Health Insurance is not Auto Insurance

I saw some talking head on the cable teevee news making a specious comparison between health insurance and auto insurance. If we just treated health insurance more like auto insurance, he said, we’d have more competition in the health insurance market. We’d have little lizards on the television marketing insurance to us at low, low prices.

Problem is that our bodies are not cars and our policy goals with health insurance are different than those for auto insurance. By and large, we’re content to let people suck it up and go without a car if they can’t afford one (or if they can’t afford to insure it). It’s less common for us to tell people to suck it up and die if they can’t afford to keep their bodies in working order.

And that leads to the second point. As a policy matter, I don’t think we’ve ever decided whether we want people insured against accidents or the unexpected or for maintenance (or, probably, a little of both.) If the person doesn’t change the oil and the car breaks down, well that’s just what you get dummy. Change the damn oil. If someone has a lemon of a car – and it’s known to be a lemon – an insurance company isn’t going to insure against repairs. The person is expected to repair it at his or her own expense, buy another car that’s not a money pit, or do without.

You can’t do that with your body. We don’t have a lot of sympathy for the folks who don’t change the oil – they don’t exercise, they eat junk, they smoke, and they sit on the couch. Just like a car, you’re body is going to break down. But, even for these folks, we’re not quite willing to just let them die if they can’t afford the inevitable repairs.

We’re more sympathetic to those who bought a lemon – their bodies develop problems through no real fault of the owner. Some defects are unknown and unknowable in advance, but others can probably be calculated with sufficient information, genetic testing perhaps. If an insurer can determine that a potential insured is probably a lemon in advance, can we really expect them to insure against future maintenance that’s not so much unknown risk as strong probability?

With health insurance, we haven’t really decided whether we are spreading the danger of unknown risks (who is going to get hit by a careless driver? We know it’s somebody, we just don’t know who exactly). Or, are we spreading the cost of health care from the unhealthy to the healthy. Or, are we spreading the cost of health care from the poor to the rich?

The spreading and managing of risks, the impact of which can be estimated at the group level but the individual level of which is unknown, is typically what “insurance” is. The other policy choices – having the healthy subsidize the unhealthy or the rich subsidize the poor strike me as different animals even if they are perfectly valid policies. But, I think we have to know exactly what we’re trying to accomplish before we can design a system that is effective in meeting our goals.