Insurance, Evil People, and Economic Efficiency

The NYT had a peculiar article today presenting some of the people who work in the insurance industry to its readers. As the article indicates, they don't seem like evil people, just normal workers trying to support themselves and their families. It is not clear why anyone would have expected the workers who fill the industry's offices to be evil people. The argument made against the industry is that the structure of the industry causes it to profit by preventing people from getting coverage and that it adds an unnecessary layer of administration to the health care industry. The first point is straightforward. Payments for health care come dollar for dollar out of the industry's profit. If an insurance company can avoid paying for its customers' care, then it increases its profits. The industry is arguably unnecessary since it is not directly involved in providing care. Medicare pays the checks for care at far lower administrative cost than the private insurance industry. Neither of these facts makes the individuals who work in the insurance industry evil people, just as oil and coal workers do not become evil people because burning fossil fuels cause global warming. Nor is a government employee an evil person because they may work in a pointless bureaucracy. It is not clear why anyone would have thought that the individual workers in the insurance industry were evil, but if anyone did, the NYT did a valuable service by correcting this impression.

--Dean Baker