December 26, 2002

Missing the Point Bill Hobbes links to a posting that compares insurance to a casino, but both the original poster and him miss the entire point of insurance. Guaranteed smaller costs to remove the possibility of large or unlimited costs in the future.  Hobbes writes: A Sucker Bet Rich Hailey explains why insurance is like a casino. It's a long post, but worth it as Hailey makes some excellent points. In order for the system to work, those who claim in excess of what they pay in must be outnumbered by those who claim less than what they pay in, which means that for the majority of the people, they will pay in more than they get back. In Vegas, this is called a sucker bet, and the house loves gamblers who take it. Additionally, insurance companies set their premiums based on total claims over the past year, adjusting the rates to ensure a slight profit. In Vegas, it’s called the house’s edge, and it is what pays for all those multi million dollar casinos and resorts. The worst part is that it is all unnecessary. If my employer paid me the $500 he pays for my insurance, I know I could invest it for a higher return than any private insurance company. I don’t have the overhead of adjustors, secretaries, boards of directors, advertising, and so on to cover. 100% that money could be dedicated towards creating a medical savings account, covering my health care far more effectively than an insurance company could. Of course, it would throw a lot of insurance company employees out of work, but we need to get rid of the parasites before they suck us dry. Suppose you get sick just after the insurance would have started and long before the $500 a month from your employer amounts to anything? Bet you would feel even sicker as the bills come in without any chance of paying it. 3:18:09 PM

Whomever did a Yahoo search on "I Hate Terry Pratchett" should ashamed of themself. 2:31:16 PM