Do we even know what insurance is?
Friday, October 31st, 2008 By Mike MaurerHere is how the Washington Post describes one element of Obama’s health insurance plan:
“Forbidding insurance companies to reject anyone or charging more if they are sick.”
A Forbes opinion piece describes it this way:
How hard is this? Why do serious and intelligent people write this stuff? Consider:
You have a car. I have a car. We both go to buy car insurance. My car is all smashed up from an accident. Your car is not. There are three, and only three scenarios here.
One is that the insurance company accepts you and rejects me. This is the correct outcome, because I’m not buying insurance, a payment for a risk. I’m buying a repair.
The second outcome is that the insurance company sells us both “insurance” at a rate that reflects true insurance rate, which is to say, the rate that it accepted you for and rejected me for in the first scenario. This means that there has been a wealth transfer from the insurance company, its shareholders, to me, to repair my car. This is a grossly unfair welfare transfer and will eventually drive people out of that business and into other investments.
The third outcome is that the insurance company sells us both insurance, but at a rate reflecting my known-cost. This means the price you pay will be much higher than the true insurance rate (because you’re not buying insurance, you’re simply paying for my repair, or half of it, anyway, in this scenario). This is also a welfare transfer, from you to me.
Only one scenario is insurance. All others are welfare.
If we’re going to have welfare, let’s have it. But don’t call it insurance. And no one, absolutely no one, not newspapers, not responsible people talking, and certainly not insurance companies, should call this insurance.
October 31st, 2008 at 8:07 pm
Call it insurance, call it welfare, call it whatever you want. Obviously, any government plan to extend health coverage to people who cannot otherwise afford it involves a cost, a cost that will ultimately be paid for by people with money. That is how the government pays for everything—our army protects poor people along with rich people, poor people drive on the same roads as rich people, etc… The only question is: do we as a country wish to include health care on that list? I hope that we do, perhaps you do not. That’s why we have elections.
November 2nd, 2008 at 10:57 am
Thanks for the post. It’s forthright, fair, accurate, all the good stuff. If only our elected representatives could do so well. (I’ll quibble with you another time over whether it does indeed matter what we call it; you’ve got the main issue spot on.)
November 3rd, 2008 at 1:37 pm
Token Liberal, the policies that government must put into place to extract money from “rich” people to include health care on the list would result in fewer rich people which in turn would result in government’s lesser ability to take money from the rich people. It is silly to assume that Rich people will continue to happily do what they do when government extracts 62% of the profits, which is what Obama is proposing. Once the rich people opt out, jobs are lost and the economy collapses. That’s the real danger of socialism and Mike, that’s the main issue.
November 3rd, 2008 at 2:02 pm
Oh, I know you’re right, Marc, but Token Liberal buys into the socialists’ basic tenet, that welfare is a state purpose-and state purposes need paid for, which is taxes. At least he’s an honest voice, unlike all the Democrat and Republican socialists that deny what they’re doing. Heck, I’m thinking he’s George Voinovich, that great budget-balancer.