Friday, July 23, 2010

What Is Insurance?

Troy Camplin offers an illuminating thought experiment — What If There Were Food Insurance? The Honorable Congressman Ron Paul made the same argument with a comparison to another sphere — Healthcare and Economic Realities:
    Consider what would happen if car insurance worked the way health insurance does. What if it was determined that gasoline was a right, and should be covered by your car insurance policy? Perhaps every gas station would have to hire a small army of bureaucrats to file reimbursement claims to insurance companies for every tank of gas sold! What would that kind of system do to the costs of running a gas station? How would that affect the prices of both gasoline and car insurance? Yet this is exactly the type of system Congress is now expanding in health insurance. In a free market system, health insurance would serve as true insurance against serious injuries or illness, not as a convoluted system of third party payments for routine doctor visits and every minor illness.
"But healthcare is expensive," you say. It wouldn't be if the free market were allowed to operate.

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Anonymous M.Z. said...

The answer is a lot less than you think. The payment processing side of insurance amounts to 2.5% or something like that. It is pretty close to the cost of processing credit cards.

And for all practical purposes, there is food insurance. We subsidize corn and other grain producers to overproduce, insuring that there is ample supply. Similar schemes have been true throughout history. Most often the price of bread has been subsidized.

12:34 AM  

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