Insurance — Against What?

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The brouhaha over whether Catholic institutions should be required to provide insurance coverage for contraception highlights everything that is wrong with medical insurance today. And Obama’s “compromise” of requiring insurance companies to provide contraception for free, thereby sidestepping the argument that Catholic institutions shouldn’t have to pay for it, is even worse.

No one should use insurance to pay for contraception. It is a regular, pre-planned expense of daily living. There is nothing to “insure.” There is no guesswork in whether a person will need it or not. It is the best example of the current problems with medical "insurance."

The purpose of insurance is to protect against unexpected catastrophic expenses — the kind of costs you wouldn’t be able to cover on your own. It is a way of hedging your bets against disaster. People pool their money, and whoever has a disaster gets to take money out of the pot. If too many disasters occur, the pool runs dry. The only remedy is to increase the amount each person pays into the pool, and decrease (through healthier, safer living) the number of disasters that individuals can’t pay for themselves.

Some people may never “get their money’s worth” out of their insurance premiums, because they remain healthy and accident-free. And that’s a good thing.

Insurance is the lottery you don’t want to win.

We have to stop thinking about insurance as some kind of unlimited prepaid plan in which everyone scrambles to “get their money’s worth.” For an insurance program to work, there need to be more healthy people than unhealthy people. Insurance premiums always have to outweigh medical payments. But when we start covering every little doctor’s appointment and medical expense, there isn’t enough money left for the true disasters without vastly increasing the premiums.

Contraception is a perfect example. There is nothing catastrophic or unexpected about its cost. If a person is having sex and doesn’t want to make a baby, the cost of contraception is as regular and predictable as clockwork. There is no unexpected event to insure against (unless the contraception doesn’t work — but that’s a different medical event). There is no reason to insure against the possibility that you will have sex.




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