its' inception right on down to today, Lloyd's of London has specialized in offering insurance products which are customized to the needs of the well off and of well capitalized businesses. Give credit where credit is due: Lloyd’s is one insurance company that doesn’t very much try to turn a buck by selling insurance to less well off people who will really not benefit from it.

In the United States, the first insurance policies were offered in the early 1860’s, when the Civil War was raging. Obviously, well off people in both the North and the South were worried about losing what they owned directly or indirectly due to the War, so the concept of insurance was, under duress, imported from Mother England despite the fact that, overall, both the American political and the American economics systems were clean breaks and fresh starts from those of England. Note that for about 85 years after the Declaration of Independence, America got along just fine with no insurance industry at all.

Just as in England 170 years earlier, insurance in the States started out as a product exclusively for well off individuals (and businesses owned and operated by those individuals) to insure against losses associated with very, very expensive things. Of course, insurance of various types gradually became more and more popular in the 20th century in America. But in the first half of the 20th century, insurance was sold mostly to wealthy people and to businesses mostly owned by relatively wealthy people.

Insurance was the type of product that was and still is seemingly custom designed for enterprising or conniving sales people to sell to those who were worried about this, that, and the other thing. And to those who are worried about financially "keeping up with the Jones'". More broadly, insurance turned out to be one of the mainstays of the great American commercialization and industrialization from 1860 on.

Eventually, along about 1950, banks granting mortgages required all “homeowners” with mortgages to carry house insurance. Similarly, virtually all of the states eventually required those to whom drivers’ licenses were issued to carry liability car insurance, which can pay for damages caused by the driver.

So during the 20th century, insurance began to be sold more and more to people not so financially well off. When after and due to Franklin Delano Roosevelt the American middle class grew by leaps and bounds, the insurance industry, armed with more and more types of insurance products and with more and more and ever niftier sales pitches, pursued this vast new market without hesitation. Since during the 20th century the American middle class had its' apex, the insurance industry naturally penetrated this class of the population so that it could vastly increase its' sales.

Thus by the late 20th century, insurance was as much an everyday industry among large sectors of the American population as is food sold at the grocery store.

And yet insurance was and is still, well, insurance. Legally it hasn’t really changed much from 17th century England. The problem is that insurance as a product is at heart still far more appropriate for the wealthy than it is for the non-wealthy. When a wealthy person has a misfortune and files a claim with his insurance company, he or she has plenty of money to pay all of the deductibles, co-pays, and uncovered items associated with the claim. In fact, the wealthy person often technically has enough money to pay for the entire misfortune lock, stock, and barrel, but that could make that wealthy person not wealthy anymore, thus the need for the insurance. Again, the objective of insurance was and still ultimately is primarily to keep wealthy people wealthy, not exactly as wealthy as they were before the misfortune, but almost as wealthy as they were.

But when a non-wealthy person who happens to have an insurance policy files a claim, he or she can become destitute even if the insurance company honors both the spirit and all of the fine print of the contract. We have seen this in the massive number of medical bankruptcies filed by those with health insurance policies that have occurred in recent decades in the States.

With the new health insurance laws, we will continue to see large number of medical bankruptcies in the future in the United States, although many of them will be disguised for political reasons as old fashioned "the debtor made bad decisions" bankruptcies.

Under the Democrats' unconstitutional health insurance laws, people who think they can but really can not afford premiums and all of the other less talked about health insurance expenses that come up from actual claims (deductibles, co-pays, disallowed items, uncovered items, prescription drugs, vision care, dental care, etc.) will end up in bankruptcy court. Meanwhile though, other, wealthier people will avoid bankruptcy thanks to the new health insurance laws, because for example they really need health insurance but they were denied it prior to the new laws due to a preexisting condition.

This is why we have already stated in a previous article that bankruptcy is "moving down the income scale". The total number of medical bankruptcies will neither greatly fall nor greatly increase due to Obama Care, but the income and wealth of the bankrupts under Obama Care will be lower than it was before. The gap between assets and liabilities among the bankrupts will be lower than before due to the subsidies and due to new annual “out of pocket” limitations.

The annual out of pocket limit regulations in the new laws do take direct aim at bankruptcies, but will not help one iota those who “live paycheck to paycheck” and so don’t have $5,000 or $10,000 or $20,000 lying around to cover the amount they are supposed to pay for the deductible, the co-pays, the prescription drugs, and the uncovered items. Ironically, a much higher percentage of Americans live paycheck to paycheck than do people in other countries who don’t have to worry about any of the things we are discussing because their health care expenses are taken care of completely (or at least virtually completely) by the general tax system of the country they are living in (which is the core idea behind “single payer” financing of health care).

If you wanted to be crass about it, I guess you could say that thanks to the Democrats, medical bankruptcy is moving to the "bad neighborhood" where the rest of the bankruptcy family lives, laugh out loud. In other words, the Democrats’ unconstitutional health insurance laws are all about moving medical bankruptcy to what is in their view its’ rightful address on the wrong side of the tracks.

It is interesting to note that in the final days before passage, the Democrats who were the most insistent that the new laws be passed despite heavy opposition often brought up the notion that people who refused to buy grossly overpriced insurance simply because it is unaffordable were freeloading. The freeloaders were getting care in emergency rooms effectively almost for free. This is known as uncompensated care, the cost of which is partly passed on in the form of health insurance premium hikes but is also partly absorbed by the commons.

But the Democrats are all about supporting wealthier people these days, so unlike Democrats of decades ago these Democrats were disgusted with common people trying to “freeload” off the wealthier. So there was an undercurrent of disdain and disgust toward the common people freeloaders, who of course are merely innocent bystanders to the US health system wreckage in general and to unaffordable health insurance in particular.

Not only will the Democrats' unconstitutional health insurance laws move bankruptcy to (in the view of the Democrats) back to where it belongs on the income and wealth scale, but the new laws will also remind us over and over again in the years ahead that insurance is not a fully appropriate concept for those who are not above average in wealth and income (before any misfortunes strike). Because despite having insurance (that they were bribed to buy with subsidies and prodded to buy under threat of tax penalties) people with lower incomes and little wealth will be going bankrupt right and left under Obama Care when they discover the hard way what the wealthy already know: that insurance certainly can not and will not pay for everything, and when misfortune strikes you will take a hit despite having insurance.

Unlike the wealthy, if you are lower down the income and wealth scales, you won't be able to take the financial hit that comes despite the insurance and financially live to tell about it. That "hit despite insurance" is relatively small to a wealthy or to a high income person but hardly so for others. So if you are induced to buy health insurance and then you can’t cover all the things that the insurance won’t cover, it will be off to bankruptcy court for you to file an "Obama Care bankruptcy". There may be a waiting list, so get your bankruptcy filing in early, please.

Remember, if you do buy health insurance, make sure you are wearing expensive, formal attire and have a gold pen when you sign your policy contract. Otherwise, you will look like a fish out of water.

By the way, did you know that bankruptcy has become so commonplace that you can largely do it on the Internet with no attorney?

READING LIST
Wall Street loots Birmingham

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