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View Diary: Shadow Insurance Explained (18 comments)

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  •  why wouldn't it be done well? (1+ / 0-)
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    cynndara

    The government handles a massive insurance and retirement bureaucracy quite well already. Adding a tax and using that tax to cover death benefits along with an added optional tax for life insurance. I don't see the need for profit in the insurance delivery system. I think the whole thing would be better as a not for profit system, but I am open to hearing why the insurance companies are better equipped to handle this then say the government that operates at even bigger scale than any insurance company and could offer better rates and a better chance of the insured getting a fair shake come claim time.

    I sing praises in the church of nonsense, but in my heart I'm still an atheist, demanding sense of all things.

    by jbou on Thu Jun 13, 2013 at 01:00:06 PM PDT

    [ Parent ]

    •  Just my opinion. Feel free to disagree. (1+ / 0-)
      Recommended by:
      cotterperson

      "You think you can intimidate me? Screw you. Choose your Weapon." Eliot Spitzer

      by bonddad on Thu Jun 13, 2013 at 01:02:27 PM PDT

      [ Parent ]

    •  i'll give this one a shot. (4+ / 0-)
      Recommended by:
      jbou, cynndara, joanbrooker, Oh Mary Oh

      Generally the government, as you say, can provide certain types of "social insurance" on a non-profit basis fairly well, and as a progressive, I would like to see that expand to health insurance.  So no argument there.

      But the reason they do that well is because generally, these are socially equitable types of insurance, i.e. they insure situations and scenarios that almost everyone is equally exposed to, and whereby the Insured, i.e. you or me don't have much agency in the level of exposure we create.  

      For example in health insurance, certain people may create disproportionate risks by smoking, eating unhealthily or generally engaging in dangerous lifestyle choices but in general these risks are so well-distributed among the populace that such coverage can be provided for, and financed relatively equitably without alienating other people.   You don't try to take my medicare because I smoke, I don't try to take your medicare because you eat too much fried food, etc...etc...  and don't stare at us health-boy, just as much a chance you get plowed over by a truck on your jog!!!

      Now let's consider property and liability insurance, and let me ask this in a few ways:

      Part 1:

      1.  Do you want your tax dollars to pay for the damage caused to someone's house full of faberge eggs and ming vases, Ferraris and Bugattis?

      2.  Do you want your tax dollars going to defend an oil company from a million dollar environmental lawsuit and then pay their settlement?

      3.  How about tax dollars going to defend a pedophile against the accusations of 25 victims?

      Part 2:

      Do you understand the obscene amount of money capitlizing the private insurance industry writ large?  Can you contemplate how much additional taxes we would have to pay - particularly given corporate / rich asshole lobbying - to sustain an insurance scheme of the size created by the private market?

      Can you imagine the competence, speed and intelligence levels of people who would work at government cheese wages to adjust claims or manage that portfolio of dollars?  Insurance administration requires pretty well-trained professionals with specialized knowledge (pats self on back), it pays well because while it can be interesting, it's certainly not the type of job one does simply for the love of the game.... well except my boss but he's nuts.  

      Part 3:

      There is an inherent temptation to corruption to large social insurance funds already, whether it's Bush raiding social security to pay for the war, or even on "our" side, both Cuomo Jr & Sr. raiding the NY State Insurance Fund to pay for pet projects/balance the books.  This is a situation that must be fixed for these programs as is, and must be vehemently monitored if we ever get to single payer.

      So in summation:

      1.  No common equitable social need which produces the cohesion to support massive single payer property or casualty insurance.  These are places where it is perfectly fair to have people accept or not, transfer or not their risk of loss based on the types of things they wish to own, and activities they choose to engage in..

      2.  This is a case, and such cases do exist, where the profit motive - when well regulated, or at least relatively well-regulated results in a superior product than the government can provide.  

      3.  Pooling risk by pooling premiums would create a Scrooge McDuck sized pile of gold which would simply be too tempting to be wasted, used to stuff holes in budgets, etc...

      One solution for the conscientious insurance buyer is to seek coverage from mutual insurers (they are the ones with mutual in their names).  Mutual insurers are almost non-profits, in that they are not at all non-profits but their policy holders are share holders, and excess reserves or underwriting profits may be returned to policy holders in the form of dividends or reinvested in the company.

      •  thank you (0+ / 0-)

        I knew some of that, but didn't take into account corporate insurance against accidents.

        I sing praises in the church of nonsense, but in my heart I'm still an atheist, demanding sense of all things.

        by jbou on Thu Jun 13, 2013 at 02:47:45 PM PDT

        [ Parent ]

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