Insurance Companies Are Just Like the Mafia

The other day I was watching “Mobsters” and afterwards began researching a bit about the Mafia and organized crime and as I was reading up on the origins of the Cosa Nostra and how it all started and how they made/make their money, it dawned on me that insurance companies, or the idea of insurance, is very similar to how organized crime, in particular protection racketeering, works.

A protection racket is an extortion scheme whereby a group or an individual is coerced to pay money in exchange for protection.  Racketeers coerce reticent potential victims into buying “protection” by demonstrating what will happen if they don’t—they damage the victims’ property or maybe even will physically hurt the owner or manager.  In most cases, the racketeers do not actually protect their client from anything but the racketeers themselves, and their “protection” is merely extortion. However, if their victim is seriously threatened by a third party, sometimes gangsters will protect their source of revenue.

Insurance companies work much in the same way. They’re a protection racket. You pay a sum every month in exchange for your health (in the case of health insurance), which will be preserved only if the collectors can’t find some way to avoid it. If you actually need the service, they cut you off. In fact, this is how insurance companies make money, by not paying claims. They don’t make money paying them.

Sure, they may pay for something minor, but the higher the claim amount, such as for serious illness or property damage requiring payoff in the hundreds of thousands or even millions, they will send in their team of lawyers  – which they can afford because of all the premiums they collected from people whom they later dumped – who can keep the judge buried in motions until the last trump – or until you die, whichever comes first.

It is no on coincidence that there exists an entire segment in law solely dedicated to insurance and why some firms solely specialize in insurance company defense. I used to work for such a law firm while in college and they were ruthless. State Farm was one of their biggest clients and all the firm did all day, every day, was  file motions and try to find ways to get their clients, the insurance companies, out of paying claims to people who had dutifully paid their premiums and now needed the insurance company to hold their end of the bargain and pay off.

Captive Markets

Since health insurance is not like most consumer goods where supply and demand control the market and prices, and where one can just “drop out” of the market if one does not like the prices/cannot afford them, people become so called “captive markets” in the insurance industry because everyone needs health insurance.

This is where corporations in the form of insurance companies come in where they take advantage of this market situation and pretty much get to do anything they want with people. They begin gaming system by, for example,  charging as much as they can in premiums and keeping prices within a few dollars of one another – also called colluding. Since people need health insurance, they are at the mercy of insurance companies and thus are forced to pay whatever ridiculous premiums they demand, including sudden premium hikes for any reason, or no reason at all. They simply can, so they will.

The health insurance industry has been engaging in such a practice for decades, and that is why there really is no difference between Anthem or Blue Cross/Blue Shield or whatever other health insurance company. The premiums are more or less the same and what is covered is also more or less the same by all. If Blue Cross drops you, Anthem won’t pick you up.

In terms of health care, this type of scheme has left people at the mercy of their insurance companies where they risk  being dropped or claims denied at every turn and for no reason other than because the insurance company can. In other words, peoples health care choices, and then ultimately the health care they receive, has for decades been determined not by their physicians really but by insurance companies that in reality are just protection rackets, a lottery. The Mafia.

While Blue Cross/Blue Shield will not come and break your legs if you don’t pay them, the fact that if you get sick you will be shit out of luck and will not receive the treatment you need is the equivalent of having some kind of terrible violence done to you because you did not make your insurance premiums (emergency rooms are not proper health care providers as they do not offer screening and preventive care. You go to the emergency room in, well, an emergency and thus as a last resort and when it is almost too late).

Organized Crime

In summary: insurance companies coerce you to buy into a lottery/racket, pass some of the cash to the only people able to stop them (Congress) and those people then vote to keep the lottery going. How is this not organised crime? In fact, insurance corporations, like the mafia, are very good at remembering to kick some of that dough back to the law enforcers (in this case, Congress).

Obamacare and Organized Crime

Obamacare, despite some of it’s strong points, such as not allowing insurance companies to drop people with pre-existing conditions, in effect supports nothing but a large scale, legislated profit racketeering whereby every citizen in this country is now required to become the customer of the health insurance mafia, under penalty of law if they do not. Other than that, nothing has changed. Insurance companies still collude in secrecy to determine premiums and prices as well as services.  They may not be able to drop you but there is nothing to prevent them from charging you, say, $700 a month for premiums if you do have a pre-existing condition etc. If you have to pay just $700 a month in premiums, you may as well not have health insurance.

Since there is no government run “insurance” side by side and competing with the private ones (the so-called “public option” that was mercilessly quashed by Congress and the dumb public),  insurance companies have no incentive to stay honest or change their deceptive practices. In other words, since there is no government-run health insurance agency  which would compete with private health insurance companies, thus maybe prompting them to actually do provide services or else risk loosing the customer to the government, insurances  – even under Obamacare – will just engage in business as usual. Obama didn’t really solve the problem and as long as insurance companies are running things and making health care decisions for you, nothing will change.

The Profit Motive

How is a government run health insurance not a profit racket you ask? Because the government, and that is key, does not have a profit motive. That is a crucial distinction people often miss. To not have a profit motive is an integral part and requirement of government as it helps it stay impartial.

The EPA, for example, has no personal interest when it regulates a company. It won’t get more or less money by anyone if it does or does not and regulating someone doesn’t cut into its profit margin – if it had one. The EPA will not gain or lose profit as a result. The EPA, therefore,  has no profit motive.

But a corporation does. Now if the EPA fails to regulate a company because of a Congress that has defunded the EPA so much it cannot do its job, then that is a different discussion. And the EPA still did not act out of a profit motive, such as personal gain for the agency if they regulate company XYZ – they simply did not receive the government funding they need to do their job. Remember Congress controls the purse and since they are in bed with big industry/pharma/banks/corporations etc., they have little interest in funding agencies that may regulate such industry.

A corporation, unlike the government, is not in business to provide a service out of the goodness of their heart, but in business to make a profit.  The corporation doesn’t care how it makes a profit, it just cares that it makes one. Period. Were it not illegal, you can bet your tutu that Blue Cross would sell crack. All corporations care about is profit. And that is why your insurance company will cut you off if you get sick (recission), why premiums continue to soar, why pre-existing conditions are screened out. Because pre-existing conditions undermine profit and premiums go up because the corporation can charge you more. Simple as that. Who is there to stop them? Congress? Congress members get bribes from them. Joe Lieberman’s wife, for example, works for Hill & Knowlton, the public relations and lobbying firm that has flacked for a gamut of gamy clients, from the tobacco lobby and the Kuwaiti government to Enron and the health insurance industry. It is no coincidnecne, therefore, that during the health care reform debate Lieberman threated to filibuster any healthcare reform bill that includes a public option – i.e. which would make it hard for insurance companies to keep up their racket scheme. 

Take all you can, give nothing back

The rule of the corporation is: “Take all you can, give nothing back“. Some 45-50 years ago, it was possible to support a family in half-decent, middle class style on one full-time wage jobs. Now, people are struggling on three. That is because, coupled with deregulation, corporations just got to do whatever they wanted.

Remember, the corporation’s ideal scenario is to have a small class rich enough to buy their product and a large class of potential workers who can be paid as little as possible, used and fired at will.

That is why the GOP, the party of greed and bigotry, hates unions, fair wage laws, worker’s comp, OSHA and all worker and employee related organizations that protect employees. Paying fair wages, benefits and thus not exploiting people costs money and undermines profit.

It if was up to Republicans and the Koch Brothers who own them, slave labor would come back, because not paying your employees anything is the ultimate profit maker. You get to collect all the benefits while giving those who worked to get you that profit nothing.

That is also precisely why the South was doing so well before the Civil War and wanted to secede and why the North would not let them: it had nothing to do with wanting to free black people because Lincoln thought that was simply the right ting to do, it was about money. The South made tons of money mainly because they did not have any labor costs, unlike the North.  The South had slaves they housed in sheds and let eat pigs feet and scraps while, literally, working them to death for 15 hours out on the field, while the owners got to lean back and enjoy the profits made at the back of other peoples’ hard work.

This is also precisely why most corporations today have moved manufacturing to developing countires where there exist no unions, OSHA or any kind of labor laws. Paying some worker in China a few dollars a day to work 12 to 16 hour shifts with barbed wires around the factory so they cannot escape may as well be slave labor.

Trickle Down

Giving corporations tax breaks does not lead them to reinvest the money and hire more workers  – which is why the whole tax break idea was coined in the first place, namely that corporations would use the break to reinvest – also known as the bullshit Reagan trickle-down economics.

What has happened is quite the contrary: when you give them a tax break, they just pocket it and give the CEO and some top people fat paychecks. Or take the money and hide it in offshore accounts for more gain or maybe build another factory in China, thus investing the money away from this country and employing non-Americans whom they pay slave-labor wages, which may as well be nothing at all.

If Apple was paying all of its employees fair, livable wages and actually paid its on-the-book tax rate of 35% as opposed to the few dollars it pays now, if that, it could not post a $ 2 billion profit. You don’t get that obscenely rich by playing fair.  That’s another thing no one tells you when the next Bill Gates or Steve Jobs is praised, namely that those guys got rich by stepping on a whole lot of people. Apple would be nothing if it weren’t for its slave laborers Steve Jobs once mocked when he was told they work 80 hour weeks.

A corporation hires exactly the number of workers it needs for the work it needs to do and pockets the rest. And often not even that. These days, people get laid off and one person is expected to do the job of four; not because the company does not make enough money and cannot pay all four, but because having four people do the job of four if one person can presumably do it, cuts in the million-dollar bonus check of the CEO and we can’t let that happen because he pulled himself up by the bootstraps and worked really hard blah blah yawn. At least this is the lie people in this country believe, namely that everyone who got rich did so exclusively through hard work and dedication. A myth I will dispel in another entry.

Profit Rackets as Purveyors of Our Health

In the health care debate, insurance companies need to be taken out of the equation. We need to stop making them the purveyors of our health, so to speak. Not to mention that someone’s health is not a commodity and health insurance not a product but service. You pay into a pool and then when you need it, you get paid back.

If insurance companies actually did what they were supposed to do, namely pay claims, then we would not even have this debate. But because they are a profit racket, honesty is not in their vocabulary, because honesty doesn’t make you obscenely wealthy. Wealthy yes but not 400% more than the average worker wealthy.

Unfortunately, much like a lot of his policies that have remained half-cocked, Obama did not really regulate the health insurance industry  when he decided to sign into law that we must become their customers. And without seriously regulating them we are exactly back at where we started: millions of people at the mercy of their insurance companies, now with just a whole lot more paperwork. The only ones who will win here are the crooked insurance companies that will be served millions of Americans on a silver platter.

And how could Obama care? He, much like Congress and despite all protestations to the contrary, is owned by the business interests of insurance companies. He is a slave to them, just like Congress. Since insurance companies have lobbyists stationed in DC whose entire job it is to bribe lobby our legislators so they continue not only supporting them but also turn a blind eye to their deceptive practices, the organized crime aspect that constitutes the practices of insurance companies, or in this case health insurance companies, comes full circle. And people who oppose the public option and universal health care are essentially just advocating for our health to be in the hands of the Mafia. The  insurance Mafia.