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Main Entry: cap·i·tal·ism
Pronunciation: \'ka-p?-t?-?liz-?m, 'kap-t?-, British also k?-'pi-t?-\
Function: noun
Date: 1877
An economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market. --Merriam-Webster
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Every morning, I use goods and services that are important enough to me to pay money for. Running water for drinking and bathing in, food to eat, electricity to heat... These are worth an exchange of wealth to me.
I bought a bicycle for several hundred dollars last year. This is a tangible, physical device I use as my primary mode of transportation. Again, it was worth an exchange of wealth to me. I spent money, I gained something in return.
That something need not be physical, of course. When I eat out, I pay extra for the services provided by chef and waiter. I haven't gained a physical item, aside from a meal I didn't have to make, but the money is worth not having to make it.
That is the heart of capitalism. It's really a barter system, except we all agree to use money to represent the exchange of value for goods and services. It makes things more convenient for everyone; if I want a loaf of bread, I don't have to figure out what I have that the baker wants in exchange for it. I can simply give him money, and he can use that money to get what he wants from someone else. It's a wonderful system for smoothing out and easing such transactions.
I love capitalism for that. It makes everyone's lives better.
But it makes a terrible model for insurance. From a purely capitalistic perspective, you receive nothing for what you put into it. And that's kind of the point; insurance isn't meant to provide its own value. Rather, it is a shared pool of value that can then be traded for goods and services (i.e., medical treatment) that most individuals can't afford to pay for up front in a lump sum.
Let me reiterate: Insurance is a shared pool of value to trade for goods and services. It is not in and of itself a good or service.
And therein lies the problem with the modern insurance company. A for-profit corporation cannot treat that shared pool of value as what it is, because it's playing a zero-sum game. Every dollar an insurance company pays out in benefits is a dollar of lost profit. Their only way to maintain revenue goals is to avoid paying out. An insurance company that pays for every medically required service its members need rapidly finds itself no longer profitable. So insurance is forced to become a racket, almost by design.
You've all heard the horror stories. Pre-existing conditions. Coverage for life-saving surgery denied. Coverage for life-saving drugs denied. Access to the shared pool of value... denied. These are the horror stories not of the uninsured, but of those who thought they had good insurance. And it's a natural result of allowing - no, requiring - insurance to be a for-profit business.
When you are a business that provides no goods or services, you must force your customers to pay for... nothing.
In 2006, William C. Van Faasen stepped down as CEO of Blue Cross-Blue Shield of Massachusetts. His retirement package was $16,400,000. That is more money than I have paid into my insurance premiums over my entire corporate career. It would take 20 of me, over the course of a decade and a half of work, to pay what he withdrew from that shared pool of value in one day. That's 300 years of work going into a value pool that ought to be spent on medical services that were instead spent on a golden parachute.
Had the people who spent into the insurance received goods and services in return, that would have been capitalism. But with nothing to show for it but a promise to pay in times of extremity - a promise that may or may not be kept - this cannot be called a capitalistic exchange.
This is a racket.