I’ve got some case law I want to discuss, but I’m going back to work this morning after two weeks of vacation/working vacation and probably won’t have time to write about it today. However, I offer this opinion column, which I noticed because it was reprinted by about 100 robot blogs. (Robot blogs are blogs that overtly shill some commercial product like auto insurance and automatically reprint stories that contain certain pre-programmed words or phrases — if you look at the stats on blogs, most bloggers are actually machines).
I wanted to root for the author of this piece, because she comes across as good-hearted and down-to-earth, and because she makes a few good points. But as the piece went along, I began to see it as a fight between the author and the subject matter. On my scorecard, at least, the subject matter overwhelmed the author.
The author’s thesis is that insurance has become ubiquitous because people are both more chicken and less willing to accept personal responsibility than their predecessors in The Greatest Generation. At the same time, she bemoans the unaffordability of much insurance. Ultimately, I reject both her thinking and most of her points. Insurance is a product, nothing more. As the country’s and the world’s wealth has dramatically increased, more money is available to buy products, including insurance. Whereas relatively few households in 1970 had two cars, the overwhelming majority do today. As household incomes have expanded, what was considered a luxury now becomes a necessity.
I never get fooled by arguments like the ones the author presents, because I come from parents of The Greatest Generation and grew up in North Dakota at a time when money was relatively more scarce and most people in my part of the state, including my family, were completely uninsured, or self-insured, if you prefer. We weren’t uninsured because we were braver than anyone else: we lacked ready disposable cash on a steady basis, and consequently had a different consciousness about risk. We accepted it because we had no choice but to accept it. Farming was hard and sometimes physically dangerous. Nature was not some warm and fuzzy concept but a powerful force with a malicious streak that froze you in the winters, baked you in the summers, and could wipe out a year’s work in five minutes of hail, or three months of drought. True, health care was cheaper, but it was expensive enough that few people used it and it wasn’t very good even if they had used it. Our consciousness of risk was also influenced by the fact that most adults could remember both World War II and the Depression, and vividly recalled a time when almost every family lost one or more people to polio, German measles, typhus, whooping cough and influenza, when the leading cause of death of women was childbirth, and when half the children born didn’t make it to age 5. Ever wonder why angels used to be portrayed as little children? That’s why, because so many died.
Some of the author’s pricing information is uninformed. She’s complaining that state employees have to pay $35 a month for $10,000 in life insurance? I’d complain too! For $35 a month, most people can get 10 to 100 times the coverage in the private market. These people should forget about the expensive pool life insurance and get their own.
The author also suggests insurance would be more affordable if we insisted people become more personally responsible, or at least pay the price for the risks they generate. That is, in fact, a statement of insurance theory, and the author rightly points out that sometimes people successfully lobby for their own personal insurance subsidies, which makes everyone else pay more. Two points. First, although I’m aware of documented cases of people behaving in more risky ways because they were insured, I personally could not supply you with one anecdote or example where I was sure someone’s stupid conduct was due to the existence of insurance rather than the person’s own inherent stupidity. Second, the real issue is not "personal responsibility," which is a concept governments and churches have been trying to promote, not always with total success, for thousands of years. Instead, the issue is creating mechanisms where the actual cost of conduct is reflected in the price, or as David Lloyd George said in a different context: "Let the price of the product bear the blood of the workman."