A Failure to Discriminate

Tuesday, July 03, 2012

John Stossel extends a metaphor I've seen used before in the debate over medical insurance reform, but he does something I hadn't seen anyone do with it.

[O]ne-size-fits-all rules take away insurance companies' best tool: risk-based pricing. Risk-based pricing encourages us to take better care of ourselves.

Car insurance works because companies reward good drivers and charge the Lindsay Lohans more. If the state forces insurance companies to stop discriminating, that kills the business model.

No-discrimination insurance isn't insurance. It's welfare. If the politicians' plan was to create another government welfare program, they ought to own up to that instead of hiding the cost.
This -- really, what "insurance" actually means -- is an important thing to remind people of. This point just happens to tie in with what I had seen done before with the auto insurance metaphor, which was to liken the low-deductible plans that are so common with covering things like oil changes with auto insurance.

Interestingly, Stossel closes his column with a couple of other examples of non-discrimination in the medical insurance debate:
... I wish people would stop conflating the terms "health care," "health insurance" and "Obamacare." Reporters ask guests things like: "Should Congress repeal health care?" I sure don't want anyone's health care repealed.

Reporters also routinely called Obamacare health "reform." But the definition of reform is: making something better. More government control won't do that. ...
Stossel makes a profound point: Racial discrimination is wrong, but to discriminate -- in the original sense and context of the word, that is, "to note or observe a difference; distinguish accurately" -- is good and necessary, and makes actual insurance possible, as Stossel elaborates so well.

-- CAV

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