Tuesday, June 28, 2016

Health Insurance: Right or Privilege? Is it even Necessary?

Depending on your view of the constitution this line in the preamble is up for debate: "We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America." The bold being what is referred to. However, at the time welfare refers to the well-being.

At the fundamental level health insurance is gambling. You pay periodic premiums on the bet that you will become unhealthy. Eventually, you win the bet, and you have to go through all hell to get the insurance companies to pay your winnings, that is the money to the health provider or laboratory. So be it.

We run into a problem when things like this are forced upon the population. People group and force the government to pass legislation requiring employers to provide insurance. They pass legislation mandating that everyone be insured. This at a basic level is crony capitalism. Forcing people to insure themselves leads to false demand for insurance. Is insurance a scarce resource? This has to be determined if we want to have an actual economic analysis. From the time of the ACA insurance premiums have increased. If demand increases and price increases that means that health insurance is a scarce resource and supply is dwindling. Which that has to be the case as doctors and laboratories are both themselves finite.

Now there is also another effect working here and that's price v. money supply. Whenever the amount of money increases so too do the prices. By the government forcing demand and then subsidizing that same market, you get increased prices. To the end insuree that doesn't seem too bad, but it's a waste of money. It drives prices up for those that do not have insurance as well. Perhaps we've gone to far with this now to turn back. But we have to do something or else this market will act as the housing market did before it.

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