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.

5 Very Stupid Beliefs About the Hobby Lobby Ruling

1. The Supreme Court doesn’t understand science/economics/women’s needs!

  • NO. That is stupid, and you are stupid for thinking it. The Supreme Court’s job is to interpret law, not write it or make policy. All they have said is that the contraception mandate is not legal because it contradicts the Religious Freedom Restoration Act (RFRA), passed (nearly unanimously) by Congress and signed into law by Bill Clinton. It would be illegal for the Supreme Court to change the law from their bench.

2. Hobby Lobby is denying women birth control!

  • NO. That is stupid, and you are still stupid for thinking these things. All Hobby Lobby has done is stated that they will not pay for 4 kinds of contraception (while happily offering to pay for 16 others). Nobody is stopping you from going to the store and buying that contraception yourself.

3. I have A RIGHT to make others pay for my contraception!

  • NO YOU DON’T. That is stupid, and you are a horrible person for believing that. You don’t have a right to make anyone else pay for ANYTHING for you. Well, unless you’re an infant and you’re asking your parents to take care of you. Are you an infant, and you need breast milk from your Hobby Lobby Mommy? The foundation of civilization is voluntary interactions and transactions. Can you imagine a society where I could come up to you and demand that you buy me a new car, and claim you’re violating my rights if you don’t? Yeah, that’s what you’re doing here. Stop being a greedy asshole trying to take things from others and learn to take care of yourself and interact with others on a voluntary and respectful basis.

4. Hobby Lobby is FORCING their religion on me!

  • NO THEY AREN’T. YOU are in fact trying to force YOUR beliefs on them by FORCING them to buy birth control that violates their religion, and then FORCING them to give it to you. How would you feel if they were forcing you to buy rosary beads and communion wafers and Pope hats and cross-shaped wall-hangings to give to them? Then you would see this for what it is. Don’t you DARE try to tell me “It’s DIFFERENT” when you’re on the other side, you hypocritical weasel.

5. Hobby Lobby still covers Viagra and vasectomies, so they’re DISCRIMINATING!

  • NO THEY AREN’T. I don’t know if there’s a female analogy for Viagra, but the comparable analogy to vasectomies is getting your tubes tied, which Hobby Lobby covers. In fact, Hobby Lobby covers far more contraception options for women than for men. I don’t see them handing out free condoms and spermicide to all the men. HEY OBAMA, WHERE’S MY CONDOM MANDATE!?

Obamacare Infographic

Infographics are often a great way to explain complicated concepts without walls of text.

Here’s a good one that was shared with me describing some of the fundamental technical problems with Obamacare.
Colors to Die For
Source: Healthcare-Administration-Degree.net

Obama Administration Debates Dying Cancer Patient

Obama’s senior adviser, Dan Pfeiffer, just called a terminal cancer patient a liar, blaming her insurance company for being driven out of business by Obamacare.

At least Obama wasn’t lying when he said, “I’m really good at killing people.”

Will Single-Payer Solve the Obamacare Problems?

The popular response among progressives to the Obamacare trainwreck (higher costs, dropped coverage, incompetent mismanagement) is to suggest that all of this would be better if we had just enacted single-payer (i.e. nationalized/socialist) health care in the first place. But do you really think the same government that was too incompetent to manage a website and run the health insurance industry will be competent enough to run the entire health care industry directly?

If you nationalize all of this, those additional costs that Obamacare created through centrally-mandated inefficiencies won’t just go away. They’ll get worse as the government takes more of the decisions away from the health industry professionals, replacing their time-tested judgements with those of politicians. The only thing that will change to make anyone’s life easier is we’ll be paying for it through taxes rather than through insurance companies. But shuffling the costs around like that doesn’t make them go away. We will have to pay those costs, or our country will default, and then we’ll all be facing total economic devastation.

Socialist health care doesn’t fix fascist health care. It only sweeps the costs of inefficient centralized management under the rug and pretends they aren’t there.

The Dictatorship Begins on Jan. 1st, 2014

On January 1st, 2014, the Individual Mandate contained within ObamaCare goes into effect. This mandate will make a dictator out of the US President overnight.

I do not make this claim lightly. For a power being granted to a leader to be considered dictatorial, there are three requirements that must be fulfilled:
:bulletblue: The power must give absolute power to one individual.
:bulletblue: The power must be totalitarian in scope.
:bulletblue: The power must be irrevocable.

Absolute Power for One Individual

When the Individual Mandate goes into effect, all Americans will be required to purchase “proper” health insurance plans, or will be forced to pay a tax. All health insurance companies will be forced to only offer “proper” plans to their customers. It will be considered illegal to offer an insurance plan that is not considered “proper.”

So you ask, what’s wrong with proper insurance? There’s a catch: The Secretary of Health and Human Services has sole authoritative power (Section 224(b), on pg. 123) to determine the contents and requirements of a “proper health insurance plan.” The Secretary of Health and Human Services (currently Kathleen Sebelius) reports directly to the President, must follow all of his Executive Orders, and can be fired by him at any time, so that he can appoint a new one of his choice.

In other words, the President maintains a dictatorship over the definition of the “proper health insurance plans” that we are all forced to buy. The President can also force health insurance companies to boycott any health care providers (doctors and hospitals) that try to cater to individuals who choose not to buy health insurance. They already use this method to force health care providers to offer major discounts to Medicare patients, and they could easily use this method to prevent those resisting the Individual Mandate from obtaining any form of health care at all.

So the choice we all end up with is: buy one of these “proper” health insurance plans defined by the President, or be punished through the complete deprivation of health care. This is the enforcement mechanism.

Totalitarian in Scope

But this only affects health care, and health care is special, right?

Wrong. There is no legal requirement in the ObamaCare law that the definition of a “proper health insurance plan” must only include measures relating to health care. Already, Obama has declared that every health insurance plan must provide contraception, which is only as relevant to health as our choice of food, car, home, or any other choices we make in our lives.

The President can easily decree any other purchasing mandate, requiring us to buy a GM car, or buy broccoli, or buy houses in specific areas, or buy certain newspapers, or subscribe to a propaganda newsletter touting the president’s achievements, or join a union. The President can also use his power over insurance coverage to retaliate against groups who do not support him. For instance, the President might put clause in your insurance plan that states that you lose coverage for some number of conditions if you buy a gun, or spend too much money supporting his opponent, or live in a wealthy neighborhood.

From a legal perspective, this law gives the President the totalitarian power to force any activity, or punish any activity, under the threat of loss of health care. All he has to do is say that it’s a part of your insurance plan (which would rapidly lose all relation to health care other than through its enforcement mechanism).

Irrevocable Power

What about the separation of powers? Checks and balances? Congress has already surrendered its power by delegating the power to define “proper” insurance plans to the President’s appointees. The Supreme Court has already taken a whack at this law, and bizarrely ruled the Individual Mandate constitutional so long as it only makes use of economic incentives, rather than prison sentences to enforce its goals. But of course, those economic incentives can be just as damaging as prison sentences. The only branch of government that has the power to stop this law from becoming a dictatorship is the Executive Branch. Only the dictator can prevent the dictatorship (or a 2/3rds majority in both houses of Congress to override vetoes, but that’s the stuff of legend). The separation of powers and all the checks and balances have been thwarted.

As humans have learned throughout history, once a leader gains dictatorial power, it is extremely difficult to remove him, even if he is subjected to periodic elections. Under a dictatorship, information is controlled, and political opponents are destroyed, as in Fascist Italy or Nazi Germany. The means of production are given to political allies, and elections are stolen, as in Mugabe’s Zimbabwe and Chavez’s Venezuela. The citizens may even begin to worship their leaders out of a sense of dependence, as in Stalin’s Soviet Union, Maoist China, and North Korea.

Our only hope for avoiding dictatorship is to get ObamaCare repealed before January 1st, 2014. Obama will not do it. If we cannot remove Obama from office, either in the November election, or through impeachment prior to 2014, the United States government will become a dictatorship.

If you’ve been wondering what would drive a libertarian like myself to support a conservative like Mitt Romney, this is why. After the Supreme Court upheld ObamaCare, the gravity of the situation became clear: it’s all on us to pick the right president. Unlike Gary Johnson, Romney can beat Obama, and unlike Obama, he has pledged to repeal ObamaCare. Certainly, there is always the chance that Romney is lying and would keep ObamaCare. But if he does, he loses the support of his base, and the legendary 2/3rds majority in Congress may manifest and repeal the dictatorial powers over his veto.

This is our last chance. We, the People of the United States, must remove Barack Obama from office in order to save our freedom from an untimely death.

EDIT (6/11/13): Added a link to the section of the Obamacare bill that gives the Secretary of HHS this power.

The Individual Mandate Oral Arguments

The oral arguments over ObamaCare are here:

Day 1 deals with whether or not the Tax Anti-Injunction Act bars legal challenges against the mandate until the “tax” goes into effect.

Day 2 deals with the constitutionality of the Individual Mandate.

Day 3 deals with the constitutionality of the Medicaid eligibility expansion, as well as the severability of the Individual Mandate.

By my evaluation, it looks like 6 out of 9 justices (including Sotomayor) are ready to strike down the mandate and at least 5 justices are ready to take down the whole Act with it. The Solicitor General simply could not articulate any sort of consistent limiting principle that could allow the mandate power to derive from the Commerce Clause without giving the federal government unlimited power. Additionally, the whole Act is such a massive monstrosity that passed by such narrow margins that the Justices did not feel comfortable trying to evaluate which portions of the Act would have passed without the mandate.

However, progressive pundits have been fighting back, saying that the limiting principle is there, and the Justices just weren’t listening. They say that the health care market is unique because “Health care is market that everybody will be a part of and must be administered in an emergency basis. NO other market has such a consideration.” This exact statement comes from a progressive on the forums who heard this argument from Sam Seder on a progressive radio show. I’ve heard similar statements coming from numerous other progressives.

The thing is, I have to question whether any of these progressives are actually reading the oral arguments before chiming in like this. Solicitor General Verrilli and Justice Ginsburg tried to make exactly this argument, and it didn’t hold up under scrutiny. First of all, how a service must be administered in order to be most effective or most financially sustainable (e.g. unexpectedly or paid for in advance) is a matter of whether or not a certain act is a good idea, not a matter of whether or not it’s legal. As Justice Kagan once pointed out, the questions of whether or not a law is stupid and whether or not it is legal are completely independent of one another. If the constitutional portions of the law are stupid unless something that cannot be constitutionally justified on its own merits is passed along with it, it doesn’t alleviate concerns of unconstitutionality. As one of the other Justices pointed out (I forget whether it was Roberts, Scalia, or Kennedy), there are plenty of constitutional ways Congress could completely break the economy, and that doesn’t justify unconstitutional action to alleviate those problems deliberately created by Congress. So if Congress doesn’t want to pass a stupid law, they simply should not try to pass a stupid law, not try to violate the constitution in order to make a stupid law a little less stupid.

So, on to the second “unique” factor. “Health care is market that everybody will be a part of.” The Justices brought up a couple of problems with this claim. As Kennedy described, government could define the market that it’s regulating as “the food market,” which everyone will unquestionably be a part of at some point. Would that allow Congress to mandate that everyone buy broccoli? What about the housing market? Can the government force everyone to buy apartments rather than houses? And the transportation market? can the government force everyone to buy a GM car? The information market? Can the government force everyone to buy the New York Times or the Wall Street Journal?

And what about Christian Science followers? Obtaining any kind of health services is against their religion, so that means that not everybody will be a part of the health care market. At best, you can only say that “most” people will be a part of the market. Justice Kennedy nailed Verrilli with this one, and then went on to ask what percentage of the population has to be engaged in a market in order for the government to decide that it can assume that everyone is participating in the market. Is 90% good enough? What about 70%? If we’re letting the government create mandates for everyone regarding markets that only “most people” participate in, then can it also create mandates about the electronics market? Can they force everyone to buy a Macbook? What about the movie market? The cell phone market? The energy market? Is there any market Congress can’t touch?

As Justice Kennedy pointed out, if nobody can find a limiting principle, then the Individual Mandate cannot possibly be considered constitutional.