Health Insurance- For-Profit or Nonprofit

If a Government is going to compel you to buy insurance, shouldn’t the insurance be nonprofit?

Originally published by Being well on Medium

Photo by Bermix Studio on Unsplash

The concept of a nonprofit organization is misleading, as it sounds like the latter system is built solely on humanity and care for others. For that reason, we often hear criticism such as healthcare has become for-profit and insurance companies or healthcare institutions, in general, should be not for profit- if they meant to deliver quality medical care for everyone.

The notion's rhetoric elevates almost every soul; however, it is practically far from reality. Because some of the most robust insurance systems and managed care organizations in the United States are nonprofit (like Kaiser Permanente) yet in 2019, the leading managed care organization had $7.4 billion in revenue. And it is one of the biggest and the first provider of Medicare advantage and participant of the Affordable care Act (ACA). Therefore, most managed care systems that have partnered up with ACA are nonprofit.

But what is a non-profit organization?

A nonprofit organization (NPO) (also notorious as a non-business entity, not-for-profit organization, or charitable institution) is traditionally applied to promoting a particular social cause based on shared values. It is designed to use its revenue surplus to reinvest rather than divide its proceeds to the organization’s shareholders, leaders, or affiliates. A Nonprofit organization is to serve as the public extension of a government’s revenue department. For that reason, they are exempted from paying tax on the money that they receive for their organization. They can operate in religious, scientific, research, or educational settings.

Nonprofits’ critical slants apply to liability, trustworthiness, rectitude, and openness to every person who has invested time, money, and faith in the organization. The former is something that is the subject of considerable controversy.

Not distributing its profits to any private individual is the crucial difference between nonprofits and for-profits. Besides that, the executives of the system still get salaries and salary raises. In reality, the term “nonprofit” is misleading, as numerous nonprofit organizations even take in millions of dollars annually and consistently run in the dark. A few are vision Service Plan, Red Cross, Volunteers of America, United Way, and Pride Industries.

To fulfill a nonprofit’s mission and vision, the company needs a steady stream of income. Think of programs like “service” and fund development. To support earnings, one must raise awareness. Raising money, ongoing community involvement, finding opportunities for others to help, formulating the annual fund extension & public relations plan, and making it all happen with the support of the Executive Director, Board of Directors, and an army of excellent volunteers.

What is health insurance?

Insurance entails collecting funds from many insured entities, also known as exposures, to pay for the losses that some may acquire. Therefore, the covered entities are immune from price risk. The set value of the latter is dependent upon the frequency and severity of the event occurring. To be an insurable risk, the risk insured against must meet specific characteristics. Insurance as a financial emissary is a money-making enterprise. They are also a considerable portion of the financial services industry.

Health insurance is coverage that embraces the whole or a part of the risk of a person sustaining medical expenses, spreading the risk over many persons. By approximating the overall risk of “health risk” besides “health system costs” over the “risk pool,” an insurer develops a finance structure, such as a once-a-month premium or personnel tax, to provide the money to pay for the healthcare aids specified in the insurance negotiation.

Insurance is a Business, hence for-profit

Health Insurance industries are not charity organizations. Like every other business, they will pivot their strategies and often even their vision and mission to maximize profit. Unfortunately, the mainstream public holds a different mindset. The average soul believes that healthcare costs can only be paid for by the third-party entity, which often pertains to the for-profit insurance industry.

To maximize their profit, insurance executives take decisive strategies to exploit income. Governments and or private organizations regulate the modern insurance industry. Nonetheless, to widen their profit margin, insurers often utilize various avenues, including lobbying, manipulating the social determinants of health and sickness, legal kickback privileges, and maintaining non-transparency to factitiously present costs and high patient premiums. For instance, health Insurers are collecting details on public information. They can predict our health costs based on more information that happens, and R & D like race, marital status, how much T.V. we watch, whether we smoke, or even buy plus-size clothing. These are data that could raise our health premium rates.

Along the way, insurance companies have partnered up with administrations through subsidies and legislative loopholes. Affordable Care Act and Medicare Advantage are a couple of many scenarios where insurance companies have tapped into the public funds. Even with full access to the taxpayer’s money, 3rd party payers have still maintained flexibility to patients under ACA via co-pays and deductibles. For example, the eligible patient for ACA not uncommonly pays a co-pay as high as $300 for a simple chest X-ray.

Some advocates of universal healthcare coverage propose Forcing insurance companies to become nonprofit organizations, notwithstanding the possible constitutionality clause of such a move by the administration. Besides, there are already 3rd party payers that are practically not for profit, still making billions of dollars for their executives.

The Insurance Industry will always Strive to keep Healthcare Costs High.

The insurance industry will always want to make the public ancillary on their mission. And to prevail, will refuse to be transparent, deter accountability, and manipulate governments to pave their way for ultimate financial reign. Legal kickback is one such example.

Kaiser Permanente (K.P.) in northern California (the frontrunner of the managed care system) functions as a parasol for many medical groups, the Permanente Medical group. While K.P. is seemingly a nonprofit, the medical groups that form the network are for-profit companies. About 50% of the Kaiser Permanente umbrella’s profits return to these for-profit entities. In 1973, the CEO of Kaiser introduced the network’s business model. In the circle of K.P., Permanente Health Plan, and Permanente Medical Group, the total incentives are toward less medical care because the less att