A License to Live

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President Obama and Congress want to ensure that everyone has health insurance. At this writing, one of the methods under consideration to bring this about is the “individual mandate.” Put simply, the individual mandate would require that people who do not have health insurance paid for by their employer or the government buy it themselves.

To many, this sounds like a modest, humane proposal. What could be wrong with requiring that everyone enjoy the benefit of health insurance?

Lots.

Proponents of the individual mandate often argue that it is akin to the requirement that you buy insurance to drive a car. But all that is required for driving is liability insurance covering injury to others and damage to their cars. You are not required to insure against injury or damage to your car or yourself. The equivalent for health insurance would be to force you to buy coverage only for the harm that you might cause to others accidentally, by giving them chickenpox, for example.

More fundamentally, you don’t even have to buy car insurance if you choose not to drive. The equivalent for health would be what, exactly? You wouldn’t have to buy health insurance if you chose not to what? Not to live? Would you need insurance to get a license to live? Could it be revoked?

(You stand at the cash register of your shop. A burly man in a fedora and a double-breasted suit walks in and offers to sell you insurance. “Insurance against what?” you ask. “Like if something bad should happen,” he says, smiling. “I don’t want any insurance,” you say. “Sorry pal, you got no choice. It’s like a mandate,” he chuckles. “What’s that mean?” As he leans across the counter his smile is replaced by a cold look. “It means you gotta pay. Everybody pays. We’re all in this together.” You shudder.)

But let’s step back for a minute. Why is the government so keen to force people to buy health insurance in the first place? And Why must people be forced to buy something that seems so obviously good for them? Is the government more concerned about their health than they are? The answer to these questions lies in the actuarial tables, community rating, and proposed progressive pricing system.

To illustrate, let us examine the case of a hypothetical citizen: Doug. Doug is 60 years old. He is retired. He is a non- smoker and moderate drinker. He exercises regularly. He is in good shape. After 40 years of hard work and frugal spending, Doug has paid for his home, has no debt, and has a few million dollars spread among various assets. Doug has carefully examined the cost of health insurance available to him and has chosen to self-insure, which is to say, if he gets sick, he’ll pay the bills himself.

Doug made this decision because the health insurance policies available to him have lifetime caps smaller than what he could comfortably pay on his own and because the premiums he would have to pay for the coverage are based on the risk of a group of people who are far less healthy than he. In short, Doug decided that the available health insurance was, for him, a bad deal.

And all the actuaries who advise the government about healthcare policy know that Doug is right.

Here is the answer then: the government is keen to force Doug to buy health insurance that he doesn’t want in order to subsidize the relatively more expensive healthcare costs of higher-risk people who are less able to pay. Doug, and all other relatively healthy people, must be herded into the same risk pool with the high-risk, unhealthy people. When every- one is in the same risk pool and charged the same premium, community rating will have been achieved. Community rating is considered a moral imperative by its proponents. Their websites are positively thick with imperatives.

(As an aside, if you stake out the position that a person has no choice, that he must buy health insurance, can you still call yourself “pro-choice?” In order to call yourself “pro-choice,” shouldn’t you at least allow a person to look over the optional health insurance packages, peek at the price tags, and choose “none of the above?” In a way, this involuntary health insurance sounds more like a “pro-life” position, doesn’t it?)

Recall that we’re talking here about those who aren’t already covered by their employers or the government. Would everyone in the grip of the individual mandate really pay the same premium? Well, no. The government, we are assured, would devise a progressive subsidy that would taper off until it reached, say, Doug, who would get none. And because the wealthier tend to be healthier anyway, the formula is this: the lower the risk, the higher the out-of-pocket premium. Imagine car insurance working that way. The worst drivers would pay the lowest rates, or none at all, while the best drivers would have to pay the highest rates. Fairness, always a slippery concept, has just slithered away.

(By the way, if Doug lived in Oregon, would his individually-mandated, government-approved health insurance policy cover assisted suicide, even if it meant that his monthly premiums would stop? Just curious.)

When a government takes a person’s money by force, it is a tax, no matter how it has been gussied up. When that money is used primarily for the benefit of a third party, it is a transfer payment. It remains a transfer payment even when the money has been laundered through a dummy insurance corporation, the reins of which have been legislatively snatched away by that government.

The plan is clever, though, because the majority of voters, those already covered by their employers or the government, see nothing personally threatening in it, and those being offered someone else’s money to help pay their premiums will find it tempting to accept the bribe quietly. (They came for the self-insured, but I didn’t speak up, because I wasn’t self-insured.) They will overlook the fact that the plan gives no one the freedom to say, “No, thank you.” They will overlook the fact that individual mandate would take away a measure of both responsibility and freedom from everyone.

“If Mr. McMurphy doesn’t want to take his medication orally, I’m sure we can arrange that he can have it some other way. But I don’t think that he would like it.” – Nurse Ratched, “One Flew Over the Cuckoo’s Nest”

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