Private and truly market-based health insurers are an extremely important piece of the puzzle in our world: without them, a huge moral hazard arises with our health, and the only thing we can do in times like the current pandemic crisis is wait "until it passes." At the same time, with functional market health insurance, we would have had a normal life sooner and the current crisis would be a great investment opportunity. Why?
The current crisis over the new coronavirus has shown us several facts:
- Governments are completely incompetent
- Deputy Prime Minister of Czech republic Mr. Hamáček summed up decades of proving the impossibility of central planning in one tweet
- Nothing like medical insurance in the Czech Republic (and most of the Western world) does not really exist.
Insurance companies in the first line of the fight
In an ideal world, insurance is a product when we pay for things that probably won't happen to us. We pay insurance for the house before it burns down, but it will probably never burn us out: the probability is so small that 1 in 1000 people will burn down the house, for example.
999 people thus take out insurance with their insurance to compensate the unfortunate one. Insurance is like that tax on happiness: the more lucky we have in life, the more life insurance costs us (because we will never draw compensation).
The insurance also works as "saving" of happiness in time. When we - the whole of society - are doing well and nothing is happening, we produce value, we make money, we pay insurance from it, insurance companies do not have to pay much (because we are all very lucky) and thus create huge profits and savings (and thats good!) - and when, for example, an unexpected, expensive pandemic comes, which one cannot be prepared in advance, insurance companies can use these huge profits and savings to compensate, and "to fight against a pandemic".
It is in interest of the insurance company: the insurance company only earns when nothing bad is happening to us. If something bad is happening to us, it is in the interest of the insurance company that the "evil" is eliminated as soon as possible. In the event of a pandemic, it is in the interest of the insurance company to:
- let people earn and work as soon as possible, so they can pay for insurance
- to secure, that as little evil as possible happen to people, so that insurance companies do not have to pay compensation, including "secondary“ damage
- make people as soon as possible again in a state of "happiness", when nothing bad is happening to them, so there is so little probability that the insurance companies will have to deal with something at all
It should be the case of especially insurance companies to invest / push / come up with solutions of how to deal with the current situation, how to function in it as normally as possible, how to best protect their policyholders. It should be insurance companies that take the surpluses of years past and invest them in coronavirus research and development, modern "smart quarantine" technologies and intelligent tracing to set up their "hygiene teams". Professor Prymula or Dr. Fauci should be the crisis manager of the insurance company, not Deputy Minister of Health.
It is a private insurance company with which voluntarily I will make a contract - and by this voluntariness I will give it much more powerful weapons than the state. I'm not afraid of data misuse in the "smart quarantine" by the insurance company that gives chance It's good name, stock value and more.
I'm scared of misuse of data by the state, which can persecute, oppress and otherwise harm me, while not being punished for any mistakes.
"Happiness saving " as an economic stimulus
It's the insurance company that can blame me and push me much more effectively in case of non-compliance with the recommended behavior (not wearing a facemask, social distance), for example by limiting the insurance benefit, increasing the insurance premium, contractual penalty.
Just private insurance companies, pushed by market competition that will behave a lot more flexible, introduce modern methods faster and assess individual cases much more individually than the state. And it is precisely the competition of various private insurance companies that would allow us to try several different solutions to the situation at once to find the one that is optimal as soon as possible. That is how competition works.
At a time when the state is now forcing us to freeze the whole economy and put us to sleep, on the contrary, it would be precisely private insurance companies that would invest their savings - "money from the time of happiness"- acted as a kind of "fiscal stimulus" which would create jobs and stimulate the industry, namely immediately and those that are really needed. Whether investing in sectors that develop medicines, vaccines, the chemical industry, logistics, processing, pharmacies, distribution… or direct compensation payments as an incentive for "consumers".
When we put other types of insurance in this picture, we get a comprehensive economic "cure" for similar crises: it is market with happiness over time, insurance market.
After all, today's Donald Trump's empire stands on compensation from a health insurance company after the Spanish flu.
Such a market stimulus - surpluses of private insurance companies from happy times - would be natural "Spark" of economic activity:
- that wouldn't work inflationary such as printing new money
- It would not devalue savings such as printing new money
- The bond market would not become empty
- The money would be distributed by several companies, so much more flexible, faster a more diverse
- Compare: how easily you can take out a consumer loan in a private bank and how "easily" you can say about a 25 thousand (approx XNUMX thousand € or $) contribution for self-employed persons. I have no doubt that private insurers would do better.
That sounds great? So all that remains is to answer the question: why the hell doesn't it work like that?!
Health insurance companies are not a real insurance companies
Because today there is nothing that works like a real "health insurance company". And practically nowhere in the world.
In the Czech Republic, everyone has to pay the same % out of his income to few lincesed insurance companies, that have to provide the same services. One cannot order individualized plan, there is no patient participation in costs at all.The political-bureaucratic effort to strengthen the power monopoly of the state has led us to a situation where we leave a few chosen individuals to decide how to deal with our happiness in time: politicians and officials.
Current health "insurance companies" do not care how their clients behave, because health insurance is paid compulsorily. It's a tax which creates an environment of moral hazard with our own health, when insurance companies do not have to do anything and get their money and at the same time "we", individuals, due to the obligatory state health tax, we insure much less against, for example, accidents, death and others.
- There is no price competition, because the state has determined how much we have to pay for insurance
- There is no risk of bankruptcy, because the state said that whoever cannot pay, he will pay for it himself, or he will have you destroyed. Mandatory minimum health insurance is charge to the state for the fact that you can live at all.
- There is no fight for the customer because the state said that everyone must have insurance. The harshest risk - the "departure" of the customer from the industry - does not exist
- There is no pressure to innovate, because potential competition (the risk that when current insurance companies are lazy, someone new will come who will seize the chance) is practically non-existent
- The whole industry is socialized: profits go to the accounts of insurance companies, we will all pay the losses (even if through State Insurance Company VZP).
Current health insurance companies are so only and only the franchise of the Financial Administration, which also collects taxes on private accounts. Because of that, state has to deal with the whole situation now centrally and across the board which - just as it cannot handle centrally the production / distribution / supply of food, toilet paper, sanitary napkins and more - can never manage centrally or trade with happiness in time.
Today we pay compulsory health insurance. As a result, health insurance companies have good surpluses in a good times - savings from our happiness - which we cannot use effectively in times when we need it most: in times of disaster.
Stand like that it wastes our happiness from the past and at the same time it prepares us for a sadder future. On the other hand: we have the opportunity to repair the insurance industry in the same way that we have repaired, for example, the supply of food through privatization after the Velvet revolution and fall of comunism in past.
Will anyone have the courage to do that?