If we made it easier for people to buy health insurance for themselves, instead of needing to rely on their employers to provide them with it, then your friends could have shopped around for a plan that would suit them. The problem your friends had was not with insurance companies–it was with a system that discourages choice. I once had a bad experience with a major electronics retailer. From that point forward, I stopped shopping at that retailer. (Incidentally, that retailer recently went out of business, but I assume I'm not directly responsible for that:)). That's how the free market is supposed to work. If consumers have a true choice, companies compete for their business, both by providing a better product or server, and by keeping prices competitive. The current system discourages choice by tying health insurance to employment, and also by creating regulation that makes it difficult for start-up companies to enter the market in order to provide more competition.

Over the years I have heard many stories from my younger and poorer friends about health insurance problems. One of the worst is the young couple, both on the husband's employee insurance plan, who both had serious asthma. The company did not see why they had to give them both rescue inhalers–as it they were together all the time! Also, the young woman had juvenile diabetes (most of her life–and she was then 21). The company refused to allow the type of insulin care her long-term physician ordered, which of course infuriated him. Naturally, when the young man lost his job, they could not get any kind of insurance to cover their needs as they had prior conditions which could not be covered. Many diabetics whom I know have little or no chance to get coverage unless they have a good employee plan like the federal government has for its workers.

But tough luck, right?

So we should order the more expensive one first? What if the cheaper one is able to make the expensive one not necessary most of the time? Doesn't this contradict the recent talking point from the left–that we pay for too many unnecessary tests as it is. You've just disproven that point by showing that insurance companies already have an incentive to control costs by limiting potentially unnecessary testing. If you have evidence that we would save money by going straight to the MRI, I'm sure the insurance companies would love to see it.

“It is routine for insurance companies to require authorization for many treatments, and this authorization may require your doctor to submit piles of paperwork and sit on the phone for an hour.”

Although I think there can be improvements in this area, I think it's fair to say you're exaggeration a bit. And if the alternative is to just authorize everything without question, that doesn't sound like the plans from the left either. Obama constantly repeats how we should stop doing tests that have proven to be wasteful. That means someone's going to have to make that decision, and my guess is it might require some paperwork.

“And as for the development of new treatments, I would like to point out that not a single new drug, not a single new treatment, not a single scientific breakthrough has ever been made by an insurance company.”

Yes, and not a single car has ever been produced by an auto insurance company.

“Pharmaceutical companies, research universities, and innovative physicians/scientists will continue to do these things, and their discoveries will continue to be tested scientifically before being administered to the general population.”

And the new procedures and medications will need to be paid for, and often they will be more expensive than the average consumer can pay for out of pocket, therefore, there is the need for a third party that is willing to take on the risk of needing to pay for these things for a particular patient, in exchange for the patient paying a monthly sum of money. We'll call these third parties… insurance companies.

(Please note: I have made clear before, and I make clear again, that I recognize that our system needs changing. I've made my positions clear on other threads before, and I believe my proposed changes are actually more significant than Obama's. In an issue as complicated as this, it is impossible to outline one's entire position in one comment in a blog post. So before anyone claims that I'm defending the status quo, please search some of the previous threads. My point here is to argue against the point that the insurance companies are worthless and are making the system worse. Is there room for them to improve? Yes. Should we impose some regulation on them to make the system better? Yes. Are they responsible for all of our woes? No.)

Second, the verdict against insurance companies doesn't make sense on its own, because the fraud business model simply doesn't work. Your “they have lawyers” argument doesn't explain how health insurers are uniquely able to make fraud pay, because *every* company has lawyers. Health insurers do indeed have customers evaluating them, though they're more often HR departments than consumers (a serious deficiency we should fix, but I've already written about that). Perhaps you're suggesting HR departments don't care whether they're signing an honest insurer or a fly-by-night outfit? If they do the latter, they are themselves exposed to lawsuits. Job number one in every HR department is keeping the company out of court.

Finally, your claim is hard to believe because it's so convenient. It plays into the corporations-are-evil-you-must-trust-the-government mantra of leftists so tidily that if it weren't true they would have a strong temptation to make it up. I'm not really suggesting they did, but I am suggesting a rumor has evolved from somewhere, it's in their interests not to ask too many questions about it, and they haven't.

Ok, my analogy sucks, but still. I have some of the best insurance out there, plus I'm a young and healthy white person with and excellent job but no children [read all: "I am highly priviledged"] and I STILL can't count on one hand the number of times my insurance tried to get out of paying one of my claims. Since we all have multiple stories like this (c'mon, you know you do!), why is it all surprising that people who aren't young and healthy and willing to sit on the phone for hours or maybe don't speak English well or just aren't quite as loudmouthed as I am or can't afford to hire a lawyer or whatEVER — why is so hard to believe that those people might have a hard time getting their appointments and treatments and medications paid for?

In a single-payer system, if you need to see a doctor or if you have an emergency, you just walk into the doctor's office or the hospital ER, show them your card, and get taken care of. You don't have to worry about how to pay for it or whether your insurance policy will cover it. Freedom remains. Choice remains. The only thing that leaves is the worry of being saddled with mountains of medical debt.

2. “Why don't they do business this same way?” Generally speaking, they do. Not to everyone, not every time, only when they think they have a good strong case for getting away with it.

3. “Why haven't they shut health insurers down?” First: good question. Second: insurance companies have excellent lawyers.

“Are there any actual statistics on what fraction of claims insurers fraudulently deny?”
Ah, see, here's where those lawyers come in. They would object to your use of the word “fraudulently”. Your “fraudulently” would be their “totally justafiably”.

Um… there are reasons such a system would increase “freedom” (whatever that is), but it certainly doesn't increase competition. It's not supposed to.

What I'm trying trying to figure out is how such a question, qwert, has to do with this post? I don't see anyone, within the context of this post, has said anything about single payer at all.

If you need a summary of this post, here's a quick-n-dirty stab at it, since maybe you forgot to read it: Person in WSJ says “my insurance is awesome, so everyone's insurance must be awesome, so don't change the system”. Author of post says “well ain't that special that you've got great insurance, but in the real world down here on the ground, most Americans aren't quite so lucky; here's the evidence of that”. Actually, instead of “lucky”, the post uses the word “priviledged”, which is indeed the perfect word.

Notice: no talk of single payer. What's the logical fallacy for making an argument against a point that isn't being argued?

But the claim that insurance companies habitually deny contractually-promised coverage has the ring of an urban legend: a scary story that imparts a strong moral but doesn't quite add up. Consider:

1. Established companies generally avoid fraud because they're concerned about their brand and reputation. If health insurers make a habit of cheating people, why haven't their customers dried up?

2. Other types of insurance companies have the same profit motive and face the same temptation to deny coverage after the fact. Why don't they do business this same way?

3. States have regulatory bodies that do nothing but oversee insurance companies and investigate claims of contract violation. Why haven't they shut health insurers down?

Are there any actual statistics on what fraction of claims insurers fraudulently deny?

And how does having a government single payer system increase freedom and competition?

Answer:

Lobbyists, hands down.