Comment by fsckboy

>Part of the problem is that the existence of the middle man adds a lot of costs: insurance company salaries, their executives, doctor's office billing coding, advertising, etc.

that's not a sophisticated analysis. it would be like saying mcdonalds is unecessarily expensive because executive pay, and cars, and dry cleaning, etc. etc. yet, if you tried to found a competitor, you'd have all those same expenses. even charities have to pay management.

insurance companies make money because their aggregate risk is less than your individual risk, and you really don't want your individual risk so you are willing to pay them extra, a premium, to get them to shore up your downside. After that it's like any other company selling any other thing.