Insurance

   Some folks maintain that insurance is a racket, a scam perpetrated by those who collect policy premiums and delay or refuse to honor claims. These cynics charge that companies sell insurance only to those who don't need it, and not to those who do.
   They sell medical insurance to young, healthy people who are not likely to get sick, and if there's a possibility that you might get sick, or if you already have a condition that may in the future require medical attention, they don't want to know you.
   It is true that the insurance industry is a private enterprise, in business to make a profit for the owners. The firm must collect more in policy premiums than it pays out in benefits, or the business fails and the firm shuts down.
   Responsible firms calculate this risk, and find the answer in spreading the risk, collecting premiums from more people, thus reducing the chance that any single policyholder will suffer a grave enough accident or illness to harm the company. Their answer is to collect more money in premiums from more people, to make up for the benefit payout.
   (Either that, or pay no benefits at all, keeping all the money collected. That's what makes it a scam. Granted, not all insurance companies do that, but some do, and that's what makes some folks suspicicious.)
   There are reliable reports that clerks are under instruction to routinely reject every third claim, regardless of validity. The burden of proof falls increasingly on the claimant, and generates more paperwork in fighting to collect benefits.
   Meanwhile, the company has the use of the cash, investing it in money-making projects to increase profits.
   Sound efficient? From the policyholder's viewpoint, no. But from the corporate standpoint, it doesn't matter -- the goal is to increase profit.

  There is no doubt that insurance policies are useful and sometimes mandatory. The purpose is to compensate people if or when they suffer a loss, and this applies to auto accidents, mortgages, homes, property damage from storms, or in the shipping industry as well as health care.
   But the point is that an insurance plan works best the more people are involved in buying into the risk pool. The bigger the pool, the less cost to each individual.
   Therefore, it makes no sense to sell insurance only to healthy people who are not likely to get sick, or to drivers who seldom use their cars, or to offer flood insurance to those living on a mountain, or fire insurance to those living in brick buildings, or life insurance to millionaires.
   However, there is always some risk, and the more people share the risk, the better for society.
   There is also no doubt that there are abusive practices in the insurance industry. That's why there are government regulators, to oversee the industry and prevent or punish those who abuse the public trust.
   There is at least one segment of the industry -- health insurance -- that may be too important to be left to the private sector.