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.

The Debt Cliff

A simple analogy for those trying to understand the debt ceiling debates:

The debt ceiling is a brick wall that we’re running towards. If we hit that brick wall, it will hurt. Hence, the Democrats want to break down that wall and remove it altogether so that we don’t run into it.

However, the Republicans understand something which the Democrats do not: that this brick wall blocks the path to a sheer cliff. The Republicans want to keep this wall up because of the far more severe pain we will experience if we run off the cliff. They see that the entire nation of Greece is painfully trying to climb back up this cliff, having run off the edge and been safely caught before the bottom in a net laid out by Germany. Unfortunately, no nation in the world can afford a net big enough to catch us if we take the plunge.

In the past, we’ve avoided the pain of running into the wall by breaking it down and rebuilding it further up the road. This will not help us when we run out of road. The only solution to avoid further pain is to simply stop running down this road. Though the Democrats blame the Republicans for leaving a brick wall up for us to run into, it is those same Democrats who keep us running towards it by protecting ever-growing entitlement spending, and who will run us right off the cliff edge in the absence of such a wall.

If this wasn’t clear enough, the road is the national debt, and the cliff edge is the point where our interest payments on our national debt become too large for the national budget to ever achieve a surplus again.

According to recent Congressional Budge Office models, we will officially hit that cliff edge in 2058, though that assumes that we’re willing to completely eliminate our military, Medicare, Medicaid, Social Security, and just about every other government program in order to repay our debt. If we assume that a functioning military is more important than repaying our debts, then we’re going to hit that cliff in 2050. If we assume this, and that Social Security funds are untouchable because they’re owned by the people paying into the system, then we’re going to hit that cliff around 2034. With those assumptions in place, if we want to have even a single dollar available to fund Medicare and Medicaid, we better turn away from this cliff before 2026. And of course, in 2015 (just three years from now) we’re going to hit the point where it becomes exponentially more costly to steer away from the cliff every year.

Of course, all of these fiscal scenarios optimistically assume that our credit rating is never downgraded again, and that the government doesn’t add any additional spending to the current baseline scenarios. Basically, this is assuming that we don’t further speed up our run down the road, even though we have been accelerating faster than ever before under the current administration. The more realistic scenario is that all of those deadlines will approach far faster than is currently assumed.

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.

Here’s what Obama is gonna do if he stays for 4 more years

He will continue doing much of what he’s done for the last 2.5 years. That means:

:bulletblack: More indefensible bureaucratic expansion. [link]
:bulletblack: More regulation of company mobility to prevent profitable enterprises from fleeing Democratic majority states to search for more freedom elsewhere. [link]
:bulletblack: More economic failure, leading to Carter-style stagflation. [link]
:bulletblack: More debt growth, as he resists all attempts to steer the country away from an imminent Greek-style crash. [link]
:bulletblack: More moralistic nationalization, enforced through militarization of the US police forces, pushing us towards a Soviet-style police state. [link] [link] [link]
:bulletblack: More corrupt abuses of executive power, bordering on illegality. [link] [link] [link]

If you want to continue these disturbing trends, to disregard liberty in favor of a Soviet-style socialist nation under a government with totalitarian control over your personal life and endeavors, then by all means, vote for Obama in 2012. But if you want change- economic recovery and the restoration of the values of liberty -then for your own sake, vote against the Democrats!

Should America Bid Farewell to Exceptional Freedom?

Representative Paul Ryan of Wisconsin gave this speech on March 31st:

Last week, on March 21st, Congress enacted a new Intolerable Act. Congress passed the Health Care bill – or I should say, one political party passed it – over a swelling revolt by the American people. The reform is an atrocity. It mandates that every American must buy health insurance, under IRS scrutiny. It sets up an army of federal bureaucrats who ultimately decide for you how you should receive Health Care, what kind, and how much…or whether you don’t qualify at all. Never has our government claimed the power to decide when each of us has lived well enough or long enough to be refused life-saving medical assistance.

This presumptuous reform has put this nation … once dedicated to the life and freedom of every person … on a long decline toward the same mediocrity that the social welfare states of Europe have become.

Americans are preparing to fight another American Revolution, this time, a peaceful one with election ballots…but the “causes” of both are the same:

Should unchecked centralized government be allowed to grow and grow in power … or should its powers be limited and returned to the people?

Should irresponsible leaders in a distant capital be encouraged to run up scandalous debts without limit that crush jobs and stall prosperity … or should the reckless be turned out of office and a new government elected to live within its means?

Should America bid farewell to exceptional freedom and follow the retreat to European social welfare paternalism … or should we make a new start, in the faith that boundless opportunities belong to the workers, the builders, the industrious, and the free?

We are at the beginning of an election campaign like you’ve never seen before!

We are challenged to answer again the momentous questions our Founders raised when they launched mankind’s noblest experiment in human freedom. They made a fundamental choice and changed history for the better. Now it’s our high calling to make that choice: between managed scarcity, or solid growth … between living in dependency on government handouts, or taking responsibility for our lives … between confiscating the earnings of some and spreading them around, or securing everyone’s right to the rewards of their work … between bureaucratic central government, or self-government … between the European social welfare state or the American idea of free market democracy.

What kind of nation do we wish to be? What kind of society will we hand down to our children and future generations? In the coming watershed election, the nature of this unique and exceptional land is at stake. We will choose one of two different paths. And once we make that choice, there’s no going back.

This is not the kind of election I would prefer. But it was forced on us by the leaders of our government.

These leaders are walking America down a new path … creating entitlements and promising benefits that model the United States after the European Union: a welfare state society where most people pay little or no taxes but become dependent on government benefits … where tax reduction is impossible because more people have a stake in the welfare state than in free enterprise … where high unemployment is accepted as a way of life, and the spirit of risk-taking is smothered by a tangle of red tape from an all-providing centralized government.

True, the United States has been moving slowly toward this path a long time. And Democrats and Republicans share the blame. Now we are approaching a “tipping point.” Once we pass it, we will become a different people. Before the “tipping point,” Americans remain independent and take responsibility for their own well-being. Once we have gone beyond the “tipping point,” that self-sufficient outlook will be gradually transformed into a soft despotism a lot like Europe’s social welfare states. Soft despotism isn’t cruel or mean, it’s kindly and sympathetic. It doesn’t help anyone take charge of life, but it does keep everyone in a happy state of childhood. A growing centralized bureaucracy will provide for everyone’s needs, care for everyone’s heath, direct everyone’s career, arrange everyone’s important private affairs, and work for everyone’s pleasure.

The only hitch is, government must be the sole supplier of everyone’s happiness … the shepherd over this flock of sheep.

Am I exaggerating? Are we really reaching this “tipping point”? Exact and precise measures cannot be made, but an eye-opening study by the Tax Foundation, a reliable and non-partisan research group, tells us that in 2004, 20 percent of US households were getting about 75 percent of their income from the federal government. In other words, one out of five families in America is already government dependent. Another 20 percent were receiving almost 40 percent of their income from federal programs, so another one in five has become government reliant for their livelihood.

It continues. I urge every American to read the entirety of the article and ask yourself the rhetorical questions posed in it. Paul Ryan is a smart man- he had Obama on his toes at the Health Care Summit  and he’s the one who exposed the deceitful gimmicks used by the Democrats to get the answer they wanted from the CBO. I don’t agree with everything in Rep. Ryan’s proposed solution, but he is right that we are at the tipping point, where we have a choice between a nation built on individual freedom and a nation hanging from the precarious limb of government support. We are approaching the end of an era, and it’s up to all of us to decide what the future will look like.

I, for one, choose freedom.

A Right to Welfare?

Now that I’ve explained why humans have rights and what those rights are, I figure it’s a good time to address the claims that humans have “a right” to health care, or “a right” to food, or to anything else they need to survive.

If something is a human right, then it is inherent to human individuals, not a function of whatever government you have, or where you live. I have the same rights in Ethiopia as I do in the US, though whether or not the governments of those countries respect your human rights is a different matter entirely. Whether I live in the US, Ethiopia, North Korea, China, or even on a deserted island, I am still a human with the same human rights.

You can make the claim that if someone denies you health care, then they’re violating your rights. But let’s do a thought experiment to evaluate that claim. Say you’re in a plane crash and end up on a deserted island. Suddenly you’re deprived of food, clean drinking water, and most certainly health care. Does this mean the plane crash is violating your rights? Is nature violating your rights? It sounds pretty silly, but that’s exactly what you’re saying if you think that everyone has an inherent right to be given everything they need to survive.

Now, let’s say you run into another survivor on the island. You find out this survivor just happens to have been a doctor back home. How convenient this is, since you were starting to feel a little under the weather. So now, because you have a right to health care, he is obligated to take care of you, even if it means taking time away from his own survival efforts. In fact, he probably would be better off had he not been a doctor, because then he wouldn’t be forced to act as primary care physician in the midst of a survival situation.

Conveniently, this doctor also happens to know how to fish. He could teach you how, but even if he did, you wouldn’t really have to do anything, because you have a right to food. Hence, even if you choose not to find a way to provide for yourself, he is required to give you some of the fish he catches, or he’ll be violating your rights.

So you see, if you have a right to health care, or even food, then you have a right to force others to work for your own well-being; it is within your rights to enslave others. And this same concept applies if you scale up the situation to an entire country using redistributive welfare, the only difference being that it’s much harder to rebel against this enslavement when there’s a police force and military enforcing it. Saying that humans have a “right” to health care and a “right” to food or to any other material possession violates every notion of what a “right” actually is. It violates the premise that rights are inherent to all humans, and that all humans have equal rights.

Humans do not have rights to make sure every person has everything they need to survive, regardless of the choices they make. Humans rights are there to define what it means if we believe that “all men are created equal.” Humans can only be equal if they are free from being enslaved by others. You cannot force someone to take care of you and still say that you are treating them as your equal. Thus, forced welfare redistribution is in fact a violation of the truly fundamental human right to be free from enslavement.