Insurance Assurance

I'VE BEEN SHOPPING around for insurance lately, and it has been my pleasure to be able to talk at length to insurance agents about their trade, and about what is presently concerning them.

Our word 'insurance' as well as our words 'assure', 'ensure', and 'secure', come down to us through Anglo-Norman French, and eventually derive from the Latin securus, meaning 'without care'. How appropriate! Insurance, of course, is a way of avoiding anxiety.

In its purest form, insurance is a way of avoiding catastrophic financial loss. A policyholder wishes to avoid a particular kind of loss, and an underwriter estimates the probability of that loss and prices the policy accordingly. It is a simple system; policy cost is proportionate to risk. High risk policies, of course, are more expensive than low risk ones, but since the policyholder merely wants to avoid catastrophic loss — in other words, having a high deductible — the actual cost of the policy is relatively low. The insurance company offers a price, and if the price is too high — say, insuring a sixteen year old male driver — the buyer can take it or leave it, and even reevaluate whether they should be taking the risk at all.

This system, of course, is for those people who act like virtuous adults, who can rationally judge risk versus cost. Again, this system only insures against catastrophic loss; the policyholder himself takes care of recovering from minor losses and in reducing his own risk. This is beneficial for both the policyholder and for the insurer: the cost of insurance is low for the purchaser, and the cost of claims processing is low for the seller.

But judicial reform since the 1960s has trashed the system. For example, suppose someone skateboards down a staircase and gets injured; clearly they are negligent — after all, skateboarding is a crime (or at least imprudent) — but changes in the law state that they can recover from the insurance company. However, the policyholder may be immune if they follow mandated regulations, such installing handrails on stairs. The end result is that a property owner must incur an expense which would not have prevented the accident. Because the law of cause-and-effect is so often ignored by the courts, insurance costs have gone up dramatically.
These changes do not benefit policyholders nor the insurance companies, but rather reliably enrich product liability and personal injury lawyers, as well as provide a lottery-sized win for some lucky few plaintiffs. Instead of insuring against physical risk, we now are insuring against legal risk.


Old wing of Saint Mary's Hospital, in Richmond Heights, Missouri.

Health insurance has become more expensive and less available lately, and there are two main causes. Under the old system, a person would pay for their own health care, and if something catastrophic happened, then insurance would cover the extra costs. This is both simple and ultimately inexpensive for both the policyholder and the insurance company, as well as convenient for physicians and hospitals.

Managed care, which was largely developed under the Clinton presidency, is not insurance; rather it is pre-paid health care. This is not a simple system, rather it is very large, expensive, and labor-intensive, with the bulk of the expense not going to actual health care, but rather to management overhead. Physicians hate this system, hospitals hate this system, policyholders who explicitly pay for their own insurance hate this system, and small insurance companies hate this system. Everything about this system is tightly controlled and very expensive.

Those who seem to like managed care are big governments and the very large health care companies who make and control the system. However, those who do not pay for their own insurance, or who work for companies that pay for it, often like it because it is so cheap to visit the doctor: it is surprising how many people will not mind dropping $600 at a casino but will complain about spending $60 at the doctor. This is a form of childishness and shows a lack of virtue.

When something is free, there is a tendency of people to hoard it, and apparently-free health care is no exception. This of course is a vice against the virtue of justice, and leads to rationing, which tends to be highly unjust and arbitrary. Usually rationing is found in government-run health care systems, and you can tell what the government values by looking at how they ration: usually, birth control and abortions get the very best funding, while care for the elderly and permanently disabled tends to be neglected.

The other main problem with health insurance is with the patients themselves; more problems are now treated professionally whereas they would have gone untreated in the past, or very expensive proprietary medicines are used where older generic drugs would suffice. But I don't want to belabor this point, for in the old days so many people just suffered greatly and died, and at an early age, without regard to whether or not they had dependents. Out of charity, we ought to encourage good and better health care.

There is a far worse problem: many people now go to doctors for vague and difficult-to-diagnose conditions, and they often go to numerous specialists for a cure, and end up having a vast multiplication of possible diseases, while never getting a real cure. Often the patient is subjected to an array of novel and expensive treatments, and they never work for very long. The percentage of patients who have this profile has increased dramatically since the 1960s, and was first clearly identified in industrial urban areas in the late 19^th century.

Of course, this is hypochondria, the unwarranted fear of poor heath.

Every medical specialty has an odd disease, of unknown origin, of unknown cure, that causes pain in the body, and is often related to sleep or mood disorders. A physician friend of mine once related to me a list of such diseases, but I won't repeat them here; they are ridiculously common, and patients take them very seriously. What is nearly certain is that if you have one of these diseases, then you would almost certainly be diagnosed with all of the others. All are caused by anxiety, and the potential cures offered by the physicians will no doubt increase that anxiety. The more a patient is prone to this kind of anxiety disorder, the more likely that they will insist on treatment, much to the annoyance of right-minded physicians.

Anxiety and depression have become increasingly common lately, now to the point where self-inflicted harm is the major health problem and cause of death for older teens and young adults. This is a spiritual problem, but because of the psychosomatic unity of humans — we are both animal and spirit — spiritual problems cause physical problems.

As Catholics, we know both the cause and cure for these disorders, but society does not. The problems we are seeing in our insurance industry are symptoms of a much greater disorder.