ARC's 1st Law: As a "progressive" online discussion grows longer, the probability of a nefarious reference to Karl Rove approaches one

Wednesday, June 08, 2005

Downer hates profits....

Downer replied to my post here about his lack of foresight with respect to economic issues, and med mal issues in particular. I'll repost his comment here in its entirety, so you don't have to go digging for it:

You would have a point about medical mal practice if the amount given by juries was the reason for high insurance rates. What we know from other states is that capping pain and suffering awards hasn't caused rates to lower. It just allows the insurance companies to pocket the savings.

It does affect the ability for doctor's to get appropriate levels of coverage however. Remember that a doctor is on the hook for anything in excess that his insurance company will not cover. As such, doctors faced with that sort of liability are leaving the states that do not cap awards. Which was my point all along. In exchange for the med mal lotto, innocent people, have to do with lacking health care.
You fail to address the millions of dollars in profits made by med mal insurance companies that are the real reason for the high rates they CHOOSE to charge doctors. I said that in my post but I guess it was easier to avoid that little discussion.

And so you take the bait. Whats wrong with an insurance company making a profit? I've got news for you, insurance companies exist to make profits. If they can't make a profit, then they don't offer the service. The raw material of an insurance company is one thing. Money. They take in money from people they give insurance too, and pay out if necessary according to the policy. They get to pocket the difference. They don't exist to provide lottery services to plaintiff's attorney's and those unfortunate to be hurt.
Why blame people who have been disabled or can't work for the rest of their lives because of a negligent mistake made by a doctor? Why not look at those who are taking all the insurance premiums to the stock market and making bad investments, ie the insurance industry? Again, you side with the powers that be instead of the individual, which is what conservatism is all about these days.

Who says I was blaming them? Their ability to work or not has nothing to do with caps, since the caps were only on pain and suffering. Their ability to work or not is covered in economic damages, which are not capped. Non-economic damages (also known as pain and suffering) is the only thing capped.

As to the investment issue, thats one of the ways that Insurance companies can make that profit (remember that part?) without raising rates or simply not offering coverage. They can only invest a limited portion due to regulation however, so its investment loss and gains doesn't have as much impact as the potential risk they face with a given policy. By having a cap, then their risk is quantified, and its easier for them to offer insurance at lower rates. Doctors get to stay in the area, and the community as a whole gets to have medical care.
You also seem to forget that state employees pay money into their retirement plan. It doesn't all come from tax dollars. If the state makes a commitment to pay retirement it should take the steps necesary to ensure that money will be there when its needed.

But thats not what happens. The promises the states make keeps increasing, because the state doesnt get to go out of business when it can't raise the money it needs. It simply raises taxes. Or runs a deficit. The state can keep increasing its promises without having to worry about the liability, becuase it will be some other elected official's problem.

Sounds an awful like Social Security doesn't it?

Not surprised that Downer is opposed to profits. I'm sure that whatever his endeavor is in life, he doesn't charge his employer or his customers (if self-employed) for his services.

By the way... what is insurance? It's when someone such as a doctor passes on the risk associated with an activity to someone else (be it a huge insurance company or a local mom&pop insurance company from the old days). Why would someone get in the insurance business? To make a profit. I know Downer's response here - THE GOVERNMENT SHOULD RUN AND INSURE THE MEDICAL INDUSTRY!!! We'll just discount that as the ravings of a lunatic.

What happens when the insurance companies see that the average malpractice lawsuit involves millions above the actual economic damages involved (which include lost pay due to the injury as well as the actual medical expenses)? They have to raise their rates for the possibility that a huge claim will be awarded against one of their doctors. Thus, the rates skyrocket and doctors are unable to get insurance.

So, what if the doctors decide to forego insurance or if insurance didn't exist? They're making a bet that they'll never make a mistake or that every single patient will follow their post-procedure instructions and not complicate the recovery. If they make a mistake or if an unforeseen complication occurs, then the doctor is out of business. finito. kaputt.

Who would go into business where one mistake will put you into debt for life and cost you your livelihood (removing your ability to pay off that debt)?
Answer: No One

BTW, one of the reasons for the extravagant pain & suffering awards was that many juries recognized that the doctor themselves wouldn't pay the award, but rather that the big insurance companies would be writing the check. Now, in a trial you're not supposed to reveal that the one paying is the insurance company... but most jurors understand the system and they failed to look beyond step 1 (ie they only looked at the specific case and didn't consider its future implications).

For more (especially if you're a Leftist like Downer), read Thomas Sowell's Applied Economics: Thinking Beyond Stage One. 2 of 3 Conspirators agree that it's an awesome book! (Not sure whether Penelope has read it)

Your Co-Conspirator,
ARC: Brian