Wednesday, February 3, 2010

NOW! Blog » How insurance companies make money by cutting off customers - A WellPoint Study

by Jason Rosenbaum in Profits Before People

Insurance is supposed to be about spreading out risk among a large number of people. In health insurance, the theory goes that everyone can pay a little bit every month into a large pool. If someone who pays into the pool gets sick, that large pool covers their expenses. Because there are enough people in the pool and only a certain percentage are sick at any one time, it's possible to design a system where people can afford to be covered for their illnesses when they happen.

Under this theory, wider coverage is a good thing. More people paying into the pool means the risk is more spread out. But Wall Street run insurance companies have perverted this system. Instead of striving for the largest risk pool, insurance companies can make more money by selectively insuring only the least risky people and cutting out the rest. In other words, they make money by cutting membership.
Continue Reading
Reblog this post [with Zemanta]

1 comment:

  1. this is my first come to your blog,and i read agood information that you put in here..good job i like it
    keep going thanks.