Insurance or not?

A post by Robert Peston got me thinking yesterday. The subject was on the costs of private healthcare and how many Britons may be charged too much for their treatment. Now, the gradual privatisation of the NHS (don’t pretend it isn’t happening) is a matter that’s close to my heart, although Peston’s points have got me thinking about the wider insurance industry – which is to be fair something I don’t often dedicate much thought to - and the effect that it has on our lives.

Peston claims firstly that many of the privately run hospitals face little to no competition, granting them an automatic monopoly in certain areas. As a result patients are being charged top dollar just for being ill in an area which only has a private health centre immediately available.

The wider implication of this is that this system of overcharging is endemic in any private healthcare system, especially if it’s run like the American system. I’ve been lucky enough to speak with doctors both here and abroad who have confirmed the fact that going directly to a hospital and paying without the insurer results in a cheaper price. Because the insurers are large companies and insist on using specific facilities – which aren’t necessarily the cheapest – they usually pay out more than they should.

This seems to be a pretty standard insurance industry tactic as I’ve heard of it being used in the likes of car insurance, home insurance etc. Now if that strikes you as horribly inefficient then you’d be right and of course you know that if insurers pay out higher costs that those costs will inevitably be passed on to you. It’s the line we’re always given if premiums do rise.

Consider that influence on the cost of living in all situations where you have to rely on insurers. After all car insurance is a legal necessity if you drive and health insurance I would imagine will become obligatory as well. The cost of living due to these inefficient middle men is bound to be higher for this.

Of course let’s not even get started on the fact that many insurers can be tricky paying out to begin with or charge an impractical excess. These are just further insults to injury – literally in the case of health insurance.
Overall you do have to wonder whether life would be more secure with or without insurance. Would the extra money in our pocket allow us to better financially protect ourselves or are we better off sticking with the current system and throwing away money? Obviously a system where we aren’t being ripped off due to inefficiency and monopoly has to be a better way.

And this is why we can’t have nice things!


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