Full Coverage Government

[stokes234]

I think the OP has a fair point. It can be argued, and by many it is argued, that services and production are better handled by private industry because private industry finds more efficient ways to produce as it is motivated by profit.

However, insurance providers don't produce. They just take in money and hand back money based on calculations of risk. Private insurance companies aren't allocating resources more efficiently by providing insurance at different premiums, they are just gambling. As a result of this gambling, and the raised costs thereof, a certain amount of money is creamed off into the pockets of the super-rich.

By switching insurance over to government control, the advertising costs and the super-rich share would be removed, and quite probably administrative overheads as well, but no governmental inefficiency would arise because nothing is really being created anyway. The same checks on risk criteria could still be employed, and the same workers employed to do them, but with fewer expenses and exploits.

Deepatrax makes the point that jobs would dissapear, but those jobs are funded by inefficiency anyway. No wealth would dissapear from society, it would just cease to be transferred from those paying for insurance to those whose jobs are in the insurance industry but would be superfluous in a government equivalent. The people paying for insurance would have the money left over to pay for other goods and services and the unemployed insurance workers could move to this industry to pick up. There would be a short term skills imbalance, but this would level out.

 

[hgc]

You see "great idea."

I see "here's another slush fund like Social Security where government takes in more than it hands out, for a while, and then runs into funding problems because the 'trust fund' has been looted for general spending."

The borrowing from the trust fund is not a flaw in Social Security. It's a flaw in financing of general spending -- if the debt is not repaid. Do you really think that the US government is going to default on its debt? If things come to that, we're going to have a lot bigger problems than Social Security falling short.

 

[Francesca R]

However, insurance providers don't produce. They just take in money and hand back money based on calculations of risk. Private insurance companies aren't allocating resources more efficiently by providing insurance at different premiums, they are just gambling.

See post 27 and the thread linked therein (start from post 2 of that).

Blindly parroting faulty belief systems that have already been logically dismissed, when you have no counter response to the dismissal, doesn't make the beliefs true, nor the debate a reasoned one

 

[King of the Americas]

Please refer to posts 27 and 38.

I am afraid I don't understand. Do you still hold that "advertising" isn't a significant potential savings opportunity, within a government system?

I detect a 'disconnect' between what is the reality here, and what you propose as your own reality.

I propose government could and WOULD be more efficient at handling insurance policies, and would provide premium/tax payers "more" bang for their collective buck.

What exactly are you proposing, that this isn't true, or that it is a socialist or communistic notion?

DO you understand the notion of 'spending'...? If a company or organization doesn't advertise, that means they aren't 'spending' money, allocating funds, or making expenditures... This means they are NOT making withdraws from their bottom line. They are SAVING money.

Could you elaborate as to how you see private profit seeking organizations treating consumers 'better' than a non-profit government would?

---

Setting criteria for government insurance agencies:

All 'people' and their income are taxed equally, 5-10% across the board, ending ALL deductions. Regardless of kids or charitable giving, you pay 5-10% (whatever the rate needed to be to account for last year's losses, zeroing the books). Everyone is charged the same rate, period. As we are all 'Equal under the eyes of the Law.'

Property is taxed based on it current market value, again at ONE set rate. Once you have paid taxes on something it is protected for a year. If it is damaged or lost, the government will replace it.

Today insurance companies are legally allowed to discriminate, and lobby daily for further ability to do so.

This is legalized gambling, where they get to make sure they win, by simply increasing premiums...

And in some state people are FORCED to carry insurance.

Government can and should end these practices by becoming the single payer insurance agent.

 

[Francesca R]

Firstly you have this premise that "insurers don't produce anything", meaning that they add no value, and insurance is indistinguishable from paying your own bills. Enough info has been given to show that is wrong. Yet you don't acknowledge the mistake.

Secondly you imagine that if you just took the voluntary expenses out of a business (ignoring that no business has any business spending any of its shareholders money unless it expects a net financial gain from doing so), and removed the profit, then the cost to the customer would go down. With that reasoning all profit-seeking business of every kind should be criminalised and replaced with state directed activity, not just insurance.

So unless you do favour a fully centrally planned society, you just have some apparent internal inconsistency based on something you have not justified or even explained.

 

[King of the Americas]

So... "Yeah". There's a disconnect.

Insurance agencies don't 'add' to premium payer's premium payments...

They aren't producing MORE revenue for premium payers. They take in premiums, and dole out a 'portion' to pay claims. Another portion goes to advertising, in this case hundreds of millions, and some goes to pay high paid executives and Board members.

Insurance companies aren't 'growing' your premium into something bigger and better. You don't get back more than you put in. If this were true for every insurance consumer, the companies would not be in the black. In MOST cases, premium payers never see a dime for their monthly payments, they just get peace of mind knowing that they are protected...when in all likely hood they aren't 'completely covered'.

Insurance companies employ entire divisions to fighting the payment of claims, it is called their denial of services section.

What 'information' has been shown to demonstrate your contention?

With all due respect, I think you are employing the "Willful Ignorance Fallacy".

 

[Francesca R]

You continue to exhibit full ignorance of what insurance is. Since this has been explained in plain language and you have avoided it all, I conclude your reason for these threads is to broadcast rhetoric.

Nevermind

 

[GeeMack]

So... "Yeah". There's a disconnect.

Insurance agencies don't 'add' to premium payer's premium payments...

They aren't producing MORE revenue for premium payers. They take in premiums, and dole out a 'portion' to pay claims. Another portion goes to advertising, in this case hundreds of millions, and some goes to pay high paid executives and Board members.

Insurance companies aren't 'growing' your premium into something bigger and better. You don't get back more than you put in. If this were true for every insurance consumer, the companies would not be in the black. In MOST cases, premium payers never see a dime for their monthly payments, they just get peace of mind knowing that they are protected...when in all likely hood they aren't 'completely covered'.

Insurance companies employ entire divisions to fighting the payment of claims, it is called their denial of services section.

What 'information' has been shown to demonstrate your contention?

With all due respect, I think you are employing the "Willful Ignorance Fallacy".

No. Read this again...

Enough info has been given to show that is wrong. Yet you don't acknowledge the mistake.

 

[stokes234]

See post 27 and the thread linked therein (start from post 2 of that).

Blindly parroting faulty belief systems that have already been logically dismissed, when you have no counter response to the dismissal, doesn't make the beliefs true, nor the debate a reasoned one

Your first post appears to claim that by pooling risk, overall risk is reduced. Unless you can explain why a private pooling of risk reduces more overall risk than a public pooling of risk, I don't see how this is incompatible with my claim. And it doesn't seem like alot to ask for you to approach the debate with civility, rather than thinly veiled insults.

My point is that while insurance is useful, it doesn't produce in the same way that most industry does, it reduces risk. Because of this, I see no reason to believe that the private sector can reduce risk more effectively than the public sector. As an anecdotal example, I can get insurance through my fathers trade union membership that is cheaper than private insurance, because the union only needs to calculate risk and pay out cost price while the private companies need to pay for advertising and CEO yachts.

 

[Francesca R]

Your first post appears to claim that by pooling risk, overall risk is reduced. Unless you can explain why a private pooling of risk reduces more overall risk than a public pooling of risk, I don't see how this is incompatible with my claim.

Your claim is that "insurance companies don't produce". Any time you want to climb down from that, kindly make it explicit that you're doing so.

My point is that while insurance is useful, it doesn't produce in the same way that most industry does, it reduces risk. Because of this, I see no reason to believe that the private sector can reduce risk more effectively than the public sector.

That point is invalid unless you say more. What you have there is logically equivalent to: "My point is that pink iPods are pink and are not normal non-pink goods in the way that other non-pink products are. Because of this I see no reason why the private sector can produce pink iPods more effectively than the public sector."

As an anecdotal example, I can get insurance through my fathers trade union membership that is cheaper than private insurance, because the union only needs to calculate risk and pay out cost price while the private companies need to pay for advertising and CEO yachts.

I strongly suspect that the policy is underwritten by a commercial insurer. A trade union is legally incompetent to do this, unless it is regulated in the provision of underwriting by the FSA. What is more likely is that union dues are used to subsidise your premium in some way.

 

[King of the Americas]

Francesca R,

I fully and completely don't understand your argument...

 

[King of the Americas]

Francesca R,

I fully and completely don't understand your argument...

I'd still be interested to know what "information" refutes my original OP...?

 

[stokes234]

Your claim is that "insurance companies don't produce". Any time you want to climb down from that, kindly make it explicit that you're doing so.

If you ever see someone walking out of an insurer with a big bag of goods produced in there, post a picture up here and we can have a chat about it. Until then, i'm going to go on believing that all insurance companies do is offer money in exchange for money based on risk calculations.

That point is invalid unless you say more.

Let me try an example. A house is worth £100,000, and has a 1% chance of burning down every year. A public insurer can provide the insurance at a price of £1000 a year + wages for the staff and expenses for their workplaces. A private company has to take the same £1000 a year, add on higher wages for corporate paychecks, and add in advertising costs. Explain to me how at any point in this formula, the private company can save money on the insurance provided using market driven efficiency.

I can understand how a private company might produce cars more cheaply, or be more innovative in technological research, but I cannot fathom how they are going to subvert maths to provide the insurance at a lower cost than the public sector could.

 

[King of the Americas]

stokes234,

I know there's no need to say it, but we're right.

No one has offered any 'information' that refutes our point, and I don't see it happening anytime soon.

I would like to thank you for your input, in any case.

 

[Francesca R]

If you ever see someone walking out of an insurer with a big bag of goods produced in there, post a picture up here and we can have a chat about it.

Rather luddite to try arguing that anything of value has to be tangible. That stands as nonsense without requiring any counter, I think. But the best refutation of your statement that "insurance providers don't produce" (which would include services according to your own post) is that you don't even agree with it yourself, since you say you buy insurance. It is mildly amusing when people make arguments by posting statements they contradict themselves, but it is of no use in advancing your argument. What you should do is climb down from your first statements in the thread.

Let me try an example. A house is worth £100,000, and has a 1% chance of burning down every year. A public insurer can provide the insurance at a price of £1000 a year + wages for the staff and expenses for their workplaces. A private company has to take the same £1000 a year, add on higher wages for corporate paychecks, and add in advertising costs. Explain to me how at any point in this formula, the private company can save money on the insurance provided using market driven efficiency.

The formula is wrong. It does not approximate how insurance works. It is one step (a correct one, yes) in a rather long chain. If it was that straight forward, degrees in actuarial science and related disciplines would not be needed. On the off-chance that you are interested here are some resources.

I can understand how a private company might produce cars more cheaply, or be more innovative in technological research, but I cannot fathom how they are going to subvert maths to provide the insurance at a lower cost than the public sector could.

That remains your limitation. That you don't understand something (such as not knowing what insurance is beyond calculating the probability of an insurable event) does not indicate that understanding is not possible, nor that your conclusions are correct.

It is as if I said that I can't fathom how the private sector is going to subvert chemical equations, the law of enthalpy and the molecular structure of mild steel such that it can build cars at a lower cost than the government could.

 

[stokes234]

The formula is wrong. It does not approximate how insurance works. It is one step (a correct one, yes) in a rather long chain. If it was that straight forward, degrees in actuarial science and related disciplines would not be needed. On the off-chance that you are interested here are some resources.

Stop dodging the issue, and stop trying the "i'd like to tell you why i'm right, but you wouldn't understand" card. All that is involved in insurance is risk calculations, and business expenses. Actuaries cannot reduce risk, all they can do is calculate it. Explain how the private sector can save money in a risk calculation where the public sector couldn't, or admit that you're wrong.

 

[sopclod]

Just wanted to chime in on the "insurance companies don't produce anything" point.

There is no factory, there is no gathering of raw materials, there is no modifying of an existing product. Since I have no fancy degrees, and I carry a lunch pail to work, all I see is paying premiums in exchange for being paid back in the case that the occurrence in question meets the insurance company's qualifications for payment.

 

[Ziggurat]

Insurance companies don't 'labor' or 'produce' anything, they collect and distribute funds

So would government under your scheme.

while keeping a large portion for themselves BECAUSE THEY HAVE TO MAKE A PROFIT.

This is false. Their margins are not large.

A government ran agency wouldn't have to pay for advertising or make a profit.

A government run agency would have other inefficiencies which for-profit companies have motive and means to eliminate. They would have to pay for pork, basically.

If you don't agree that these two factors represent real savings, your calculator is broken or you simply don't understand how math works.

If you don't understand how government can be inefficient, you simply don't understand how government works.

 

[theprestige]

I am afraid I don't understand. Do you still hold that "advertising" isn't a significant potential savings opportunity, within a government system?

Not really, no. Last time I checked, the government spends quite a bit on marketing and advertising.

At all levels, the government is constantly spamming us with Important Information about government services, laws and regulations, and even behavioral changes they'd like us to adopt.

And when the government isn't doing it themselves, they're forcing private industry to do it for them. Which may seem like a reduced cost at first, until you realize that you're paying for it anyway.

Even the Soviet Union invested heavily in advertising, and that government didn't have a private sector to compete with.

Don't get me wrong: I don't think propaganda is necessarily a bad thing, any more than I think high speed rail is necessarily a bad thing. But I do think that if you're proposing that government programs don't incur propaganda costs that ultimately get passed down to the citizen the same way advertising costs get passed down to the consumer, you're missing an important piece of the puzzle.

Incidentally, one advantage of private-industry "propaganda" is that if it doesn't generate enough revenue to cover its own costs, plus some profit, a private company has to improve its processes or else cease operations. Profit motive is a harsh mistress.

Government propaganda, on the other hand, doesn't have to generate any revenue at all. As long as some pundit or some politician is willing to insist that it provides some social benefit, somewhere, to someone, the government can continue its advertising campaign, even unto deficit spending without end, amen.

 

[King of the Americas]

...

This is false. Their margins are not large.

...

I think instead of speaking of these things in the abstract, we should get specific:

The industry leader isn't suffering 'small margins': http://seekingalpha.com/instablog/4...n-geico-a-template-for-growth-stock-investing

Insurance companies make profits ATOP spending in advertising and high paid salary expenditures. ALL 3 of which would not be a factor in a government ran model.

The 'margin' in a government model wouldn't exist, AT ALL. The government model is only designed to replace last year's losses, so that the safer we all are, the lower our taxes.