Holder and Sebelius trot out the auto-insurance canard

posted at 10:14 am on December 14, 2010 by Ed Morrissey

You have to feel for the editors of the Washington Post.  The day after a federal judge rules ObamaCare’s mandate unconstitutional, they get an opportunity to let the woman who runs it and the man who directed its defense publish an essay rebutting the critics dancing on the mandate’s grave.  Once the editors receive it, though, they see that the argument relies on a canard that has been thoroughly debunked for months — and renders the entire exercise useless.  Do the editors kill the celebrity column, or run with it and hope no one notices?

Guess:

Everyone wants health care to be affordable and available when they need it. But we have to stop imposing extra costs on people who carry insurance, and that means everyone who can afford coverage needs to carry minimum health coverage starting in 2014.

If we want to prevent insurers from denying coverage to people with preexisting conditions, it’s essential that everyone have coverage. Imagine what would happen if everyone waited to buy car insurance until after they got in an accident. Premiums would skyrocket, coverage would be unaffordable, and responsible drivers would be priced out of the market.

The same is true for health insurance. Without an individual responsibility provision, controlling costs and ending discrimination against people with preexisting conditions doesn’t work.

This is such a bad argument that it staggers the imagination why the administration would still be making it.  Drivers carry required insurance to cover damage done to others, not themselves, for one thing.  It’s not applicable at all.  Furthermore, states impose the insurance requirement, not the federal government, because states license drivers and vehicles.  Driving is, after all, a voluntary activity conducted on public property (roads); there is no requirement for licensing or insurance for those who drive only on their private property.  People who don’t drive on public roads aren’t required to buy a license or the insurance.

There are other problems with this analogy as well.  Those who do have auto insurance only file claims when significant damage occurs.  Auto insurance doesn’t pay for routine maintenance, like oil changes, lube jobs, and tire rotation.  That’s why auto insurance is relatively affordable.

Also, auto insurance is priced to risk.  If a driver lives in a high-crime area, then the premiums will rise to cover the risks associated with theft.  If they drive badly (get moving violations and accidents), premiums will go up, or in some cases, the insurer will drop the driver.  Policies are priced for risk according to age as well; the youngest and oldest drivers pay more due to their propensity for causing losses.   Those who drive well and present a lower risk get rewarded with lower premiums.  Right now, the federal government is preventing insurers in some instances from risk-pricing health insurance to impose government-approved fairness.  That means we all pay more, removing the incentive to lower risk.

Finally, let’s use another related analogy: fire insurance.  If we forced insurers to write comprehensive policies on burning homes, we would have no insurers left in the market.  However, Holder and Sebelius want health insurers to do the same thing — and need the mandate to force all of us to assume that risk through the higher premiums that subsidize it.  And, by the way, the government is doing exactly what Holder derogates in the essay — forcing insurers to write policies after the accident/fire/illness.

The need to reform the health-care economic model is real.  Holder, Sebelius, and Barack Obama have gone in the wrong direction through the imposition of government mandates and the calcification of the third-party payer model.  We need to break that model for routine health maintenance and return insurance to the role of indemnifying against substantial loss and end the tax incentives for the market distortion of the employer-based health care model.

Update: The Post isn’t the only publication struggling with the differences between auto and health insurance mandates.


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