Skip to comments.Risky Business (Thomas Sowell)
Posted on 08/27/2012 2:28:04 PM PDT by jazusamo
Insurance is all about risk. Yet neither insurance companies nor their policy-holders can do anything about one of the biggest risks namely, interference by politicians, to turn insurance into something other than a device to deal with risk.
By passing laws to force insurance companies to cover things that have nothing to do with risk, politicians force up the cost of insurance.
Annual checkups, for example, are known in advance to take place once a year. Foreseeable events are not a risk. Annual checkups are no cheaper when they are covered by an insurance policy. On the contrary, they are one of many things that are more expensive when they are covered by an insurance policy.
All the paperwork, record-keeping and other things that go with having any medical procedure covered by insurance have to be paid for, in addition to the cost of the medical procedure itself.
If automobile insurance covered the cost of oil changes or the purchase of gasoline, then both oil changes and gasoline would have to cost more, to cover the additional bureaucratic work involved.
In the case of health insurance, however, politicians love to mandate things that insurance must cover, including in some states treatment for baldness, contraceptives and whatever else politicians can think of. Playing Santa Claus costs a politician nothing, but it can cost the policy-holder a bundle all of which the politician will blame on the "greed" of the insurance company.
Insurance companies are regulated by both states and the federal government. This means that, instead of there being one vast nationwide market, where innumerable insurance companies compete with each other from coast to coast, there are 50 fragmented markets with different rules. That adds to the costs and reduces the competition in a given state.
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Thanks for the ping. Dr. Sowell rocks!!
” If automobile insurance covered the cost of oil changes or the purchase of gasoline, then both oil changes and gasoline would have to cost more, to cover the additional bureaucratic work involved.
In the case of health insurance, however, politicians love to mandate things that insurance must cover, including in some states treatment for baldness, contraceptives and whatever else politicians can think of. Playing Santa Claus costs a politician nothing, but it can cost the policy-holder a bundle all of which the politician will blame on the “greed” of the insurance company. “
Sowell is almost too good to be true. I said ALMOST : )
I love it when he brings that out in a column and he has in many different wordings.
Hear! Hear! As Dr. Sowell has pointed out for decades, the same is true when services are provided by government. It just makes things more expensive, and drains more money from the voluntary economy.
Political interference with the actuarial treatment of risk has converted insurance into semi-gov't, fascist social welfare enterprise.
Yep, and always a damning indictment of the politicians.
” Political interference with the actuarial treatment of risk has converted insurance into semi-gov’t, fascist social welfare enterprise. “
Exactly the intention. Wait until they tell you what you can eat, or how often you can eat it.
The left can only wish that it had a “Thomas Sowell” on its side.
Insurance, an interesting thing. I’m betting I’m going to get hurt or die; the insurance company is betting that I won’t!
Not dissimilar in key ways.
BUT what hasn't been pointed out is that opportunistic insurance industry lobbyists work with politicians behind closed doors, and sometimes openly as advisors in hearings, to write legislation, usually at the expense of their less connected and/or smaller competitors.
Would some like an unregulated, free(ish) national market? Perhaps, but, still, they make the best of it with special emphasis on restricting competition. Most viable insurance companies and benefits administrators on the whole are thriving even in an inherently challenging, complex business environment. It's the insured-- and surprisingly govt third party payors who shoulder higher costs they created-- who lose.
How those unintended consequences of direct government interference in private enterprise proceeds into the public arena is another thread.
Thanks for the ping jaz. Mrs. RQSR just commented “He nails it everytime”.
Thumbs up for Mrs. RQSR! ;-)
Yes, Ted Kennedy said years ago that this was how they would eventually get nationalized health care. They would make the cost of insurance and health care unaffordable so that people would clamor for a government system. I’m sorry to say the scheme is working. I will never understand why people ask for more government to fix a problem that was created by government. *sigh*
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