There’s an advertisement running on social media that markets an insurance scheme, highlighting the marvels of the corporation’s smartphone application. The basic message is that the app makes insurance easier.
The ad seems to be dancing cleverly around misleading or false advertising and deceptive practices but rests, ultimately, on providing what it says on the label (a smartphone app), and buyer beware — consumers should know that there are complications and risks ahead.
Beyond the app lies a warren of regulations, exclusions, carefully curated underwriting procedures, risk classifications and even rescission. Insurance can be revoked while you’re on the operating table if you have not asked for approval from medical insurance companies for doctors to save your life.
Most people who can afford to do so buy private medical insurance because they have been convinced, through a normalised collusive pact between the state and corporations, that healthcare is best provided privately than as a public good by the state. The corporation relies on people buying medical insurance to cover healthcare, notwithstanding price increases.
The evolution of corporations
Let me situate this in that long-run historical arc of capitalism, as I am wont. One way of looking at the warren referred to above is the idea that medical insurance corporations are obligated to increase value (profits) for shareholders and to remove risk more so than they serve the public or policyholders. In economics-speak, we refer to risk-free maximising profits.
This obligation has become firmer since the early to mid-1800s, when corporations moved from being family-capitalist organisations to being institutions of financial capitalism run by managers, bankers, financiers and the representatives of investors. For what it’s worth, the history of the relationship between capitalist enterprise and “economic diplomacy” in the 20th century has quite marvellous historical antecedents in the Venetian Republic (697-1797 CE) or the Ottoman era (1299-1922 CE).
Anyway, at the operational level there emerged by the late 1800s a separation of ownership and control of corporations. John Kenneth Galbraith drew attention to this in the 1960s. It is, actually, the day-to-day managers and administrators who are ultimately responsible for the underwriting principles, guided as they are by the objective to make the company profitable and strengthen the industry.
Healthcare vs. shareholder value
These actors and agents are employed to maximise profits for shareholders, which may mean avoiding paying insurance claims. Investors do not want to be involved in the management and administration of corporations. They want to see only increases in the value of their stocks — profit. Providing healthcare was once driven by the Hippocratic oath; it is now driven by the principles and practices of medical insurance corporations and shareholder values.
Under current global conditions there is nothing clandestine or treacherous about this. It depends only on your ideological bent and whether you think corporate control and dominance of financial capitalism is a good or a bad thing.
We may, of course, choose to leave or ignore unpleasant truths, as Galbraith suggested in his 1966 BBC Reith Lecture, “The New Industrial State”. Or we can chisel away at the economics orthodoxy that has made all of the above “normal”, and the insistence that “there is no other way”.
It all ought to go back to educational instruction, to which I will let Galbraith have the last say. “The arrangements by which orthodoxy is conserved in the modern academy also remain formidable. In its first half-century or so as a subject of instruction and research, economics was subject to censorship by outsiders.
“Businessmen and their political and ideological acolytes kept watch on departments of economics and reacted promptly to heresy, the latter being anything that seemed to threaten the sanctity of property, profits, a proper tariff policy, a balanced budget, or which involved sympathy for unions, public ownership, public regulation or, in any organised way, for the poor,” he said in his presidential address at the 85th meeting of the American Economic Association, in 1972.
Which leaves me to say only, beware of what the smartphone app promises.
• Lagardien, an external examiner at the Nelson Mandela School of Public Governance, has worked in the office of the chief economist of the World Bank as well as the secretariat of the National Planning Commission.
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