Gattaca, Gattaca, Gattaca!

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There are a couple odd things about yesterday's Washington Post op-ed calling for legislation to bar insurance companies from making use of genetic screening information. The most obvious one is that nowhere in eight paragraphs do we see the words "adverse selection." This is always a problem in insurance, of course: Insurance firms and their customers have asymmetrical information about the policy-holder's health. So people who know they're likely to become ill load up on more extensive coverage, while people who're more confident about their health stick with stripped-down plans. Which, in turn, drives up the cost of covering the people remaining in the more robustly covered pool, increasing premiums and magnifying the effect still further by driving out healthier customers at the margin. Genetic screening, of course, makes the problem far more acute. Maybe that's not a knock-down argument against legally entrenching this information asymmetry by barring insurers' access to genetic information (though I think it's a pretty good one), but it's just plain bizarre to see a treatment this length that doesn't even acknowledge the problem.

My second beef is that this piece—like many others—seems to operate on a strange conception of what "insurance" is supposed to do. Insurance is about spreading risk—which is why you can't generally buy fire insurance after your house burns down. If you already know you've got a disease, you don't need insurance; you just need health care. If the known risk of some condition manifesting in some individual is, say, 80 percent, and you require it to be covered as though it were 3 percent, I think it's fair to say you're no longer really talking about "insurance" in any terribly meaningful sense. What you're actually doing is using a private insurer as cover to create a health care subsidy.

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  1. If you already know you’ve got a disease, you don’t need insurance; you just need health care.

    In theory, that’s how it should work; in reality, with the cost of healthcare these days, if you have a serious illness then unless you are extremely wealthy you can’t possibly afford to pay for it on your own, not with hospitals charging thousands of dollars a day just for space in a bed, in addition to actual treatment.

  2. It’s hardly surprising, Julian. The overall trend of the last 50 years has been to compel insurance companies to act like welfare agencies and a significant part of the population (probably a majority) has no comprehension that they are supposed to work in any other way.

  3. Also, I love the headline pun!

  4. That’s how we’ll get national health care in this country. Compell insurers to cover everyone, and then compell employers to make sure all of their employees have a plan.

    Then rather than pay a tax to the government for a national plan, you’re stuck paying a fee to a private company, or having one added as a “benefit”. The people who lose out a small business owners, mainly.

  5. In about 10 years, parents will be able to check all their kids genes for disease risks the day they are born, or even before. Maybe it?s time for parents to buy lifetime health insurance for their kids before conception, when there is still plenty of uncertainty about risks.

  6. Most people no longer consider health insurance (or coverage) insurance at all. They just want someone else to pay for their medical bills. I think this was an outgrowth of:

    1. Employer health plans, and

    2. Medicare/caid.

    I remember about ten years ago when a friend, who worked for a large company, complained that she had to pay a $10.00 co-pay at her doctor’s office, and I thought, wow – something is going on here. I still had an old fashioned insurance policy, with $1,000.00 deductible type plan, and thought that paying $10.00 for a doctor visit was de minimus (extra credit for latin?).

  7. Compell insurers to cover everyone, and then compell employers to make sure all of their employees have a plan.

    But here’s yet another way the current system screws everybody: the only way to have insurance is if you have the right job, but if you come down with an illness serious enough to make you lose your job, then you lose your insurance, too, just when you most need it.

  8. If the Wall St Journal can’t explain insurance to the Washington Post, the situation is hopeless.
    Reminds me of what most people think Wall Street is for:
    The place where money trees grow and are picked by fat cats.

  9. Actually, adverse selection is less of a problem than one might imagine.

  10. Timothy-
    But all of the reasons offered there for why it isn’t a problem would tend to be undermined by genetic screening (e.g. “information isn’t really that asymmetrical”). You can’t infer from that argument that a bar on genetic screening would present few added AS problems–if anything, I’d infer the reverse.

  11. If my auto insurance worked like my health “insurance” it would pay for my oil changes. God only knows what the garage would charge the insurance co for those oil changes.

    The one I really love is medical insurance covering pregnacy. That strikes me as about the same as my homeowners insurance paying for me to add an extra room to my house.

    I have long railed against misnamed medical “insurance”. Thanks, Julian.

  12. Julian,

    Sure, a bar on genetic screening likely would make any AS problems worse, I was just pointing out that the whole AS problem is usually overblown.

    I’m perfectly okay with insurance companies using genetic data to set premiums, frankly. If we actually had an insurance market it would make pricing much more in line with risk. In the current market, well, it would mainly cause a lot of bitching from folks like the Washington Post.

  13. Jennifer, here’s another way our system screws us: you can only make a lot of money if you have a good job! And another thing; when you are unemployed is when you need money the most, and yet, somehow, that is when you get paid the least!

  14. I think Jennifer’s point was, mitch, that insurance coverage should be seperate from one’s employer.

  15. Over the weekend, my father was going on about an evil future where our purchases at the grocery affected our insurance rates. I kept thinking, “That sounds perfectly reasonable to me …”

  16. Medical insurance only grew up that funny way because “insurers” did not want to be subjected to antitrust scrutiny as they consolidated all the doctors and pharmaceutical into oligopoly arrangement over the past few decades. Used to be that “insurance” was a talismanic word that you used to keep antitrust regulators at bay.

    I play a very tiny violin for the “insurance” companies. They made their bed. Now they lie in it.

    My favored solution: stop calling it “insurance” and lets get those antitrust suits rolling. We’ll talk informational symmetry affter the more important things are accomplished, like a true capitalistic market in healthcare with a great multiplicity of suppliers, setting policies independently of each other.

  17. Question:

    Why are there no insurance groups formed on an ad hoc basis outside of the employer group? I know there is tax advantage to the employer provided option, but it seems to be there are a butt load of self employed people who should be able to form their own purchasing group.

  18. Timothy’s interpretation of my comment is correct. Mitch’s reading-comprehension skills need work.

  19. Before congress makes any more laws covering insurance — no, it just needs to not do anything for a change. Just stop guys. Seriously.

    I’m tired of lawmakers making me buy shit I don’t need.

    Goddamn auto insurance. I’m willing to take the risk of someone running into my car… I’ll buy a goddamn bond. But, it seems I can’t operate a vehicle in the U.S. of A unless I buy and can prove I have car insurance (note rising venom toward insurance industry).

    I’m sure someone mentioned it before, so I’ll keep it short:

    If our elected officials believe that we simple serfs MUST have auto, etc. insurance… then those brilliant trolls need to mandate that insurance companies MUST cover whoever wants it. Period. No exceptions.

    ‘But, vince, how will the insurance companies make money if people don’t have to buy.. what’s that pain… aaaaggghhh…my head.’

  20. I hate to be the one who tells you guys this, but healthcare is probably one thing where socialization is the best way to do it.

  21. Goddamn auto insurance. I’m willing to take the risk of someone running into my car… I’ll buy a goddamn bond. But, it seems I can’t operate a vehicle in the U.S. of A unless I buy and can prove I have car insurance (note rising venom toward insurance industry).

    Uhmmm…that law is to protect the person you run into, not yourself. You ar required to have liability insurance, not collision. What happens when you cause an accident and can’t afford to pay for damages you cause? Screw the victim?

    Talk about missing the point

  22. timothy, i thought mitch’s riff on jennifer’s inanities was funny. besides she makes some incorrect assumptions.

  23. Whether it’s health or auto, Jennifer, you’ve got some interesting ideas about insurance.

    Insurance is what you buy to mitigate your risks. Society isn’t here to mitigate risks to your health, etc. …and neither is your employer.

  24. where socialization is the best way to do it.

    which is why the insurance companies make what concessions they make. I think the biggest inequity they practice is failing to factor old age in an actuarially realistic manner. Those who think the insurance companies are just powerless pawns in this game, following rules they have no control over, should really really collect yourselves from the fall. That happened yesterday. Off the turnip truck.

  25. Once again, I’d like to make the point that the government is heavily involved in healthcare that trying to talk about one tiny sliver will always be weak intellectually. Critics will point to all sorts of real problems in the current system which need to be addressed (as always, with more government regulation).

    The insurance market is part of the problem. So is the FDA. So are pharamceutical patents. So is the AMA’s stranglehold on entrance into the market. So is medical malpractice law.

    And they are all interrelated – for example, the medical professions need to establish that only they can be trusted with making decisions with my health (and therefore not allowing me to medicate myself, and therefore creating all sorts of artificial barriers to entry into the healthcare market) led directly to current climate in the medical malpractice arena, where doctors can’t limit their risk in providing their services. Both of which, of course, act to increase the cost of healthcare.

    You can’t undo all these problems piece-meal. It has to be all at once, or it’ll never fly, because of all the problems created by the other government interventions in the market.

  26. So, Jennifer, you are against employers providing insurance to their employees? Because you think people should deal with insurance companies and health care providers directly?

  27. I hate to be the one who tells you guys this, but healthcare is probably one thing where socialization is the best way to do it.

    Hey thanks Dan. You’re the first one to ever tell us that. I want you to know how much it means to us as I can see how much it pained you to tell us. Yeah, socialized medicine, that’ll work.

  28. “Society isn’t here to mitigate risks to your health”

    Worth repeating, in many different arenas.

  29. Ken, I am simply pointing out that the current health system, at least in regards to insurance, is broken. Maybe the best thing to do would be to wipe the whole insurance system out; hospitals wouldn’t be able to charge such outrageous fees if people had to actually pay for them on their own. Something is wrong when something used by so many people is at the same time unaffordable to those same people. Talk about market distortion!

    My car insurance opinion is the same as Chicago To,’s, however. It is not to protect you, but the person whom you might run into. (However, I’ve also said people who are rich enough should be exempt from mandatory car insurance. For example, instead of buying a mandatory $100,000 worth of coverage, let the ones who can afford it simply put $100,000 into an escrow account or something.)

  30. The reason health “insurance” is different from other forms of insurance is because most of the risk is based on genetics – i.e. beyond one’s control – rather than behavior. If you’re advocating a Gattaca world where people are penalized for their genes, I think that’s gonna be a *real* tough sell to the vast majority of Americans.

    but it seems to be there are a butt load of self employed people who should be able to form their own purchasing group.

    They exist – I see ads on the subway all the time.

  31. Why are there no insurance groups formed on an ad hoc basis outside of the employer group?

    I don’t know about anyone else, but I would have thought that churches, unions and social groups would be ideal for this. Membership in such groups is more continuous over time than an individuals employment usually is.

    It is likely that such groups could maintain the kind of secondary insurance necessary to continue paying premiums thru periods of unemployment.

    I suspect that one of the reasons that such groups have not stepped up* are the very market distortions that others have observed.

    *Or no longer step up – unions once spoke of maintaining health care plans and unemployment insurance for members, but have forsaken this to lobby for nationalization of such social functions.

  32. I hate to be the one who tells you guys this, but healthcare is probably one thing where socialization is the best way to do it.

    On what basis?

    Want to know the reason hospital stays cost so much? …It’s because Medicaid/MediCal only pays about 12.5 cents on every dollar billed (last time I checked), and Medicare only pays about 25 cents. Guess where the difference comes from? Private insurance patients.

    …So not only do you pay for every Medicare and Medicaid patient through taxes, you also pay for it through higher insurance premiums, etc. How does universal health care address those disparities?

    Universal health care won’t improve costs, and it won’t improve quality. It might improve access for some people–the people who least need it. …just not for those who have to wait forever for routine procedures.

  33. Julian, don’t be an idiot. Health insurance is not only about spreading risk. That’s a part of it, but not the whole thing. The reason people need health insurance is to have access to the health care marketplace.

    It can cost you 5 to 10 times more for a given health care procedure if you are paying out-of-pocket, relative to what an insurance company would pay. The insurance company has bargaining power – they can withdraw future business. You don’t – it’s pretty much expected that you’ll get the care, and that the provider will basically make up a large number and put it on your bill, and it will go to collections, and if necessary a judge will rubber-stamp it.

    Don’t give me that Libertarian “people need health care not insurance” line. The truth is you can go and pray to the market all day long, but in health care – the market is for insurance companies. You aren’t allowed to buy health care at market rate, yourself.

    I have seen a $70,000 hospital bill, list price, settled in full by Blue Cross for $7,000. Would the hospital have accepted $7,000 from the patient, had the patient lacked insurance? Nope, no incentive, the patient doesn’t have bargaining power. Can’t threaten to take their business away. So they would take the patient’s paid-for house, that’s what the courts are for aren’t they my fellow Libertarians?

  34. So, Jennifer, you are against employers providing insurance to their employees?

    I am against a system wherein it is all but impossible to get decent insurance unless you have the right job. Hell, when I was selling stuff on eBay I made more cash money than I did at some full-time jobs I held; the problem was that the amount I would have had to pay for insurance was many, many times higher than what it would cost if I had a job. (Luckily, I get insurance through my boyfriend, so I’m okay, but others are not so lucky.)

    Imagine a situation where the price of food varied depending on who you worked for–if you work for XYZ Corporation you can feed your family for fifty bucks a week, but if you are self-employed, or work for a company that has no Food Benefits, that same food will cost you two hundred bucks a week.

    Maybe Bush was on to something when he floated that balloon about getting rid of the tax incentives for employer-provided insurance.

  35. Let’s just say that many countries that have socialized health care pay less per person that our system and have healthier populations, not to mention longer life expectancy.

  36. Vincente, ChicagoTom, Jennifer

    At one time some states allowed drivers to post a “financial responsibility bond” instead of liability insurance. I don’t know if any still do. I don’t know if Florida does, mostly coz I don’t have any 100G CDs floating around to use for it. Two things are at work here I suspect. One is that insurance premiums are lower than the foregone income from a posted bond and the other is that most people, like me, don’t have that kind of moolah lying around.

    We also probably shouldn’t discount the conspiracy theory possibility that it’s just good old restraint of trade by insurance cos maximizing their incomes. 🙂

  37. My car insurance opinion is the same as Chicago To,’s, however. It is not to protect you, but the person whom you might run into.

    We’ve had this discussion before regarding auto, and I don’t want to rehash it here. …I brought it up, ’cause it seems to be expressing the same idea.

    Auto insurance isn’t to protect the people you run into. It’s to protect you from the liabilities associated with running into people. It’s to protect your car in the event that someone without insurance or money runs into you. Health care is the same thing.

    It’s to protect you from the liabilities associated with getting sick. It’s not to find novel ways to pay for whatever drug or procedure anyone wants regardless of whether they can pay. (Oh, and there is one of those ideas out there and available, it’s called an Emergency Room)

    The problem with health care is government intervention (in association with the labor union that accredits and controls access to the industry). Increasing the scope of that interference will not improve the situation–it’ll make it worse. Universal health care will make the situation worse because it doesn’t address the cause of the problem.

  38. Jason, group plans are actually more expensive than individual plans. I’m a self-employed individual and I’d never join a group plan of small businesses.

    The best move anyone can make regarding insurance is to buy a high deductible individual plan in case you get cancer, and never drop it. Once you are on an individual plan, you don’t lose it by changing jobs either.

    And in california, losing your job doesn’t eliminate your insurance anyway, that’s just a myth. By law, you can automatically get into an individual plan if you wish. They MUST offer you coverage if you have been covered continuously for the previous 18 months or some silly thing like that. All the regulations are stupid but there they are.

    By jumping onto an individual plan after you get laid off, you avoid dealing with COBRA, which is expensive and a pain. You will pay higher premiums if you already have cancer at the time but normally you will actually save money on insurance by getting fired.

    nmg

  39. Auto insurance isn’t to protect the people you run into. It’s to protect you from the liabilities associated with running into people

    The example I used the last time we had this debate was this: Cletus McSisterfuck, who has no money, no assets, and no insurance, crashes his car into mine. My car is trashed and I am seriously injured. And for all your talk of personal responsibility, you never DID explain how you’d hold Cletus responsible and make him pay for the damages he caused me. Fine–I get to sue him and he declares bankruptcy? I get to garnish his wages so that if and when he gets a job I get twenty bucks a week?

    As it stands now, MY insurance company pays the damages, and MY insurance rates go up, often by a huge amount. Cletus did the damage, but I am the one stuck paying for it. How does that jibe with the libertopian ideal of freedom balanced with responsibility?

  40. Jennifer, you are killing me: “Imagine a situation where the price of food varied depending on who you worked for–if you work for XYZ Corporation you can feed your family for fifty bucks a week, but if you are self-employed, or work for a company that has no Food Benefits, that same food will cost you two hundred bucks a week.”

    We live in that system now. If you have a shit job, food costs a big percentage of your income. If you have a good job, food costs a small percentage of your income.

    Why should healthcare be any different than getting a haircut? Some guy has the skills and equipment to cut your hair well, better than you can hack away at it yourself. He says, “I’ll cut your hair for X amount.” You agree or disagree. If you disagree, you chop away at that mane yourself, or find somebody else with skills and equipment who will do it for less.

  41. It can cost you 5 to 10 times more for a given health care procedure if you are paying out-of-pocket, relative to what an insurance company would pay.

    I did seven years hard time in a private hospital working on coding issues, etc. I worked for a big software company doing the grouper/outpatient/whatever payer software you got in your state or insurance plan for some of the biggest hospitals in this country, in all kinds of different states.

    …and, unless I’ve read you completely wrong, I think you’re mistaken.

    The candy–absolute best–insurance you can get–from a hospital’s perspective–is a pivate insurance company that typically pays about 85% on the dollar. (approved hospitals). Once again, Medicaid pays about 12.5% and Medicare pays about 25%. …If a patient has both Medicare and Medicaid, then, on average, the hospital’s gettin’ about 37.5% on the dollar, and writin’ off the deadbeats.

    It’s hard for me to imagine a hospital that wouldn’t take an 85% rate in cash.

  42. trollumination said: I have seen a $70,000 hospital bill, list price, settled in full by Blue Cross for $7,000. Would the hospital have accepted $7,000 from the patient, had the patient lacked insurance?

    Hospitals bargain. Doctors bargain. All you do is call them up and offer to pay a portion of the bill they sent.

    And if you have an individual plan (which are cheap) they honor the negotiated prices they have agreed with the insurer for their other plans.

    Nope, no incentive, the patient doesn’t have bargaining power. Can’t threaten to take their business away. So they would take the patient’s paid-for house, that’s what the courts are for aren’t they my fellow Libertarians?

    Yeah god forbid somebody try to collect on a bill they are owed. Jeez. If you have 70K in equity and accept $70K worth of service from someone, you think it’s a crime for them to ask you to pay? No wonder this country is screwed up.

    nmg

  43. Jennifer, you are killing me: “Imagine a situation where the price of food varied depending on who you worked for–if you work for XYZ Corporation you can feed your family for fifty bucks a week, but if you are self-employed, or work for a company that has no Food Benefits, that same food will cost you two hundred bucks a week.” . . . .We live in that system now. If you have a shit job, food costs a big percentage of your income. If you have a good job, food costs a small percentage of your income.

    No, dear, I’m talking about absolute costs, whereas you’re talking about cost as a percentage of income.

    I hope you understand the difference.

  44. I think one thing is clear: In industries where the government has intervened the most, the quality and pricing of services is the most out of whack. Compare, say, the information technology or entertainment industries with education, healthcare, air travel, the postal service, telecommunications, etc., etc., etc. The government (really, state governments are the worst sinners) has gone out of its way to create barriers to competition in insurance and has regulated the healthcare industry into its current flawed state. I’m not saying that an unregulated healthcare industry would be perfect, nor am I suggesting that doctors and insurance companies are innocent victims of government action, but something with more free market components would be a damned sight better system than what we have now. Rewarding the government for helping to make this mess by going to socialized healthcare makes no sense at all to me.

  45. and re: car insurance.

    The current setup is a racket FOR insurance companies.

    The best scenario would be “driver beware”. If you want to get on the road, buy insurance that covers you if some idiot plows into you. If you have assets then you should also get liability coverage in case you the idiot sometime.

    The way it works now, people with nothing to lose fail to buy insurance anyway.

    If you need proof that the whole thing is a racket look no further than the “uninsured motorist coverage” they offer you. Yep, you can buy insurance to cover your own injuries and damage in case the other guy broke the law and drove without coverage.

    Most people buy this coverage. This is in fact the only coverage that a rational person would buy unless they have assets. As usual the system would work 10X better for us if the govt stayed out of it.

    nmg

  46. So, Jennifer, you think that every doctor, every restaurant, every grocer, should charge the same amount?

    And your distinction between percentages of income and absolute values is spurious. Your gripe is that some people, because they have good jobs, get more value than people who have lame jobs. Of course they get more value from a good job; that is what makes it a good job.

  47. And for all your talk of personal responsibility, you never DID explain how you’d hold Cletus responsible and make him pay for the damages he caused me.

    Insurance is there to protect you from just such an outcome. …but society has no obligation to insure your property against loss.

    As it stands now, MY insurance company pays the damages, and MY insurance rates go up, often by a huge amount.

    And I don’t think I got an answer to the following question last time: What part of your insurance rates go up?

    Is it the comprehensive? ‘Cause the cost of replacing your next car won’t go up (assuming it’s of a similar value). If it did, that would be wrong.

    …Liability is another question entirely. If the actuaries decide that people who get in an accident once–regardless of fault–are more likely to get into an expensive accident in the future, then it’s perfectly appropriate for them to charge a higher rate for liability insurance if they perceive you to have become an increased risk. Is it not?

    Cletus did the damage, but I am the one stuck paying for it. How does that jibe with the libertopian ideal of freedom balanced with responsibility?

    You’re responsible for insuring your own property (or body) against damage (or ill health). Society is not responsible for insuring your property or your health against damage.

  48. No, Mitch, what I am complaining about is a system wherein the price one pays for a service varies depending on who they work for.

    Are you truly incapable of understanding the differnce between absolute and relative costs, or are you a troll? We’ve been getting a lot of those lately.

  49. I think Jennifer’s point is that Coca-Cola can’t charge me $1.25 for a 12 oz. Coke because I make +$50,000/yr., but charge my mother $4.00 for one because she makes -$20,000. Neither should doctors.

  50. And for all your talk of personal responsibility, you never DID explain how you’d hold Cletus responsible and make him pay for the damages he caused me.

    I should add that if Cletus willfully destroyed your property, then we should be talking about criminal law rather than civil. …but I don’t think that’s what you’re talking about here.

  51. Liability is another question entirely. If the actuaries decide that people who get in an accident once–regardless of fault–are more likely to get into an expensive accident in the future, then it’s perfectly appropriate for them to charge a higher rate for liability insurance if they perceive you to have become an increased risk. Is it not?

    The porblem is they do not distinguish between an accident caused by my own recklessness and an accident caused by someone else’s.

    You’re responsible for insuring your own property (or body) against damage (or ill health).

    So if Cletus crashes his car into my house, *I* should be the one who pays for repairs? If Cletus hits me while I’m standing in my yard, *I* should be the one who pays the hospital bills? I ask again: what, if any, personal responsibility do you think Cletus has for the damage he causes others?

  52. Ken, why do you keep changing Jennifer’s hypothetical from “Cletus” to “society?” That seems like dodging the question.

  53. Mitch: See, in a market prices arise as the interaction of supply and demand. Are you daft?

    My favored solution: stop calling it “insurance” and lets get those antitrust suits rolling. We’ll talk informational symmetry affter the more important things are accomplished, like a true capitalistic market in healthcare with a great multiplicity of suppliers, setting policies independently of each other.

    I am completely shocked that Dave W.’s answer is litigation.

  54. I have a cunning plan. Let’s enslave all of the doctors and other medical personnel and make them give us free healthcare. Sure, they’d lose some civil liberties that way, but the rest of us would benefit. And we’d avoid the need for a lot of government regulation and for most health insurance 😉

    Hmm. Just thought of a flaw in my plan. The equipment needs to be paid for, as well as the facilities. Perhaps more people need to be enslaved?

  55. Jennifer and Mitch, you guys are arguing over a misconception anyway. Group plans are *more* expensive, not less. Getting insurance through your employer costs you *more* money than simply buying an individual plan (unless you have a pre-existing condition).

    nmg

  56. Ken, why do you keep changing Jennifer’s hypothetical from “Cletus” to “society?” That seems like dodging the question.

    Because this is a continued discussion, and, in the previous discussion, the heart of the matter was whether the state should require Cletus to have auto insurance. I say no because society, of which Cletus is, perhaps reluctantly, a part, has no obligation to insure the property of individuals like Jennifer. She should insure her own property.

    Society, of which I’m a part, doesn’t have an obligation to insure the health of individuals either.

  57. Jennifer and Phil,

    When I worked at a bookstore, the bookstore gave me a 30% discount. Some joker off the street paid 10 bucks for a book I paid 7 bucks for. The bookstore also gave a 10% teacher discount, and a 10% senior discount. Is that some kind of atrocity? When the bookstore bought books wholesale from Harper Collins or whoever, they got a much better price than I would have gotten, buying a single copy of a book. How about that?

    When people deal with each other economically, voluntarily exchange goods and services, there is a diversity of outcomes. Mr. X sometimes gets a better deal from Mr. Y than does Mr. Z. Some people get a better deal on health care and health insurance than other people. Why should this not be the case?

  58. Auto insurance isn’t to protect the people you run into. It’s to protect you from the liabilities associated with running into people. It’s to protect your car in the event that someone without insurance or money runs into you. Health care is the same thing.

    Insurance isn’t, but the the insurance laws are there to protect the victim. They mandate that anyone who will be driving must have liability insurance. The mandate is necessary for people who have no assets and thus having no motiviation to have insurance.

    The best scenario would be “driver beware”. If you want to get on the road, buy insurance that covers you if some idiot plows into you. If you have assets then you should also get liability coverage in case you the idiot sometime.

    So how does a system like this hold the party who runs into me responsible? In your view, I should be responsible for my actions, and I should be responsible for the actions of others? When do other people get to be accountable for their own actions?

  59. I say no because society, of which Cletus is, perhaps reluctantly, a part, has no obligation to insure the property of individuals like Jennifer. She should insure her own property.

    Even against the damage caused by Cletus? That’s what I don’t get, Ken–you seem to be completely missing my point that a person should be held responsible for the damages he causes, whereas you are pretending that I am saying “Society as a whole should have to pay if I suffer.” No, society shouldn’t pay, but the guy who injured me should.

  60. One more point that has yet to be addressed: if health care was truly left open to the free market, a good percentage of people simply wouldn’t be able to afford it.

    So unless we as a society are going to find it acceptable for the lower classes to literally die out in the streets then we need some form of socialization.

  61. Arguments are much more convincing when you can throw in some kind of banal elitist joke that you probably saw on “The Simpsons,” like saying “Cletus.” Ho ho, just typing “Cletus” has me in fits of laughter.

  62. I say no because society, of which Cletus is, perhaps reluctantly, a part, has no obligation to insure the property of individuals like Jennifer. She should insure her own property.

    It isn’t about society insuring anything. It’s mandating that members of society take certain precautions. Driving is something that affects others. No one drives in a vaccuum. In order to be given the privelage of driving in society, society demands that you take certain measures to protect others from the potential consequences of your actions. It’s about mandating personal responibility, not insuring people for them. If you can’t be bothered to get insurance to protect others from what you may do, then you shouldn’t be granted the privelage of being allowed to drive on public roads.

  63. The porblem is they do not distinguish between an accident caused by my own recklessness and an accident caused by someone else’s.

    That’s a function of actuarial analysis, I’m afraid. They charge higher liability rates for teenage drivers too. They charge less for teenagers with good grades–for some reason, statistically, they outperform other teenage drivers.

    I understand they give breaks to government employees, who are, apparently, more meticulous than the general population. …and it, reportedly, reflects in their driving. Statistically, they get in fewer accidents. (GEICO stands for Government Employee Insurance Co. An actuary noticed the blip in the stats and offered discounted policies via direct mail to bureaucrats.)

    They charge more money for people who have had an accident, regardless of fault. People who get in accidents, regardless of fault, tend to get into more accidents. Surely, your insurance company shouldn’t be forced to ignore the statistics.

    I ask again: what, if any, personal responsibility do you think Cletus has for the damage he causes others?

    If Cletus willfully causes you damage, it should be handled in criminal court. For civil damages, Cletus should be held responsible for the damage he causes. …You should be responsible for protecting yourself in the circumstance that Cletus has no assets.

  64. Society, of which I’m a part, doesn’t have an obligation to insure the health of individuals either.

    I guess “obligation” is a subjective term, but certainly it’s a good idea for a society to insure the health of its members. If you’re interested in living in a good society, at least.

  65. One more point that has yet to be addressed: if health care was truly left open to the free market, a good percentage of people simply wouldn’t be able to afford it.

    If by “health care” you mean “every possible desire or want is covered” then yes. But if you are talking about life threatening or otherwise serious conditions, that’s not true. Not true at all.

    In a truly unregulated market, there would be plenty of options for buying cheap disaster coverage that would cover cancer and liver failure. You may not have a $10 co-pay and you may have to go to a free clinic for a cast, but you would not be left to die. Disaster coverage is cheap, even now. It would be cheaper in an unregulated market.

    nmg

  66. Arguments are much more convincing when you can throw in some kind of banal elitist joke that you probably saw on “The Simpsons,” like saying “Cletus.” Ho ho, just typing “Cletus” has me in fits of laughter.

    Arguments are even more convincing when they’re made by someone who can’t grasp the difference between absolute and relative costs, and insists that distinctions between the two are “spurious.”

  67. Arguments are much more convincing when you can throw in some kind of banal elitist joke that you probably saw on “The Simpsons,” like saying “Cletus.” Ho ho, just typing “Cletus” has me in fits of laughter.

    Good point – and this does illustrate the class-related biases that libertarians tend to hold.

  68. In a truly unregulated market, there would be plenty of options for buying cheap disaster coverage that would cover cancer and liver failure. You may not have a $10 co-pay and you may have to go to a free clinic for a cast, but you would not be left to die. Disaster coverage is cheap, even now. It would be cheaper in an unregulated market.

    But nothing is so cheap that everybody can afford it.

  69. For civil damages, Cletus should be held responsible for the damage he causes.

    How, exactly, shall Cletus be held responsible? That’s what I’ve been asking you all along.

    Basically, Ken, your proposals mean that people who are poor enough are for all intents and purposes immune from responsibility for any damage they cause others.

  70. arguments are entirely unconvincing when based on genius myths like you can’t get healthcare outside your employer or you lose your healthcare when you get sick

  71. Frans, nobody said you can’t get healthcare outside of your employer; I, however, said it is more expensive to get healthcare on your own.

  72. It isn’t about society insuring anything. It’s mandating that members of society take certain precautions.

    To protect your property from damage?

    …Let’s get away from the ethics aspect and just look at the market distortion. Instead of one person insuring himself against loss, all 300 million of us have to buy a policy to protect you? How efficient is that?

    In order to be given the privelage of driving in society, society demands that you take certain measures to protect others from the potential consequences of your actions.

    I’ve got big questions about the suggestion that driving is a privilege. Is riding a bicycle a privilege?

    …Driving down the street with all the little poor people insuring your Mercedes against damage sounds like a privilege, an aristocratic privilege.

    It’s about mandating personal responsibility, not insuring people for them.

    I never said people shouldn’t be held responsible for their actions.

    If you can’t be bothered to get insurance to protect others from what you may do, then you shouldn’t be granted the privelage of being allowed to drive on public roads.

    If you can’t afford to insure your own property, then you shouldn’t take it out on public roads.

  73. Jennifer, in my experience it’s not. The group plan through an employer is more expensive. Are you including the value of the pre-tax money they spend on your premium?

    nmg

  74. I guess “obligation” is a subjective term, but certainly it’s a good idea for a society to insure the health of its members. If you’re interested in living in a good society, at least.

    I do a lot of charity work, myself. I take responsibility for the misfortunes of others–you might be surprised. …but I shouldn’t be obligated to do that by government.

    In a better society, people would be responsible for themselves. If people were allowed to take more responsibility for their health care, if they were allowed to take more of that responsibility from government, I think people would be healthier than they are now.

  75. Ken, here’s a hypothetical for you: suppose a brand-new company opens a potentially dangerous factory–say, a chemical plant where they make chlorine or something. Once the company opened this new factory, it had basically no money left. Also, there are homes and businesses close enough to this factory that if something bad happened there–a large fire, for instance–it would seriously damage or even destroy the surrounding homes and businesses.

    Do you think this company should be required to have enough money, or sufficient insurance coverage, to compensate its neighbors in case of an accident? Or if the factory explodes and the owners have no assets, is it simply the responsibility of the factory’s neighbors to pay for the damages the factory caused them?

  76. Want to know the reason hospital stays cost so much? …It’s because Medicaid/MediCal only pays about 12.5 cents on every dollar billed (last time I checked), and Medicare only pays about 25 cents. Guess where the difference comes from? Private insurance patients.

    Private insurance companies base their billing on Medicare rates, but actually pay LESS. It’s Medicaid that actually pays the least and is the biggest money loser for facilities.

  77. But nothing is so cheap that everybody can afford it.

    That’s not true. I can think of plenty of examples of things that everyone in this country can afford.

    Don’t forget that we have subsistence welfare for people who have nothing. And I’m not even discounting the people who *choose* to have nothing. In america, you can choose to never work a day in your life and you can still afford all kinds of things.

    One of those things would be disaster coverage for catastrophic health failures.

    nmg

  78. Basically, Ken, your proposals mean that people who are poor enough are for all intents and purposes immune from responsibility for any damage they cause others.

    Poor people generally are immune from responsibility, for their negligence at least. There can be criminal responsibility for intentional harms (and some others).

  79. Uh, how do you put those italics in?

  80. Jennifer, doesn’t it make obvious sense that it is cheaper to get health care through your employer? The healthcare is part of your compensation. Your complaint that you need to have a good job to get good health care is just a complaint that people with good jobs get better compensation than people with crummy or no job.

  81. nmg: The best scenario would be “driver beware”. If you want to get on the road, buy insurance that covers you if some idiot plows into you. If you have assets then you should also get liability coverage in case you are the idiot sometime.

    Chicago Tom: So how does a system like this hold the party who runs into me responsible? In your view, I should be responsible for my actions, and I should be responsible for the actions of others? When do other people get to be accountable for their own actions?

    Well, they *are* responsible but good luck getting blood from a turnip. The point is that these people aren’t covered anyway. What can you do? That’s life. That’s why insurers offer you “uninsured motorist coverage”.

    In an ideal system, it would be the people with assets who would bear the full cost of protecting their own assets. As it is now, they have lobbied the govt to coerce everyone else into protecting their assets. Typical.

    And most people are duped into thinking that’s a good idea too! Unbelievable.

    nmg

  82. How, exactly, shall Cletus be held responsible? That’s what I’ve been asking you all along.

    We can talk about garnishments, but eventually we’ll have to address total, complete dead beats.

    Basically, Ken, your proposals mean that people who are poor enough are for all intents and purposes immune from responsibility for any damage they cause others.

    This isn’t a proposal; insuring yourself against loss is the natural state of things. I suggest a book, “Against the Gods” (play on against the odds–get it?), a book about the history and development of risk analysis. I don’t agree with some of the conclusions, but it’s a good read.

    I’m not saying Cletus should be immune from responsibility, but I don’t think much of slavery or debtors prisons either.

    …and I don’t think that’s hyperbole–that’s what we’re talking about here, right? If Cletus can’t pay, you want him thrown in jail for driving around without having bought insurance for your car?

  83. Jennifer, doesn’t it make obvious sense that it is cheaper to get health care through your employer? The healthcare is part of your compensation. Your complaint that you need to have a good job to get good health care is just a complaint that people with good jobs get better compensation than people with crummy or no job.

    What is obvious about being charged different prices for the same goods or services, depending exclusively on who you work for? That is why I said, earlier, that I think Bush was on to something when he floated the idea of doing away with the tax breaks for companies to provide insurance. Do away with all this bureaucratic nonsense, and let people get their goods and services directly rather than through their middleman boss.

    Consider also that when the whole “Insurance through your job” thing started, it was common for people to spend their entire careers with one company. Now that is quite rare. Having people get insurance on their own rather than through their employer would also help in terms of portability.

  84. We can talk about garnishments, but eventually we’ll have to address total, complete dead beats.

    And I’d say complete deadbeats shouldn’t be allowed to drive if they can’t afford to pay for damages they cause. For that matter, I’d say a doctor, just starting out with no assets, shouldn’t be allowed to perform surgery without malpractice insurance.

  85. My second beef is that this piece–like many others–seems to operate on a strange conception of what “insurance” is supposed to do.

    Sanchez nailed it.

    …and before we got too far off course, I wanted to float the speculation that insurance companies will probably offer a discount to those who willingly undergo genetic screening. …which sounds like a great way to make good healthcare available for poor people. It would be sad, if not unprecedented, if the government banned genetic screening and thereby made that impossible.

    Genetic screening could rub some other distortions out of the market too. What if the government only insured those of us at risk? Without genetic screening, surely the government insures more people against more diseases than necessary.

  86. It looks like I am agreeing with Jennifer here, when I say that I suspect it would be better for people to just get a higher salary than to get health care insurance as part of their compensation. At least for healthy people, like me.

    However, people with good jobs will still have better access to health care, because they will have more money. And such a reform will be of no help to the unemployed, or to people who don’t get health insurance/care from their jobs now.

    I still don’t understand Jennifer’s complaint about “people being charged different prices for the same goods or services, depending exclusively on who you work for.” I had examples earlier, like the teacher discount and the employee discount. Another would be companies that give their employees gym memberships. And the way employees of academic institutions can get tuition waivers and reimbursements. This is just part of your compensation, it is like payment in kind. Complaining about it is just complaining that some other guy has a better paying job than you.

  87. And I’d say complete deadbeats shouldn’t be allowed to drive if they can’t afford to pay for damages they cause.

    As I’ve mentioned numerous times, passing laws won’t make it so. People drive without insurance, especially deadbeats. You could pass a law that requires everyone to be smart but that doesn’t mean it’ll happen.

    As Ken pointed out, what you’re really advocating is jail time (debtor’s prison) for people who can’t afford to insure your car for you.

    For that matter, I’d say a doctor, just starting out with no assets, shouldn’t be allowed to perform surgery without malpractice insurance

    Why shouldn’t I have the freedom to choose to go to a doctor who isn’t insured for malpractice? I don’t understand.

    nmg

  88. mitch,

    Receiving health insurance as part of your compensation is an artifact of government price controls; it is not something that “just makes sense”. I have a very well-paying job with full benefits. And yet I still dislike the current system because my employer, of all people, has indirect control over which doctor I see. Every time I change jobs, or my employer switches insurers in search of a better rate, it’s a big question mark on whether all of my family members’ preferred physicians will be participants in the new insurance plan. It’s a big hassle. And before someone claims it’s no big thing -go tell the wife she has to change gynecologists.

    On the topic of “asset owners paying for protection of said assets”: I see nothing wrong with asking Cletus to join a risk pool to cover some minimal level of damage to others. It’s not as though he’s required to carry sufficient liability insurance to replace a Ferrari. That’s up to the owner of the Ferrari to buy additional coverage to make up any shortfall.

  89. I still don’t understand Jennifer’s complaint about “people being charged different prices for the same goods or services, depending exclusively on who you work for.” I had examples earlier, like the teacher discount and the employee discount.

    Because in the case of health insurance, you’re not talking about a company creating or selling a product and letting its employees purchase the product at a discount (as in your bookstore-employee example), nor are you talking about, say, a bookstore giving discounts to teachers or students to generate goodwill or extra business; you’re talking about the government screwing around with the tax code so that a rather important service is bought and sold NOT based upon what the market will bear, but based upon who you work for, or how many hours you work for them.

  90. Do you think this company should be required to have enough money, or sufficient insurance coverage, to compensate its neighbors in case of an accident? Or if the factory explodes and the owners have no assets, is it simply the responsibility of the factory’s neighbors to pay for the damages the factory caused them?

    I think people should be held responsible for the damages they cause. I believe in criminal negligence.

    Cities, etc. use Conditional Use Permits and zoning to keep residential units away from dangerous uses.

    …but that’s pretty much the state of affairs now. Insurance is covered in leasing agreements, etc.–and in almost all cities, companies can’t get permitted without adequate insurance. If the government required some huge magnitude of insurance to cover everyone against loss, it would surely wipe out a lot of businesses.

    Still, businesses, homeowners, etc. should insure their own property against loss.

  91. I didn’t see Sulla’s post before I made mine, but he or she made another good point–the way the system is now, your boss basically gets to decide which doctor you go to. So among its many other disadvantages, the current system gives employers either too much responsibility for or too much control over their employees, depending on how you look at it.

  92. Still, businesses, homeowners, etc. should insure their own property against loss.

    Yes, Ken, but I wish you’d make the distinction between loss caused by your own foolishness or an Act of God, versus loss caused by somebody else.

  93. It looks like I agree with sulla, as well. I think it would be great to get health care on my own, and to get more money instead of health insurance as part of my compensation from my job.

    My argument with Jennifer has always been a result of my suspicion that she thinks health care is a right, though she hasn’t come out and said that as clearly as, for example, Dan has, and/or that her anger over the current health care “system” is based on envy or some kind of radical egalatarianism.

    Speaking of sulla, whatever happened to marius?

  94. I think we should get rid of all property laws.

    People should be responsbile for protecting thier own stuff from theft, as I’m tired of being forced to pay taxes to fund police, courts, and jails.

    Come to think of it, why not get rid of laws against murder? People should be responsible
    for protecting themselves against others trying to kill them.

  95. I’ve got big questions about the suggestion that driving is a privilege.

    OT: I’m always amazed at people who don’t understand this concept. How is the ability to propel a two-ton block of metal through public space while promising not to maim or kill anyone nearby, anything other than a *privilege*? Just because driving is a de facto requirement of functioning in modern America, and maybe it offends libertarian sensibilities that your inalienable right to motor might be somehow restricted in some way, it’s still a privilege – at least in theory. In practice, this privilege is granted a bit more often than it should be – which is why thousands are killed by cars every year.

  96. rdkraus,

    Here’s how you do it: <I>word</I>. I cheated using code symbols to reproduce the characters, but if you type that in the form, you’ll get word.

    Of course, maybe this won’t work (though it looks okay in the preview), and I’ll just confuse you more 🙁

  97. My argument with Jennifer has always been a result of my suspicion that she thinks health care is a right, though she hasn’t come out and said that

    Maybe you should try debating me rather than your suspicions, sometime.

  98. Even against the damage caused by Cletus? That’s what I don’t get, Ken–you seem to be completely missing my point that a person should be held responsible for the damages he causes, whereas you are pretending that I am saying “Society as a whole should have to pay if I suffer.” No, society shouldn’t pay, but the guy who injured me should.

    Of course he should, and he is; nobody is claiming otherwise. What you’re saying is that because there’s a risk he might not be able to do so, “society” [sic-“government”] should force him — and everyone else — to buy insurance.

    But if so, why limit it to automobiles? He could throw a baseball through your bedroom window while playing catch with his son. He could cut down a tree in his yard, do it incorrectly, and have it fall on your car — or on your head. He could take a golf club and hit you in the face with it because you annoy him. The list is endless. Should we require all Americans to carry liability insurance for every possible negligent or intentional tort they might commit?

    (Ironically, note that “society” generally won’t *let* him buy insurance for the last one I listed; it’s deemed against public policy to let people insure themselves against committing intentional torts. The reason is obvious: we _want_ someone’s personal assets to be at risk if he assaults you. But that has the side effect of ensuring that you won’t fully recover your costs. (Unless, of course, your trial lawyer can find another deep pocket to blame. Like the manufacturer of the golf club.))

  99. If Cletus can’t pay, you want him thrown in jail for driving around without having bought insurance for your car?

    and

    As Ken pointed out, what you’re really advocating is jail time (debtor’s prison) for people who can’t afford to insure your car for you.

    This kind of well-poisoning phrasing (“Why should other people insure your car?”) appears to be predicated on the idea that people have a right — moral, ethical and/or legal — to cause damage to other people and their property without being capable of providing restitution. This is, as is often said, not even wrong.

  100. Private insurance companies base their billing on Medicare rates, but actually pay LESS. It’s Medicaid that actually pays the least and is the biggest money loser for facilities.

    In regards to the suggestion that private insurance companies are actually paying less, I believe you are mistaken.

    There are theoretical situations in which a private payor might pay a smaller percentage than what the hospital would get for a Medi/Medi patient. …when a private insurance patients went to an unapproved hospital, for instance.

    In practice, the admitting department is going to call the insurance company on admission and verify status. If the hospital is unapproved by the insurer, and the company will only pay a tiny percentage, then they won’t admit the patient. …They may transfer the patient to an approved hosptial.

    The only way they’d admit the patient is if the patient came through by way of the ER.

    I’m not talking about any individual code when I was quoting my (admittedly well rounded) percentages. That’s what they actually pay–weighted for the most frequently occuring codes, etc.

    The CFO and CEO of the hospital where I worked always wanted one report from me every morning–Case Mix. How many private insurance patients do we have per Medi/Medi patient. If the number got below–and this was some years ago–I’d say it was about 1 per 8, we were losing money. Anything better, and we were good. We lost money on Medi/Medi, and we could make up for 8 money losers with one private insurance patient.

    That’s why hospitals with demographics that have higher concentrations of private insurance patients do well and the rest don’t. Here in LA, Harbor UCLA and County USC and King Drew are always in financial trouble and about to close. They don’t have that problem in the nice parts of Orange County, in the nice parts of North County San Diego, etc. It’s about getting the private insurance patients. …When hosptitals talk about marketing to doctors, I think that’s half of what they’re talking about.

  101. He could throw a baseball through your bedroom window while playing catch with his son.

    Calculate the odds that I could be maimed or killed from a stray baseball, versus the odds that I could be maimed or killed by a man driving a couple of tons of metal through the public thoroughfares at speeds sometimes in excess of a mile a minute.

  102. Jennifer, why do you hate me so? I haven’t had a wreck in weeks.

  103. I think we should get rid of all property laws.

    People should be responsbile for protecting thier own stuff from theft, as I’m tired of being forced to pay taxes to fund police, courts, and jails.

    Come to think of it, why not get rid of laws against murder? People should be responsible
    for protecting themselves against others trying to kill them.

    Jeez, how many times do we have to see this fallacy used as an attack on libertarianism?

    nmg

  104. First, I imagine that even in a 100% privately owned public road system, that liability insurance of some extent would be required to use it. Granted, levels and coverage would probably be much less, but as an owner offering my product/service, I certainly would want only responsible people on my property.

    Second, Ken is right that even today, the world of zero risk (people without insurance shouldn’t be allowed to do X) doesn’t exist. Go into your local courthouse on a license suspension/DUI/etc. hearing day, and watch how many people are convicted of driving without a license. My county puts aside a whole day each week just to deal with ’em. Think those that drive without a license are driving with insurance?

    So what happens when they hit you? Yup. Your insurance pays. They’re judgment proof, and keep on going.

    That’s life. It can sometimes suck, but it is what it is. You can’t reduce risk to 0, no matter how hard you try.

    Third, as to healthcare and the poor, there is such a thing as voluntary socialization of costs. Maybe you would just leave the poor out on the street dying, but I would (and do, in some recent cases) donate to charitable causes seeking to raise money to pay for expensive medical procedures (and in many cases, medical professionals are willing to perform gratis work for charity). So in an Objectivist universe, maybe that objection has some traction, but not in my real world.

  105. Jeez, how many times do we have to see this fallacy used as an attack on libertarianism?

    It’s because it illustrates so well what a lame philosophy libertarianism really is.

    You say that collecting taxes is immoral and that the government using force to impose the will of the majority onto an individual is immoral but you don’t really believe it.

  106. My county puts aside a whole day each week just to deal with ’em. Think those that drive without a license are driving with insurance? So what happens when they hit you? Yup. Your insurance pays. They’re judgment proof, and keep on going.

    So we put those irresponsible people in jail and get them the hell off the roads. Works for me. Obviously no law is going to eradicate injustice (there will always be murderers, for example), but the law will at least enable us to prosecute and imprison those who commit the acts of injustice.

  107. I hadn’t read all the way to the end before I posted; I see that Jennifer has now added building a factory and becoming a doctor to her list of insurance requirements. That’s pretty harsh for the poor.

    Note that most people have _some_ assets available to compensate victims — at worst, as someone noted, one can garnish their wages. The poor are the only ones without any — but those people can’t afford insurance either. Basically, Jennifer is proposing that poor people not be allowed to do anything (*), because they won’t be able to compensate people who might be harmed.

    (*) I was going to say “anything except sit on the couch staring at the wall,” but what if they accidentally drop their cigarettes because they’re so bored? They could start a fire which might injure someone. We can’t have that.

  108. So we put those irresponsible people in jail and get them the hell off the roads.

    Problem is, it costs society to punish and our economy needs these people to do the grunt work. Since driving is more or less a requirement in our culture, somebody who loses his licence is often faced with the choice of driving illegally or losing his job, etc.

  109. Yes, Ken, but I wish you’d make the distinction between loss caused by your own foolishness or an Act of God, versus loss caused by somebody else.

    If someone steals your property, subsequently sells it and your property becomes unrecoverable. …If the culprit pleads guilty, but has no money–he spent what he got in exchange for your property…

    …Should society compensate you for your loss? Even in that situation, shouldn’t you have to insure your own property against theft?

  110. Yikes…not really wanting to jump into the snake pit here, but just a couple things I’d like to point out:

    -New Hampshire does not require auto insurance, last I checked. Now, ideologically, I think no one should be forced to buy insurance, but I have to say that on the Libertarian-Outrage-o-meter, mandatory auto insurance is pretty far down on the scale.

    -I think Tabarrok at Marginal Revolution misunderstands adverse selection. His argument seems to be, “Markets (in which adverse selection supposedly exist) work fine anyway; therefore, adverse selection is a boogeyman.” But no one reasonable ever claimed that adverse selection and asymmetrical information made markets impossible. In fact, one of his own examples is an excellent example of the effects of AS, not against it: used car inspections. Great, you get the used car inspected…which costs money and introduces the interests of another party (the inspector) into the deal. That’s a cost and inefficiency in the market which wouldn’t exist in the absence of AS. No one ever said the problems were insurmountable, only that they imposed extra costs.

    -Yes, healthcare/insurance should be completely separate from employment. The only reason they’re tied together, IIRC, is that back in the 1940s(?) the feds decided to make insurance a tax-free benefit. And prior to the existence of employer-provided health insurance, it was one of the functions of professional guilds and fraternal organizations.

  111. Even under our current system, anyone without insurance *chose* to forgo that expense, period.

    Perhaps, but they often “choose” not to because it is a less pressing need than, say, paying the rent or buying groceries.

  112. You say that collecting taxes is immoral and that the government using force to impose the will of the majority onto an individual is immoral but you don’t really believe it.

    Libertarians are like any other huge group, they cover a spectrum of beliefs. Using force to impose the will of the majority onto the individual is utterly immoral and I expect you feel the same (otherwise why don’t you support segregation laws? Or perhaps you supported japanese internment or maybe you support anti-sodomy laws? After all the majority has voted!).

    The point of a rule of law is to protect the individual from the will of the mob.

    The only time the individual should be coerced is if he wants to do physical harm to another. That’s it. If you support other coercions you are just supporting an aparatus that can be used for tyranny as soon as the wrong people get in power.

    Some libertarians may actually be anarcho-capitalists but to say all libertarians advocate anarchy is like calling all Democrats marxists. Wait a second… no just kidding.

    nmg

  113. Perhaps, but they often “choose” not to because it is a less pressing need than, say, paying the rent or buying groceries.

    No. Anyone can afford rent and food and health insurance. Anyone. Subsistence welfare covers more than enough for that. Between all the programs available to the poor for food and free clothes and section 8 housing and all the rest, anyone without insurance has made the choice to not have it. Period.

    nmg

  114. If someone steals your property, subsequently sells it and your property becomes unrecoverable. …If the culprit pleads guilty, but has no money–he spent what he got in exchange for your property……Should society compensate you for your loss? Even in that situation, shouldn’t you have to insure your own property against theft?

    No, Ken, society should not compensate me; however, the man in question is going to jail. But with Cletus the Uninsured, he cannot compensate me but you don’t think he should go to jail, either. I’m screwed, and Cletus has no motivation to take responsibility for himself, because you think that violates his rights.

  115. I don’t about that, nmg. Say you’re a single mom with three kids and your employer does not provide insurance benefits. How much would coverage cost you per month to buy for yourself and your children?

  116. Basically, Jennifer is proposing that poor people not be allowed to do anything (*), because they won’t be able to compensate people who might be harmed.

    What I am saying, David, is that if you’re doing something which can hurt an innocent person, you should be able to pay for the damages you’ve caused that person. I am saying that people should be required to take responsibility, and make amends, for damage they cause to others.

    Whereas you and Ken seem to be saying “If you’re too poor to pay for the damages you do to another, oh dear! We certainly don’t want to put you in jail, so we’ll just let your victim pay the damages. That’s what we call Responsibility.”

  117. Yeah, Cletus kinda gets away clean, more or less.

    I should add that I think Cletus is an irresponsible slob, and I think it’s irresponsible to drive around without insurance.

    …but if a crime is willfully destroying someone else’s property, I’m not sure, beyond a reasonable doubt, that what Cletus did should be considered a crime.

  118. Cletus is not pleased!!!!!!!!!!!!!!!!!

  119. What I am saying, David, is that if you’re doing something which can hurt an innocent person, you should be able to pay for the damages you’ve caused that person. I am saying that people should be required to take responsibility, and make amends, for damage they cause to others.

    And what I am saying is that anything one does “can hurt an innocent person.” You provide no basis for discerning a stopping point for this principle you espouse.

  120. Ken, would there at least come a point where, after a certain number of uninsured accidents, you’d agree at least that Cletus should be kept off the road, at risk of jail time?

    David, I think you know perfectly well that there are different levels of risk for different things. To pretend that a man driving a car and a man playing baseball are equally likely to do serious but accidental harm to another, and thus should carry an equal amount of insurance against that possibility, is fallacious.

    I agree with what Rhywun said earlier:How is the ability to propel a two-ton block of metal through public space while promising not to maim or kill anyone nearby, anything other than a *privilege*?

  121. We certainly don’t want to put you in jail, so we’ll just let your victim pay the damages. That’s what we call Responsibility.”

    Interesting idea that “Responsibility”. I’m not so sure it’s a Platonic thing, existing itself as a truth, apart from its owner and his or her actions.

    But with Cletus the Uninsured, he cannot compensate me but you don’t think he should go to jail, either. I’m screwed, and Cletus has no motivation to take responsibility for himself, because you think that violates his rights.

    Does Cletus believe in hell? ; )

    Ken, would there at least come a point where, after a certain number of uninsured accidents, you’d agree at least that Cletus should be kept off the road, at risk of jail time?

    I can see some potential there. Do you see the potential injustice if Cletus never gets in an accident, and you’ve legally compelled him (and a lot of people like him) to pay for your insurance?

  122. Do you see the potential injustice if Cletus never gets in an accident, and you’ve legally compelled him (and a lot of people like him) to pay for your insurance?

    Yes, that truly sucks. That’s another paradox of modern society: we’ve painted ourselves into this corner where the only way to survive (unless you live in Manhattan) is to spend a good chunk of time driving a car, which is very risky not just to yourself but to others. So which results in the greatest net injustice, overall: requiring everyone to be able to pay for the costs of damage they might cause to others, or requiring a lot of people who WERE damaged by others to absorb the costs themsleves?

    Both options have serious drawbacks, but I prefer the first. Besides, as has been pointed out before, driving IS a privilege rather than a right (if it were a right, you’d automatically get your license at a certain age, rather than have to pass a test first), and with privileges, or even rights for that matter, come responsibilities. Including the responsibility to make amends for any damage you’ve caused to others.

  123. Here’s a compromise, which I think I offered in the last thread on this topic: if Cletus has no assets and doesn’t want to buy insurance, fine. But let’s say Cletus hits me, and causes all sorts of damage amounting to $100,000. (I just picked that number out of thin air; this example will work for any amount, though.)

    Let’s say, then, that this debt can NOT be eradicated through bankruptcy, and furthermore that this debt becomes FIRST on Cletus’ list of financial obligations: he can’t buy a house, get a credit card or take on other debts while he still owes me this money. (And lest you point out what a hardship this is to poor Cletus, compare that to the hardship his irresponsibility inflicted on me. The hardship of correcting your mistakes is different from the hardship of someone else trashing your life.)

  124. rdkraus:

    I find this site helpful

    during the last exchange on car insurance, I mentioned that Fla. had considered a gas tax to give everyone minimum coverage, but the proposal failed. depending on how it is executed, that seems like a good idea to me, but, as always, the devil is in the details. I received no comments on this idea before.

    I would also prefer that my employer just give me the money they spend on my health insurance and let me decide how best to spend it. I would probably buy catastrophic health and ER coverage and pay for other needed medical treatments on a pay-as-I-go basis.

    genetic screening for health insurance doesn’t seem any different to me than differential car insurance premium rates based on sex, age, marital status, GPA, etc.

    finally, I was in a car accident with Cletus McSisterfuck. The guy not only had no insurance, his license had been revoked for DUI. he was driving south in the northbound lane of a divided highway. we hit each other almost fully head-on a night, rounding a curve. both cars were totalled, he was killed instantly (with a blood alcohol level of 0.24). without insurance, including the umbrella of my mother’s uninsured motorist coverage, I’d have been totally screwed. why? not just because Cletus didn’t have insurance, but because society failed to keep him from endangering others, which he had shown a propensity for doing. taking away a license doesn’t stop people from driving if they want to (without upgrades in technology, which might be a good idea). but this guy should have been in prison, with his prison wages garnished to pay back my deductible and my insurance company’s expenses. he could get out when he finished paying his bill.

  125. Getting back to the original article, the author is correct when he says that asymettrical information can cause the insurance system to break down. The alternative however, is to allow the insurance companies to refuse insurance (or price it out of reach) of middle class people for reasons beyond their control.

    In the real world the electorate is not going to allow that. Like it or not the technology may make single payer (ie government) insurance the only realistic proposal.

  126. That guy that hit you must have been a real monster.

    …I don’t think I’d be entirely opposed to a judge having the discretion–especially in bankruptcy court–to lien anything Cletus owns, if he doesn’t have any money. …Until Cletus pays you what he owes you.

  127. Jennifer, that last compromise is a wonderful one that I would subscribe to.

    Unfortunately, I have learned that all the meaningful law on secured transactions in this country is written by an unelected group that basically represents the interests of banks. Since they desire uniformity in their commerce of lending, they promulgate these codes, which they then present to each state legislature. Why not present it to Congress? – after all, this does seem to be an issue concerning interstate commerce, even if you are a strict constructionist-

    Well, let’s just say that peer pressure works in their favor at the state level, and provides a little less transparency.

    Secured creditors want their guarantees, and have the lobbying power to make it so, even if it does screw tort victims.

  128. Good Lord, biologist.

    At least the SOB who hit you is dead. Maybe you can cheer yourself up, just a little bit, with this thought: your car was trashed, and you underwent a lot of misery, and that all sucks, but you inadvertently provided a good public service by getting this monster off the road. Maybe there’s a family of four, alive this minute, who would be dead if you hadn’t had that accident.

    (Yes, I know you didn’t intend to. Dorothy didn’t intend to smash the Wicked Witch with her house, either, but the Munchkins still appreciated it.)

  129. Ken, he wasn’t a monster, he was a guy with an alcohol addiction. nonetheless, he made his problem my passenger’s problem and my problem. this guy literally had nothing. because of the uninsured motorist coverage and state law, the insurance company bought out my right to sue him for damages (fine with me, since he didn’t have anything tangible and was dead). I don’t know for certain, but I doubt they got anything from his estate, since reportedly there really wasn’t an estate. if he had been put in jail, society would have been protecting itself from a dangerously irresponsible person who had demonstrated repeatedly his inability to drive safely. to me, that’s as important a justification for the prison system as punishment.

  130. he wasn’t a monster, he was a guy with an alcohol addiction

    You are a more forgiving soul than I. Maybe he can’t be held responsible for getting drunk, but he damn sure didn’t have to get behind the wheel. Drunkenness may be an addiction, but drunk driving sure as hell isn’t.

  131. Dan, I pay $250 /mo for my family of four, and that is for a coverage plan that has a moderately high deductible of about 5k but fully covers well-baby care and shots and twice yearly checkups anyway (obviously the insurance company is better off paying you to maintain your health than to discourage it).

    If I was broke and just needed to make sure catastrophic events would be covered, I could get even cheaper coverage, although I have had a hard time finding statospheric deductibles. I would like to find a plan that leaves me on the hook for the first 25K or so.

    Remember, your example was of a working mother who is just between jobs. There’s NO reason why she couldn’t maintain insurance for a short time between jobs.

    If $250/ mo is a daunting sum for someone as along term cost, then they are probably qualified for section 8 housing, school lunch programs, AFDIC, etc. etc. They can afford the $250. They really can.

    nmg

  132. You are a more forgiving soul than I.

    I assure you, that’s not the case, but it’s been over a decade, so I’ve got some distance on it. and some cool scars to brag about surviving. (my injuries were relatively minor, all things considered.)

  133. biologists’ tale is exactly why there should be no laws requiring liability coverage.

    Because you can’t enforce them in a society that is not a tyranny. So we should have a system that doesn’t rely on a fantasy model where everyone buys liability coverage no matter how irresponsible or broke they are. A more practical system would work better for everyone.

    Under the “idiot insurance” system, you buy coverage to pay any damages you suffer from other idiots on the road. If you wish to take on the full risk that you’ll be injured by a deadbeat with no assets, it’s your choice. If you are afraid of that miniscule chance, then buy some “idiot coverage”. If you have assets you wish to protect in the case you are an idiot that day, you should buy some liability coverage, because even if you hit someone with “idiot coverage”, their insurer will come after your assets.

    It’s really quite simple. And it’s got the added benefit of being more effective, cheaper for everyone, and DEVOID OF COERCION.

    nmg

  134. nmg: under the system Florida was flirting with (gas tax to fund universal basic coverage), everyone WOULD have some basic level of coverage, because you can’t drive without gas.

  135. Except for those crazy hippies who put vegetable oil in their cars. Damn dirty uninsured hippies.

  136. I directed that “That guy that hit you must have been a real monster.” to Jennifer. …The guy that hit you, Biologist, was a monster, and as awful as what happened to him was, it’s good to know that he won’t hurt anyone else. …and thank goodness you survived!

  137. I still had an old fashioned insurance policy, with $1,000.00 deductible type plan, and thought that paying $10.00 for a doctor visit was de minimus (extra credit for latin?).

    No extra credit. The Latin expression is not de minimus, but rather de minimis, from the maxim De minimis non curat lex (that is, “The law [alternatively: a statute] does not concern itself with trifles”).

  138. this is the problem, folks like Dan are saying no one can afford insurance yet he still asks questions like “Say you’re a single mom with three kids and your employer does not provide insurance benefits. How much would coverage cost you per month to buy for yourself and your children?” If you don’t know the answer to this question already then quit arguing that insurance is not affordable. There are tons of plans out there, nmg’s seems comparable with many i have shopped for and one i was on for 2 months between jobs (cobra coverage with my existing provider was too expensive). Jesus, if you don’t like your employer’s choices, get your own or change employers. some will even kick in a little cash if you decline their plan. can folks please at least find out what plans are out there before delcaring all plans unaffordable?

  139. As long as hospitals and doctors are legally compelled to provide emergency care to everyone, regardless of their ability to pay, some system to share those costs is inevitable.

    In making it illegal for an emergency room to decline to offer care to those unable or unwilling to pay for such care, government has already clearly stated that there is a right to a certain basic level of care. That we have created such a labrinthine system to share the cost of that basic health care is only because we have refused to deal with the obvious implications of requiring emergency care providers to serve all customers regardless of their ability to pay for the service.

  140. If I may digress from the topic at hand for a moment, I’d like to address danny boy.

    “People should be responsbile for protecting thier own stuff from theft, as I’m tired of being forced to pay taxes to fund police, courts, and jails.”

    Very, very few crimes are actually physically prevented by the police. On the other hand, one can simply take responsibility for his/her own safety by training with and carrying a defensive implement. (Kuboton, pepper spray, pistol.)

    I personally practice at the range twice a week, and am quite content to point out that I’m far more proficient with a side arm than the average cop.

    Generally speaking, cops are nothing more than a documentation/cleanup crew. They are not legally bound to protect either you or your property from crime.

    “Come to think of it, why not get rid of laws against murder? People should be responsible
    for protecting themselves against others trying to kill them.”

    Murder would still be illegal in any libertarian society, as is any activity in which one person attacks another.

    duh.

    “It’s because it illustrates so well what a lame philosophy libertarianism really is.”

    It does nothing of the sort. It shows that you’re happy to beat the everliving shit out of a big, mean straw man, though.

    “You say that collecting taxes is immoral and that the government using force to impose the will of the majority onto an individual is immoral but you don’t really believe it.”

    Yes, I do.

    I always love it when someone with a substance-free argument tries to cover up their weak arguments by getting their condescension on.

  141. I haven’t had time to read the whole thread yet, so apologies if this has already been addressed, but I think I have some important info re:

    Why are there no insurance groups formed on an ad hoc basis outside of the employer group?

    I don’t know about anyone else, but I would have thought that churches, unions and social groups would be ideal for this.

    The answer is: Once upon a time, social groups did.

    See: How Government Solved the Health Care Crisis: Medical Insurance that Worked ? Until Government “Fixed” It

    Excerpts from linked article:

    Eighty years ago, Americans were also told that their nation was facing a health care crisis. Then, however, the complaint was that medical costs were too low, and that health insurance was too accessible. But in that era, too, government stepped forward to solve the problem. And boy, did it solve it!

    In the late 19th and early 20th centuries, one of the primary sources of health care and health insurance for the working poor in Britain, Australia, and the United States was the fraternal society. Fraternal societies (called “friendly societies” in Britain and Australia) were voluntary mutual-aid associations. Their descendants survive among us today in the form of the Shriners, Elks, Masons, and similar organizations, but these no longer play the central role in American life they formerly did. As recently as 1920, over one-quarter of all adult Americans were members of fraternal societies. (The figure was still higher in Britain and Australia.) Fraternal societies were particularly popular among blacks and immigrants…

    The principle behind the fraternal societies was simple. A group of working-class people would form an association (or join a local branch, or “lodge,” of an existing association) and pay monthly fees into the association’s treasury; individual members would then be able to draw on the pooled resources in time of need. The fraternal societies thus operated as a form of self-help insurance company…

    … The kinds of services from which members could choose often varied as well, though the most commonly offered were life insurance, disability insurance, and “lodge practice.”

    “Lodge practice” refers to an arrangement, reminiscent of today’s HMOs, whereby a particular society or lodge would contract with a doctor to provide medical care to its members. The doctor received a regular salary on a retainer basis, rather than charging per item; members would pay a yearly fee and then call on the doctor’s services as needed. … [Deleted for space: Discussion of mechanisms for controlling quality of service and avoiding abuse of system.]

    Most remarkable was the low cost at which these medical services were provided. At the turn of the century, the average cost of “lodge practice” to an individual member was between one and two dollars a year. [Equivalent of about a day’s pay for the average person. Also about equal to one doctor’s house call on the ordinary market.]…

    … Yet licensed physicians, particularly those who did not come from “big name” medical schools, competed vigorously for lodge contracts, perhaps because of the security they offered; and this competition continued to keep costs low.

    The response of the medical establishment, both in America and in Britain, was one of outrage… Such low fees, many doctors charged, were bankrupting the medical profession. Moreover, many saw it as a blow to the dignity of the profession that trained physicians should be eagerly bidding for the chance to serve as the hirelings of lower-class tradesmen. It was particularly detestable that such uneducated and socially inferior people should be permitted to set fees for the physicians’ services, or to sit in judgment on professionals to determine whether their services had been satisfactory. The government, they demanded, must do something.

    And so it did. In Britain, the state put an end to the “evil” of lodge practice by bringing health care under political control. Physicians’ fees would now be determined by panels of trained professionals (i.e., the physicians themselves) rather than by ignorant patients. State-financed medical care edged out lodge practice; those who were being forced to pay taxes for “free” health care whether they wanted it or not had little incentive to pay extra for health care through the fraternal societies, rather than using the government care they had already paid for.

    In America, it took longer for the nation’s health care system to be socialized, so the medical establishment had to achieve its ends more indirectly; but the essential result was the same. Medical societies like the AMA imposed sanctions on doctors who dared to sign lodge practice contracts. This might have been less effective if such medical societies had not had access to government power; but in fact, thanks to governmental grants of privilege, they controlled the medical licensure procedure, thus ensuring that those in their disfavor would be denied the right to practice medicine.

    Such licensure laws also offered the medical establishment a less overt way of combating lodge practice. It was during this period that the AMA made the requirements for medical licensure far more strict than they had previously been. Their reason, they claimed, was to raise the quality of medical care. But the result was that the number of physicians fell, competition dwindled, and medical fees rose… As with any market good, artifical restrictions on supply created higher prices — a particular hardship for the working-class members of fraternal societies.

    The final death blow to lodge practice was … [Well, you really should go to the link and read the article. Basically, it was a combination of private-party stupidity and short-sightedness, with goverment power acting as an enabler.]

  142. Here’s a compromise…Let’s say, then, that this debt can NOT be eradicated through bankruptcy, and furthermore that this debt becomes FIRST on Cletus’ list of financial obligations: he can’t buy a house, get a credit card or take on other debts while he still owes me this money.

    Jennifer, how about this for a compromise: the judge sentences Cletus to be your butler.

  143. I got to this thread late– sorry.

    A couple of points.

    Driving is not a privilege, it’s a skill. Driving on a road that someone else owns is the privilege, like the privilege that I grant you when I allow you, explicitly or implicitly, to walk on my property. Since I own the property, I could refuse you. If I owned a road, I might want you to have liability insurance before I let you drive on it, with a “hold harmless” clause that exempts me from liability if you harm the life or property of the other drivers I allow on my road. My old Lions Club had to get a temporary rider on its policy whenever it held an event at our local high school, holding the school district harmless from anything we did that might harm our patrons at the event. Similarly, the bank that held the mortgage on my house required me to have paid-up fire insurance on it. Much as we Libertarians don’t like it, the govt. owns almost all of the roads. Given that, it seems reasonable that the govt. requires us to demonstate competence at the wheel (OK,OK, don’t start– I know the driving tests are a joke, mostly) and to have insurance. Is that so they’re held harmless?

    And I *can* see someone driving without a license but having insurance. I don’t know about your insurance, but mine is attached to the *car(s)* I own, and I don’t have to submit proof of a license to get it, I have to submit proof of the car’s registration (indirectly makes sure that the car meets basic safety standards; I know, I know, insurance companies should be doing that and licensing drivers, too, instead, and are better equipped and motivated to do it– another subject). I could own cars that I let others drive, and the govt. wants me as an owner to insure for liability when the cars get into accidents.

    As a retiree on fixed income, I’d like to get me some of that high deductible, lower premium medical insurance, especially since my wife ahs a number of years to go before she qualifies for Medicare. Can someone post the name of a company? Yes, we plan to use Medicare. I know it helps keep the evil juggernaut rolling, but damn it, they took part of our money all the while we worked. If we had saved it, maybe we could afford to opt out of Medicare. We drive on govt. roads, too.

    Jennifer, I want Cletus (or anyone) to be held responsible for his actions to the fullest possible extent. But as someone observed, There will always be murderers, and uninsured deadbeat drivers. Makes sense to protect ourselves from losses they cause when we can.

    I have a hunch that this thread is growing stale. I wonder if anyone will read this post.

    CrackerBarrel

  144. CrackerBarrel

    “I don’t know about your insurance, but mine is attached to the *car(s)* I own”

    this might vary among states, but in Florida, some aspects of the insurance cover the driver’s liability, no matter whose car he is driving.

  145. Jennifer (et al.), the problem of “what happens if someone like Cletus causes me damage that he cannot possibly pay for?” has come up in connection with anarcho-capitalist “libertopias” especially, with no government and no “public” (government-owned) property. That’s because in “Ancapistan” there are no “crimes” (offenses against the State or “society”), only torts (offenses against individuals), and the emphasis is not so much on punishing the perpetrator as in providing restitution to the victim. Presumably offenders would not be simply locked up or put to death, because that doesn’t do anything for the victim.

    However, the fact that there is no “public” property is one of the keys to the solution.

    The solution is a form of liability insurance that we can call restitution insurance. Cletus (and just about everyone else) pays for coverage in the event that he ever incurs a humongous debt that he can’t possibly pay for. If the arbitrators find Cletus owes you a restitution, Cletus’ insurance company pays restitution to you if Cletus can’t.

    Then probably the insurance company turns around and tries to recover as much of the cost from him as it can. Maybe it sets him to manufacturing license plates (if such exist in Ancapistan). This would be built into the contract between Cletus and his insurance company. The terms won’t be too outrageously onerous for Cletus (e.g., “In exchange for us paying off your claim, you have to let us kill you and sell off your organs to recover the costs”) because there would be many competing restitution insurers competing for Cletus’ business, which would keep the “costs” from being too arbitrarily unreasonable.

    But the insurance company probably won’t depend on recovering its entire payment from Cletus in order to keep itself solvent. Most of its revenue will come from collecting the premiums of all its other customers, presumably few of whom will ever submit a claim to be paid out.

    This type of insurance will be feasible at affordable rates if:

    A) The total number of people paying for restitution insurance is very large (approaching “almost everyone”). This will provide the funding for any claims that have to be paid out. These claims will be very large but also relatively few in number.

    B) A relatively small proportion of customers ever have to submit a claim for the insurance company to pay out, because they have incurred a debt they cannot possibly pay off by other means. I suspect this would be the case. This is comparable to people declaring bankruptcy today. What percentage of the population currently declares bankruptcy? It’s a very small minority, right?

    Now, I know that prerequisite (A) must raise this question in your mind: What in hell could possibly compel almost everyone to buy restitution insurance? Especially irresponsible and/or low-income folks like Cletus? Especially if one’s chances of ever having the insurance company pay off a claim, after you’ve paid all those premiums, are very low? Especially if there is no government to force people to buy such insurance?

    The answer: Market forces and the absence of “public” property.

    Before I hire you to do anything for me, before I buy anything from you, before I sell you anything, before I let you set foot on my property, one thing I will probably want to know is, “Do you carry any restitution insurance?” Because if you don’t, you’re a risky person to deal with. There’s a chance you could incur a debt to me, or damage me, or wrong me, and I would never be able to collect restitution from you. I’d tend to avoid having any dealings with you, in favor of other people who do carry restitution insurance. This will make life much more difficult — if not impossible — for you. This is your incentive for buying restitution insurance, and you’ll work very hard and creatively to find a way to scrape up the pennies you need to do so.

    In Ancapistan, you can’t run to the government to escape your responsibilities. (Although you might get a charity to pick up the tab for your premiums, if you can convince them that you really are trustworthy. That’s likely to be hard work, too, with some strings attached.)

    Also, as the owner of a private highway, I will want to see proof of Cletus’ restitution insurance before I sell him the sticker-with-embedded-microchip that gives him access to my highway. I don’t want him plowing into one of my streetlights that he has no way of paying for. And I don’t want my other customers to find out that I let such a risky person onto the highway to imperil them — I’d lose their business. Therefore, if Cletus doesn’t have restitution insurance, he doesn’t have the opportunity to plow into Jennifer’s car and injure her. If he does have the insurance then, god forbid, if he wrecks Jennifer’s car and injures her, his ins. co. will pay for it.

    Since I’ll be away from the WWW until Tuesday, I’ll try to anticipate a couple of objections:

    – Cletus is unlikely to submit a claim lightly or act in a riskier manner simply because he has restitution insurance to cover it (the “moral hazard” problem) because he would be penalized. The company has the right to make him work to partly pay off his debt. At the very least, his rates will go up. Plus, if it’s known he had to have a claim paid off, he’ll become known as a risky person to deal with.

    – There is a problem if the restitution insurance company gets hit with such a big claim, or so many claims, that it can’t afford to pay off Jennifer. This is a problem that insurance companies already deal with today. One solution is reinsurance: Insurance companies in turn pay for coverage by reinsurers, which pay the claims they themselves can’t. It’s a matter of figuring out the odds of various payouts, what premium needs to be charged to cover it, make a profit, yet still be affordable, etc. Actuaries figure it out and make it work.

    Restitution insurance is also discussed here:

    http://www.libertarian.co.uk/lapubs/philn/philn031.pdf

    Now I have to go. Happy New Year, all!

  146. Oop, had to come back for a couple things:

    1) The PDF link I gave assumes restitution insurance claims would be paid by the insurer of the victim. However, I have seen other proposals where the debtor’s insurer would pay, and it would not be limited to cases of “criminal” culpability. But I can’t find any references on the Web. Although I think the latter case is better, either way there is an incentive for almost everyone to buy coverage, and the victim will get restitution.

    2) Some people may object to a situation where, if Cletus incurs an obligation he can’t pay off, his restitution insurer might subject him to something like debtor’s prison in order to recover partial payment. This may be unacceptable to us. But the real question is, is it acceptable to Cletus? If it is, fine. If not, and many other people feel the same way, then the market will probably offer them an alternative: Cletus’s debt will be paid off, and he will have little or no obligation to repay the insurer. However, his rates under such a set up will surely be higher. And if he does ever have a claim, his rates will probably go WAY up, or he might be dropped from coverage altogether as an unacceptable risk. TANSTAAFL.

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