by Brian Schwartz
Should Colorado mandate that each car owner buy a comprehensive lifetime vehicle warranty? By the logic of a common argument against Colorado Amendment 63 and for mandatory medical insurance, the answer is “Yes.” Mandatory insurance treats your body as a means to political ends, rather than respecting your rights as an individual.
An editorial in the Boulder Daily Camera provides an example. It states:
The individual mandate widens the pool of people with bodies — bodies that, inevitably and without fail, need some medical care at some point — that pay for health insurance. The mix of the extremely healthy, the healthy, the sick and the acutely ill is one way to make our health care system healthier.
This argument illustrates H.L. Mencken’s observation: “For every complex problem there is an answer that is clear, simple, and wrong.”
Also note that the unfree insurance markets already pool risks well. As Independence Institute economist Linda Gorman notes, research by health care economists Mark Pauly and Bradley Herring finds that
direct-purchase insureds who had medical expenses about 4 times that of other people enjoyed premiums that were only 1.6 times as high. People who buy a policy and become ill have a strong incentive to continue paying. … [RAND Corporation economists] concur, reporting that the individual direct-purchase market is “an important source of long-term coverage for many who purchase it” and that “there is substantial pooling” that “increases over time because people who become sick can continue coverage without new underwriting.”
To see a more fundamental problem with the risk-pool argument, apply it a different type of insurance. For example, insuring that your car runs well. To paraphrase the Camera:
Mandating that all car owners buy a comprehensive lifetime vehicle warranty widens the pool of vehicles — vehicles that, inevitably and without fail, need some repair or maintenance at some point — and drivers who pay for the warranties. The mix of the brand new, the low-mileage, the high-mileage and banged-up vehicles is one way to make our auto-repair system healthier.
The problem is clear. Keeping your car running well is your personal responsibility, and you have the right to do this according to your own best judgment, rather than by politicians’ edicts. People don’t buy a warranty to make the product or “system” better for everyone else, as defined by politicians or bureaucrats. They buy warranties and other insurance products because it suits their own purposes and goals.
Forcing people to buy a product is a form of exploitation. It treats people merely as means to other people’s ends. To use the Camera‘s term, it treats people merely as bodies. By contrast, moral legislation recognizes people as individuals with the right to pursue their own ends through voluntary exchange with others.
Requiring people to buy a product is wrong, whether it’s a car warranty or medical insurance. Medical care is not “different.” It’s not a right. Rights are freedoms of action, not entitlements to what others produce. Adults have the right, and personal responsibility, to seek medical care through voluntary exchange or voluntary charity.
As for risk pools, companies selling insurance or warranties may want a large risk pool to reduce costs, which enables them to attract customers with low prices. Let insurers expand their risk pools by selling quality products and good prices, rather than having government further coddle insurance companies by forcing customers to buy their products.
Instead of forcing people to buy insurers’ products, government should repeal legislation that prevents insurers from competing for our business. For example, the tax treatment of medical care and insurance keeps insurers from catering to patients. Instead, insurers cater to employers, and doctors cater to insurers. This insurance-friendly tax code is the root of rising medical care and insurance prices, as it encourages patients to consume medical care like business travelers dining on a company expense account.
Prohibitions on buying insurance sold in other states also protect insurers from competition. Repealing such controls nationally would make insurance affordable for millions and improve state-level insurance regulations. Removing these trade barriers would not only expand risk pools, but also our liberty.
This article originally appeared in the HuffPo Denver, October 26, 2010.