What’s the Point of Insurance if it’s Not Socialism?

This post is derived from a conversation I had on Facebook with a middle-aged Californian.

Q: What’s the point of insurance if you can’t force people to cover treatments they’ll never use (e.g. charging men for women’s birth control pills)?

A: Are you saying that you do not understand the difference between managing risk and redistribution of known costs? I can explain this to you.

Think about how your car insurance works. It insures you against collisions and the associated liability- a situation that has a low chance of occurring, but is associated with high costs. When you pay your premiums, you are buying the mitigation of risk. If you have a 5% chance of incurring $20,000 in damages each year, then your customer group is costing the insurance company an average of $1000/year. So they charge you $1170/year, spending 15% on bureaucratic overhead, and walking away with a 2% profit margin for the service of converting your individual risk into a certain, statistically-weighted charge.

But in situations where the chance of a cost being incurred are either 0% or 100%, it makes no sense to buy insurance. If the chance is 0% (e.g. the chance of a man needing an abortion, or the chance of a woman needing Viagra), then your risk is zero, and the insurance company has nothing to offer you on that plan. If the chance is 100% (or you have control over the event’s occurrence), such as with birth control pills that you know you want, or that vasectomy that a guy chooses to get at a particular time in his life, then the premium cost associated with the service will be the cost of buying it without insurance, plus 15-30% bureaucratic overhead, plus 2-5% profit. In these cases, you already have complete control over the costs, yet you’re paying the insurance company extra to manage no additional risk. Financially, this is not a smart decision.

However, you seem to want people who have zero risk to share your known (100% chance) costs. This is not insurance. This is known as “social ownership” of costs. Social ownership is always advantageous to those who spend more and contribute less, and disadvantageous to those who are more responsible with their cost-management. There are only 3 cases I can think of where this sort of arrangement happens voluntarily for a long term: marriages, corporate ownership, and socialist communes. These arrangements only survive if they are very selective about who is allowed to participate, and have established mechanisms for removing (divorcing) members who take advantage of the contract without contributing much in return. Otherwise, the best members will always leave first, collapsing the arrangement.

When you use government force to mandate social ownership of costs throughout an entire society, that is known as “socialism.” In this case, there is no check on the behavior or character of participants. There is no mechanism for removing bad actors from the arrangement. It’s like being stuck in 300 million bad marriages all at once…unless you’re the one being a bad partner. This system violates the human right of free association, incurs unnecessary bureaucratic overhead costs, reduces productivity, reduces innovation, and ultimately reduces prosperity for everyone involved.

So if you’re seeking social ownership, insurance companies are not the institution you’re looking for. Let insurance companies sell insurance, and get your desire for social ownership fulfilled through family, communes, or (if you think your desired organizational structure is more efficient than existing companies) start a corporation. Don’t try to force insurance companies to be something they’re not, and don’t try to force us all to participate in a social ownership plan that some of us really don’t want to be a part of. Involuntary association of that nature will only make us all poorer.

UPDATE: She responded that I was “mansplaining” to her, and argued that because birth control “is a basic part of health care,” insurance must cover it, completely ignoring my argument. Logic and reason doesn’t get through to these socialist idiots. They only understand the fear of having their own smears turned back against them. So I called her a bigot for trying to use my gender to demagogue me into silence through that misandrist term. That’s when she “lost interest” in the conversation…meaning she no longer had any way to maintain dignity while making her argument. This is just about the best outcome that can be hoped for with people like this- they’ll never admit they’ve lost the debate, but they’ll be too embarrassed to make those arguments in public again.

8 Ways to Obtain Contraception Without Violating Everyone Else’s Liberty

Here is a non-exhaustive list of the ways contraception can be obtained without violating the rights or liberties of others:

• Pay for it out of pocket.
• Split the costs with your significant other.
• Buy a health insurance policy that voluntarily covers it.
• If your employee health plan does not cover it, negotiate with your employer for contraception coverage.
• If your employee health plan does not cover it, negotiate with your employer to be paid in cash, rather than medical benefits, and then use that cash to buy the medical benefits of your choice.
• If your employer refuses to pay you in cash, campaign to remove the government regulations requiring your employer to pay you in benefits instead of cash.
• If your employer refuses to pay you in cash, campaign to remove the tax benefits your employer receives for paying you in benefits instead of cash.
• If your employer continues to refuse to pay you in cash after all government incentives against it have been removed, search for a different employer who respects your personal choice a little more.

And here is a list of the ways to obtain contraception by violating the rights and liberties of everyone else:

• Campaign to use the force of government with the threat of taxes, prison, or violence, to mandate others to buy you contraception.
• Steal it, or the money to buy it, with your own hand.

Yes, ladies, this same logic applies to Viagra as well.

Liberal Intolerance

Something we often hear from self-described liberals is that you must be tolerant of people “from all walks of life.” But do they really take their own admonitions to heart? Andrew Cuomo, the current Democrat acting as Governor of New York, had this to say about people he considers “extreme conservatives”:

The Republican Party candidates are running against the SAFE Act — it was voted for by moderate Republicans who run the Senate! Their problem is not me and the Democrats; their problem is themselves. Who are they? Are they these extreme conservatives who are right-to-life, pro-assault-weapon, anti-gay? Is that who they are? Because if that’s who they are and they’re the extreme conservatives, they have no place in the state of New York, because that’s not who New Yorkers are.

With a very generous reading of his statements, I can understand the hatred of anti-gay and pro-life perspectives in terms of being intolerant of intolerance. So let’s just set that aside for now. What I cannot possibly understand is his comment about “pro-assault-weapon” people. So it’s okay to be blatantly intolerant of people who prefer to defend themselves rather than lay down and die? Is it okay to be an ignorant bigot against people who prefer liberty as a first principle? I mean, what if I were to say, “People who don’t like guns don’t belong in this country. There’s no place for you here.” Does that sound at all enlightened or worldly? How can you consider yourself a “tolerant” or “accepting” person if you believe that people who don’t share your principles should be turned into pariahs who can be fined, imprisoned, or exiled? So is all the liberal talk about tolerance just complete bullshit? A cynical political tool?

Now, I don’t want people to think I’m overgeneralizing based on one comment from one politician. Cuomo is not alone in his intolerance of non-liberals. This intolerance is neither isolated, nor unrepresentative. In fact, it is systematic, and has been documented. The linked review is pretty accurate, but if you’re not convinced, I highly recommend reading Jonathon Haidt’s whole book, The Righteous Mind: Why Good People are Divided by Politics and Religion. It’s truly cutting-edge.

The key observation I’d like to call attention to is that conservatives understand liberals, and believe liberals are “good people with bad ideas.” Meanwhile, liberals are, for the most part, completely ignorant of conservative principles, and do a terrible job of predicting how conservatives will react in particular scenarios. In other words, conservatives have a realistic view of liberals, but still reject their ideas, while the liberal view of conservatives is a cartoonish straw man that unrealistically kicks puppies and takes pleasure in the suffering of others. Conclusively, the liberal hatred of their intellectual opponents is not rational consideration, but ignorant bigotry.

So when liberals attack intolerance, are they just projecting their own weaknesses?

During my time engaging in political debates, I’ve encountered plenty of ignorance about my political philosophy, libertarianism. If you’d like to actually understand what we believe, Jonathon Haidt has recently published an excellent, well-supported, independent description of libertarian moral foundations. If you don’t understand how libertarians can believe what we believe, please read it. We tolerate you and your lifestyle, so why not make an effort to tolerate us?