The issue isn't that insurance companies are evil. It's that they need to be profitable. They have a fiduciary responsibility to maximize profit for shareholders. And as Potter explains, he's watched an insurer's stock price fall by more than 20 percent in a single day because the first-quarter medical-loss ratio had increased from 77.9 percent to 79.4 percent.

The reason we generally like markets is that the profit incentive spurs useful innovations. But in some markets, that's not the case. We don't allow a bustling market in heroin, for instance, because we don't want a lot of innovation in heroin creation, packaging and advertising. Are we really sure we want a bustling market in how to cleverly revoke the insurance of people who prove to be sickly?

I have a problem with the concept of medical insurance companies. The goal of a corporation is to maximize share-holder value. Officers and employees of the corporation are negligent if they are not pursuing that goal as rigorously as possible within the confines of the law. Only we are not talking about using market forces to drive innovation to make the best, cheapest, yet acceptable widget. We are talking about the lifespan and quality of life of a human. Can you imagine the concept of Planned Obsolescence applied to healthcare?

A more chilling (and often overlooked) point is that the entire purpose of insurance is to protect you from the effects of rarely occurring but catastrophic events. So you have in place a system whose function is to be as profitable as possible when its customers are struggling with the most damaging and life altering events that can occur. Yet the needs of the medical insurance corporation seem completely perpendicular to the needs of the patient.

I have a very difficult time reconciling this.

Rescission