The Insurance Industry fears free-market capitalism

Susan Pisano of the America’s Health Insurance Plans (AHIP) trade group stresses two major points about health insurance plans:
 
1. The health insurance industry does not believe they could compete with a government operated insurance plan.
2. Only one percent of health care premiums go toward profits.
 
Two generally accepted points regarding health insurance administrative costs are:
 
1. For-profit health insurance have administrative costs of 15 – 30%.
2. Medicare has administrative costs under 5%.
 
When we put the position of AHIP together with what is accepted about administrative costs it is hard to see AHIP’s concern over the competition a government administrated plan would provide. True, for-profit insurance plans would have to bring their administrative costs under control but that is not necessarily a bad thing. Once AHIP members brought their administrative costs under control the one percent difference (profits) would be insignificant and a free market would determine if they were deserved.
 
AHIP appears to fear free-market capitalism more than anything else.
 
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One thought on “The Insurance Industry fears free-market capitalism”

  1. Nice post. It is always good to see people expressing themselves in different ways. Since you seem to be associated with Management, I would like to suggest you a new magazine – PEOPLE MATTERS started by an ISB Alumni, which was suggested to me by a friend and which I have found very useful. It deals with various important aspects of management, especially those related to Leadership & People Management. It's also relatively cheap. I guess its annual subscription is about Rs. 400 (US$ 8 approx) which is even less than the cost of a standard Pizza.Their last issue had an enlightening article by Robert Kaplan (the co-founder of Balanced Scorecard method, if you remember) where he talks about how organisations can create opportunities out of current economic downturn.I got its subscription online through their website: http://www.peoplematters.in If you like the magazine, kindly refer it to your friends or colleagues in the organization you work. They may be interested in subscribing to it.Thanks

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