Here, Please, Take My Money

I hate insurance companies.  For the moment, however, let's leave my personal feeling that all types of insurance are akin to a Mafia protection racket.  Instead, let's examine how the insurance industry is a nearly perfect analog for practical (not theoretical) socialism.  Now, Americans generally dislike socialism, choosing instead to hitch their shiny horses to the star of almighty capitalism.  Part of the American Dream is that if you work hard enough, then you will be rewarded with riches compensatory to such work.  The dirty underwear of this is obviously greed.  Americans feel that it's their money and that it would be sacrilegious to divvy any out to those of lesser economic means, because, obviously, they are simply lazy.  There is also the prevailing theory that only material rewards engender innovation, although I would say that new ground is continually broken in the highly socialized fields of law enforcement and fire fighting.  Still, Americans rail against the very notion of any program or idea that smells even vaguely like the big S.

If, then, socialism is so distasteful on an academic level, then why is it so blindly accepted in practice?  A portion of the above thinking is rooted in the basic assumption that human beings are self-serving.  Sure.  This quality has manifested as corruption in many a socialist state leading to an eventual downfall.  In a nutshell, those in power give preferential treatment to a select few and embezzle their fat asses off.  This, my friends, is exactly how the insurance industry works, except that it is perfectly legal.

We can break this down into 3 distinct components - (1) The Redistribution of Wealth.  At zero, everyone pays the same amount of money into an insurance pool.  This gives the agency the funds to pay for the claims of those "in need."  Let's look at health insurance.  Everyone pays in so that insurer can cover the medical bills of the ill.  That is, the allocation of wealth is based on need, classic socialism.  (2) Cronyism.  Eventually, if any one individual places too many claims, his insurance premiums will rise.  The tacit rationale for this is to maintain some sense of equality, to create a nominal distance from what is described in point #1.  The actuality is that the insurers simply want to give preferential treatment to those that allow them to reap a larger profit.  By raising the rates of the sick, the insurers both lessen the relative burden on the healthy and weaken the already frail ability of the enfeebled to regain their health.  It's all about the King Harolds, which brings us to... (3) Government Sponsored Embezzlement.  So, we have the vast majority of the population paying into a pool that is used primarily to maximize the income of the insurer.  So, where does that money go?  Of course, there is overhead and, for all publicly held companies, the payouts to shareholders.  Still, the biggest piece of the pie goes to (drumroll, please) the corporate CEOs.  I won't bore you with the numbers (go here if you would like to see some), but suffice to say that 8 figure salaries could be used to lessen the burden on the entire set of insured.  If this were a socialist state and those in power were hoarding the wealth instead of distributing it to the masses, we would call that corruption.  Instead, in the great old US of A, we call it living the dream.

Yep, capitalism is much better.

Cheers.
Eat the Rich.