FINAL VERSION: Ethics Through the Lens of Insurance.

 Hello everyone! 

I gave my presentation just a few weeks ago (I think), and I received word that some of you found it enlightening as insurance is surely one of the most critical black holes in our society. We all need it, and it's strong enough now to topple our economy, and yet most of us just don't understand how it works. The crazy thing is that it was kinda built that way. 

Throughout this semester, we discussed the many faults in our healthcare systems, especially pertaining to the current pandemic, the inequality in its history, and the proverbial walls that most good healthcare people have to break down to try to enact change. This is where I thought insurance would be a relevant topic. Healthcare in this country is so expensive that we have no choice but to pay for insurance so they can pay for the medical bills. There are those who believe that the reason this exists is actually just a circle of exploitation.  Let me explain. 

Insurance is typically written where, while you are currently insured, you will have to pay a certain amount (co-pay) every time you go in and you will also have to pay up to a certain amount overall (deductible) before insurance will pay for everything else. Hospitals see this practice and decide to raise their fees beyond that deductible because they are guaranteed to be paid out by insurance. Insurance sees this, raises the deductible again, and hospitals raise their fees. This practice is common and often why you don't see itemized receipts on your hospital bills. If patients saw that they were technically being charged over a hundred dollars just for sitting on a hospital bed and another thirty for a bandaid, they'd obviously be very upset. Hence, you hear stories of hospital bills dropping drastically when patients ask for itemized billing. 

This practice doesn't necessarily show a bad side to insurance. Afterall, they are reacting to their environment, going off the data and numbers from the previous year. But of course, raising that deductible does not sit well with the insured. They will just feel like they can't go to the doctor, and if they do, and they reach that deducible and go too far over, their monthly payment (insurance premium, can also be a 6-month payment) will surely go up too. 

This is another aspect of the ethical dilemma. 

Now, in my presentation, I offered a small history lesson about insurance. Cargo ships, piracy, Babylonian merchants and such. It's based in spreading the cost of risk across a large group of people to better protect them. The most modern sense of insurance being over the past 120 years, auto to health to life, etc. I discussed how insurance is about looking at the numbers, the statistics of a given situation, determining the risk of that situation needing funds from the pool, the insurer then charges the rate that will indemnify (refill) the pool. Or at least that's the main goal. 

Additionally, rates are determined by how much the company must charge its customer base to remain solvent (open and at least mildly profitable to remain stable). 

This was the ethical dilemma we initially discussed. Market-wise, it makes sense, but that doesn't make the policyholders( normal people) happy cause they know they're being charged just a bit extra than their statistic. Some companies saw that people were upset, so they started advertising online and had ridiculously low rates. "Auto Insurance for just $29 a Month!!!" Yeah, okay. Let's talk about why that's not gonna work. 

Now, perhaps this company is somehow managing to operate on scraps, only online, no physical buildings, no real profit. Their pool of funds is going to be so small that they won't stay solvent for very long. 

Think about this. $29 dollars a month. That's the amount they are getting in per customer. Do any of you remember when it only cost $29 to fix anything on your vehicle? I sure don't. This pool will require the funds from at least 20 other people to pay for the damages from one solid car accident, and they operate on such a low budget that they do not have a backing of funds to cover high expenses. 

So what's my point? Why am I tell you all this?

The underlying theme is that, for the sake of profitability, nearly everything essential in the U.S. has gotten so expensive that the average person living here can't purchase it on their own. I believe this is why insurance has boomed so much. It's also one of the only industries that didn't really take any losses during the pandemic. No one really left that industry during the Great Migration, they just went to a different insurance company to make even more money, and the crazy part is that it's built to simply adapt to its enviroment and spit out new rates to consumers. The high inflation right now? Premiums are going to go up alot next year to counter it. Hospitals start charging even more for COVID testing and vaccines? (Yes, they are already starting to charge for it.) Insurance companies are eventually going to exclude coverage of COVID-related stuff from their policies. That's what happens when something is causing too much damage and the insurance company fears it will empty the pool. That's why war and natural disasters aren't covered under the typical insurance policy. 

I'll step off my soapbox now, but I want you guys to see this and contemplate a double-edge sword:

Is insurance unethical itself or is it unethical because it reflects exploitation in other areas? Personally, I feel it's a little of both. 

Disclaimer: I realize I do not have many insurance links to provide. As I said before, there's a huge disconnect between policymakers and policyholders and every link I find just lacks a solid explanation without going into a bunch of jargon that most people can't vibe with or understand. 

That being said, these aren't completely horrible: 

https://www.thebalance.com/basics-to-help-you-understand-how-insurance-works-4783595 

This offers an explanation of most of those terms I talked about early in the post. 

http://wsrinsurance.com/how-insurance-began-3000-years-of-history/

I think this is the one in my original post. It is very broad, like very, very, very broad, but it does discuss a few key points along the timeline. It's also says modern insurance happened much earlier, which I disagree with cause the methodology now is different, but whatevs. It gives a good summary. 

AND REMEMBER THE ANSWERS TO MY PRESENTATION WERE

Modern Insurance? 120 YEARS

Why Insurance Potententially Unethical? PROFITABILITY

Super excited for Tuesday, Let's kick that test's butt!!!!

It's been awesome having you all in class. 

-Patti Hummel.