WHAT IS A FREE MARKET for Health Insurance?

Here is the definition from Investopedia: “The free market is a summary description of all voluntary exchanges that take place in a given economic environment. Free markets are characterized by a spontaneous and decentralized order of arrangements through which individuals make economic decisions. Based on its political and legal rules, a country’s free market economy may range between very large or entirely black market.” Source: https://www.investopedia.com/terms/f/freemarket.asp#ixzz4bKMGQJbu 

The question is: Can or should health care be governed by the insurance industry? Can it be administered as a free market commodity?

 Insurance, in general, is a gamble that you hope you won’t have to use. It is a bet you make with an insurer that you are both hoping you will loss. Unlike playing the slot machine, that has a small price to pay for the potentially of winning a greater payoff, insurance is a small price paid in the hope you won't have to pay a higher price later.

Fire, flood and theft insurance makes senses for most people since it is on their property that is at risk, While the chances of collecting are small, the loss could be quite high. The price of a premium seems small compared to the potential loss. It is the premium/payout ratio that determine the value of the policy for both insurer and insured

Life insurance has its greatest value for most people when they are young and have a family. This is when the ratio of the price to payoff is greatest and the value of protection is the highest. As the family matures and the insured grows older the price of coverage goes up per unit of value and the protective value or need may go down for the survivors. In fact, the offerings available to older people are such that the cost is nearly prohibitive and dying early is the only way to profit from the investment.

Both causality and life insurance are products that can compete in a free market. The need is determined by the consumer and the pricing is determined by the insurer. The consumer can select what risks he/she will assume and which she/he will insure against. The insurer can decide what risks it will insure, under what conditions and at what price. Insurers compete with one another for customers seeking such risk protection. The system works because the odds of anyone client collecting on their policy are very low and the odds of a certain percentage of annual payouts are fairly predictable, just like Powerball or Mega-Millions. This leads to marketing and pricing policies that can compete in a free market.

Health insurance is very different. The odds over a life time that any individual will need help to pay for accidental injuries or illnesses are very high. The uncertainty of what these will be and what it will cost the individual directly and indirectly are unpredictable but very real.

There are three ways to deal with the risks involved: (a) The individual bears the costs oneself or accept charity; (b). Under certain circumstances one can point out someone or something to blame and sue them for cost of the injury or illness; or, (c) One can buy health insurance that will cover the costs of an unknown illness or injury that may or may not happen.

At stake for the individual is one’s health and one’s life. For the insured, it is their life and the quality of that life that matters. It is the desire to LIVE and be healthy that matters. For the insurer, it is the unpredictable cost of healthcare that is most problematic,

The Free market goal is make a profit based on the insurance business model of betting on the client losing. Death would simply stop the premiums from coming in, but it saves on the expense for care.. These are conflicting goals between the personal and moral value of the human life and ideology of the free market.

The Republican plan to repeal, and maybe replace, what they call “Obamacare”, officially called the Affordable Care Act, with a Free Market health plan is a farce. The Health Care system is already a “Free Market.” Even if there is only one insurance provider in the state – there is a free market. That market is free to chose between buying the insurance or not. The decision is based on the price and value such a plan offers the client. The Republican plan is not going to change anything as far as the need for health insurance. But it will change the conditions under which most people will have to make the choice to Not Buy Health Insurance.

Insurance, in general, is a gamble. That is, it is a bet, where you hope you won’t have to use it for the purposes you bought it and that it was created for. If you hope to “win” (collect on it)”, you have to lose. If you don’t lose but collect, the insurance company may claim that you were perpetrating a fraud against it and not pay you. And this is where the TV lawyers come into the Free Market for and against you.

The fundamental assumption in the Republican plan is that Insurance companies want to market to sick people. But why should Insurance companies compete for this market, when there is no profit in insuring a person who needs health insurance? The profit is in collecting the premiums from healthy people who don’t use the insurance..

Obamacare, as they call it, proves the very weakness in the nature and dynamic of the Free Market as it applies to health insurance. Premiums go up with the cost of the delivery of healthcare. Providers find that they have to pay out more for customer claims as a result. Between the insurer and the client is a vast complex and qualitatively unequal service delivery system that is out of control and which drives the cost and quality.

The Free market is not designed to solve the problems that an individual faces when threatened by disease or injury. The Free market system is designed to roll the dice and produce winners and losers. The proof of this is that unless health insurance is made a right and administered by a single payer acting on the principle of NEED before Profit, there will always be losers. It is an existential fact that if profit is the sole purpose of the market, any free market - based health care insurance system designed for universal coverage is guaranteed to fail. It is an ideological pipe dream that it will work.

The same people who would allow a woman to die by denying her healthcare in order to save a fetus, yet deny the "saved" child the right to a healthy life, seems prepared and willing to accept the premature deaths of millions of lower class, sick and injured, babies and aged, non-white and poor whites (among others) to save a tax payer few dollars on healthcare, Meanwhile those "savings" are used for buying an aircraft carrier that may never be used or paying for a President’s weekend vacations to his Florida estate as a perk.

There will always be a Cadillac market for health insurance designed for those who have the wealth to spend insuring their future well being. Or for the corporation to insure its executives (and write off the cost as a business expense along with other asset). But unless the real human tax payers can get some real value out of a national healthcare insurance system, this is nothing more than a fraud designed to make the winners stay winner and add to the pile of losers.

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There will always be a Cadillac market for health insurance for those who have the wealth to spend insuring their future well being. Or for the corporation to insurer its executives (and write off the cost as a business expense). But unless the real human tax payers can get some real value out of a national healthcare insurance system, this is nothing more than a fraud designed to make the winners stay winner and add to the pile of losers.