Many moons ago, there never used to be health insurance. Not that people never fell sick; it’s just that they had other ways of dealing with health problems. They were never guaranteed of getting money for the medical bills, but they still lived happily then.
The secret to their existence lay in a closely-knit society. When one fell sick, the community would come together and contribute money for the medical bill. Fundraising would be made and the bills would be paid by all means.
The more popular you were in the society, the more the people would show up with their pockets when you needed them. This approach forced everyone to be an active member of the community. Evil people lacked this social capital which they could exploit when in need. So did the thieves, witches, outcasts and all the people who were not in good books with their neighbours. Everybody strived to stick to the straight and narrow path because no one knew when disaster would strike.
In general, the society thrived fairly well. There were a few cases where the bills were too high, or the call came during a famine when people had very limited resources. Those were some unfortunate moments, but they were just an exception, not the norm.
But then, things began to change. Urbanization quickly began to take root. People began to live in places where they did not know their neighbours. Social ties were broken and a new system that favoured individualism began to gain acceptance. The old system could not work.
That is when Mr Mwangi, elsewhere known as Mr Smith, began to analyse the challenges presented by the new development and came up with a solution. Instead of people coming together to contribute money when one person fell ill, he could collect a little amount of money from each person every month, then go ahead and pay any medical bill that showed up. Brilliant idea!
New Social Order
People loved this new approach. No longer would they need to pretend to be good to their neighbour. No longer would one need to attend useless social events to maintain good social credit. Most importantly, they would not have to fear the risk of falling sick during the dry season. That is how insurance was born. Most people of means were happy with the new system. The rest had no option but once the bigwigs jumped ship. The old system died.
But Mr Mwangi/Smith also needed to make money. He realized that he does not have to pay all the claims presented. He came up with terms and conditions to govern the health insurance industry.
Up to date, we are still trying to understand those terms and conditions.