Capitalism
May 3, 2010 by limako
Reading about recissions in the health-insurance industry, I was struck again by the clever ways that capitalism does things efficiently. Rather than checking to see if people are eligible for coverage (which might be expensive), instead insurance companies would sign people up and get them to start paying. As long as they didn't file any claims, they would keep taking their money. But, if the person got sick, only then would the company check to see if there were any way to weasel out of covering them. What a monstrous and inhuman way to treat people! The whole point of insurance is to know that you're covered in the event of a crisis. To have a whole industry devoted to pulling the rug out from under vulnerable people is a real travesty.
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Rescissions
May 6, 2010 by pbrewer, 1 year 39 weeks ago
Comment: 703
I figure that rescissions ought to work both ways.
If the insurance company ever does any rescissions, the upshot is that you didn't really have any insurance anyway—and that means that you ought to be able to get your money back for all the years you paid but didn't really have any insurance.
A policy like that ought to bring rescissions to an end right away. (Although the health reform legislation will bring it to an end even sooner.)
But your general point is still valid. Rescission is just a particularly egregious example.
incontestability clause
May 6, 2010 by Anonymous, 1 year 39 weeks ago
Comment: 702
Good post. In life insurance there is, or used to be, an incontestability clause providing that after a certain period (usually one or a few years, sometimes immediately) the policy paid off no matter what the cause of death was. The burden of proof was on the company; they had a chance at the beginning to find out what they needed to know. Plus, insurance is strictly statistical, so all they need to know is what percentage of people are likely to lie when applying and they can set their rates accordingly.
I don't know to what extent incontestability was involved in the health insurance of long ago. I know that my parents had Blue Cross/Blue Shield starting at least by the time I was in college (so anyway by early 1950s), and I don't recall hearing in those days or for several decades later of health insurance plans cutting off people for preexisting conditions or because they developed a chronic illness.
I read an essay a while back making the point that the trouble with capitalism is not greed; almost everybody wants more of what they need or like. Rather, exploitation (of others and the environment) is the problem. The difference between now and the period from late 1930s to 1981 is the co-optation of government by money-making interests so that governments no longer are guards against exploitation.