Rowyn (rowyn) wrote,
Rowyn
rowyn

The Economics of Insurance


One of the things that’s been kind of driving me nuts about the whole “mandatory insurance coverage for contraception” thing is that, of dozens of tweets and articles I’ve seen complaining about it or complaining about people complaining about it, only one actually addressed what I don’t like about it.  Here, have a link: http://online.wsj.com/article/SB10001424052970204136404577210730406555906.html

 

Allow me to pull out the key point:
Insurance is supposed to mean a contract, by which a company pays for large, unanticipated expenses in return for a premium: expenses like your house burning down, your car getting stolen or a big medical bill.

 

There are certainly good arguments for subsidizing contraception.  If the federal government wanted to up food stamp allowances and let people use them to buy condoms/birth control pills/etc., I could see that as reasonable.  In fact, the federal government already does subsidize birth control, in the form of grants to Planned Parenthood, which provides inexpensive birth control pills and annual check-ups to women across the country. They may even still be handing out free condoms.  I don’t know if this is the highest and best use for taxpayer dollars, but it is at least (a) pretty cheap on the scale of the federal budget and (b) reasonably efficient.

 

Insurance is not efficient. 

 

No doubt we could come up with a less efficient way to subsidize birth control than to:

 

(a)   Create a government  mandate that every company offer employees insurance that covers contraception from private insurers, necessitating that:
(b)   Private companies purchase insurance from those private insurers
(c)   Private companies report their insurance to the government
(d)   Private insurers report who’s bought insurance to the government
(e)   Individuals report whether they have insurance or not to the government
(f)     The government track what companies aren’t providing insurance
(g)   The government offer subsidies for those who aren’t getting insurance through an employer
(h)   The government penalize individuals who don’t get insurance and companies who refuse to provide it
(i)     Individuals who did get insurance get a prescription for birth control pills from a doctor
(j)      The doctor files a claim with the insurance company for $100 for the office visit
(k)   The insurance company spends $15 processing the $100 claim
(l)      Individuals get their birth control pills from a pharmacy
(m) The pharmacy files a $30 claim for the pills
(n)   The insurance company spends $15 processing the $30 claim
(o)   Insurance company reports all this back to the government to show they’re complying with the law.

 

I mean, I could think of a worse way of doing it. Perhaps we could get the TSA into the act?  They already do full-body scans, why not add prescription drugs?  Oh wait, I was trying for LESS efficiency.  I’m sorry, my imagination is failing me at the moment.

 

My point is that insurance is a HORRIBLE, NO GOOD, VERY BAD way of covering routine expenses.  It adds a whole extra layer of bureaucracy to every transaction, for no reason at all.  If you add $200 worth of annual routine expenses to what insurers are required to cover, then insurers are going to charge an extra $300-$400 of annual premium to your bill.  You don’t get “free” or even “cheaper” services this way.  You get more expensive services because now you have to pay for all the extra bureaucracy and paperwork and insurance company profit.  If you can afford insurance for a routine expense, you can afford the expense.  If you need a subsidy in order to get insurance for a routine expense, you could just get a subsidy for the expense itself and it’d be cheaper. 

 

But NO.  This is freaking America, and we have to do everything in the most insane and ridiculous way, and then call it 'compromise'.  Where 'compromise' means 'worse than what anyone on any side actually wanted'.  x.x

Tags: economics
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