Friday, June 26, 2009

In Which Zandar Answers Your Burning Questions

Ezra Klein asks:
The issue isn't that insurance companies are evil. It's that they need to be profitable. They have a fiduciary responsibility to maximize profit for shareholders. And as Potter explains, he's watched an insurer's stock price fall by more than 20 percent in a single day because the first-quarter medical-loss ratio had increased from 77.9 percent to 79.4 percent.

The reason we generally like markets is that the profit incentive spurs useful innovations. But in some markets, that's not the case. We don't allow a bustling market in heroin, for instance, because we don't want a lot of innovation in heroin creation, packaging and advertising. Are we really sure we want a bustling market in how to cleverly revoke the insurance of people who prove to be sickly?

We already have one. As a matter of fact, that's how the insurance companies make money and always have. If they don't pay up, they win and we lose.

Once again, I fail to see how driving private health insurance companies out of business would in the long run be a bad thing.

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