Insurance Demagoguery

When I first started this blog, back in 2006, one of the favored targets of politicians and media was the oil industry. Gas prices were high and the oil companies were to blame; they were profiteering and becoming wealthy by ripping off the public, their executives were reaping outrageously fat salaries… Something had to be done, laws urgently needed to be passed
to “keep them honest” and “hold them accountable.”

Just like the health insurance industry today.

What was ever done to reign in oil companies? Nothing. It turned out, when all of the bloviation evaporated, that oil companies were not the problem. Oil companies were making less than 10% profit, and actually had been losing money for many years. High prices were being caused by speculative traders, and the ones who were becoming wealthy were the traders and nations who had the oil, such as Saudi Arabia.

The “windfall profit tax” that was going to “punish the oil companies’ egregious behavior” would not have reaped much money, because there was little if any egregious behavior to punish.

I blogged repeatedly about that at the time so, “I told you so.”

When all of the bloviation evaporates in this round of demagoguery, it will turn out that the health insurance industry is no more of a villain now than the oil companies were then. They are currently operating at about 6% profit and, while they do contribute to health care costs, they are no more the proximate cause of this nation’s high spending on health care than is, say, the advertising industry. Actually, advertising might be by a substantial margin the larger culprit of the two.

We spend three times more than any other nation on health care for a fairly complex mix of reasons, including profit taking by doctors, hospitals, clinics, labs, drug companies, pharmacies, and advertisers in addition to insurance companies, and due to choices made by the people who use the health care system. We are not going to solve that by a simplistic bashing of the health insurance industry.

Just as bashing oil companies solved nothing in 2006.