February 18, 2008

Oddities of Health Insurance

Health insurance surely must be one of the oddest things in existence in the Western world, indeed within the realm of insurance itself. The normal idea of insurance is protection against a disaster which one otherwise could not, or could only with difficulty, recover using one's own funds. To this end, a insurance corporation pools risk, betting that calamity will not befall all of its policyholders at once, and the policyholders bet that the insurance company will be able to pay out the insurance when it is needed.

This comparison between health insurance and other sorts of insurance brings out several very important points. First of all, insurance is not maintenance. We do not use automobile insurance to pay for maintenance on cars. We do not use flood or water damage insurance to replace the roof. We do not use the Federal Deposit Insurance Corporation to cover checking fees. Why do we use health insurance to pay for routine health costs?

Some people see no reason to, and some people have no need to do so. There seems little point in forcing people who can afford to do without health insurance to purchase health insurance. Simply not having health insurance does not mean that a person cannot pay their health care bills, nor does it mean that they aren't going to care for their health.

Lastly, an insurance company needs to be reasonably certain that it won't have to pay out more money than it possesses. It is a logical impossibility for the insurance possibility to pay out more to policyholders than it actually owns. It is one of the cruel facts of life that insurance companies can't cover everyone. If we try to make them cover everyone, there is a good possibility that they'll go bankrupt right when we really need them.

By this point it should be clear that I think universal health insurance is a misguided idea. It sounds nice, but it's more likely to make insurance companies go bankrupt as they pay too many people. Various plans advanced by current politicians also have enforcement plans that are disturbingly close to making health insurance a protection racket administered by the government.

Dream Sequence


GOVERNMENT HEALTH INSURANCE THUG: "Hey, Joe Taxpayer! You're looking kinda ill, you know? I'm worried about you, you haven't bought your health insurance this year."

THE THUG'S MUSCLE: "Yeah. He's looking pretty sick."

JOE TAXPAYER: "Well, you know, I make enough now that I can afford to pay for my checkups myself. I don't think I'll need it, but the wife convinced me to buy some high-deductible insurance in case of an emergency. I just didn't want to buy the health insurance."

GOVERNMENT THUG: [shakes head sadly] "Joe, Joe, Joe. But what if something was to happen to you? What would your family do?"

JOE TAXPAYER: "I told you, the emergency insurance, and I've got life insurance, and disability insurance too-"

GOVERNMENT THUG: [interrupts] "Uncle Sam's gonna be real disappointed in your shortsightedness. We're like a family, you know? If you can't take care of yourself, Uncle Sam's just gonna hafta stash away some of your money for you. It's for your own good."

JOE TAXPAYER: "He's going to take-"

[MUSCLE steps forward menacingly, flexing his muscles.]

MUSCLE: "You could go see Uncle Sam in person in the courthouse, if you gots a problem."

[JOE subsides.]

JOE: "Yeah, sure, I get it. Okay, I'll buy the insurance already."

GOVERNMENT THUG: "I'm glad to hear that, Joe. You're looking better already."

[GOVERNMENT THUG and MUSCLE saunter away- for now.]


I think we can trust the electorate of the United States, and the insurance companies, to know what risks they can and can't afford to take.

If people were able to choose more about their health care, they might be more inspired to ask hard questions and engage in preventative care. To that end, I think that health care savings accounts are valuable. By giving people a financial stake in their own health, it encourages them to seek the best value for their hard-earned money. A health savings account is a respectful and productive way to engage people in raising the quality of their own lives and improving health care.