Car Insurance and Health Insurance Are Not The Same; Or How A College Dropout Schools A Harvard Educated Lawyer

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(Posted by guest blogger, John Cheshire)

You all remember Obama’s last analogy favorite don’t you?  Oh come on…he repeated over and over again right before the 2010 elections.  There was this car in a ditch and Democrats are getting all sweaty and dirty down in the ditch trying to push it out and Republicans are sipping slurpies and not helping but as soon as the car is out of the ditch the Republicans want the keys back or some nonsense like that.  Oh and don’t forget the money line – “if you want to go forward you don’t put the car in “R” for reverse (or Republican), you put it in “D” for drive (or Democrat).  Awww that is sooooo cute!  What a clever little play on words!  If you don’t remember or never heard this bile then count yourself lucky. 

Now we have this from and interview the Tampa Bay Online conducted with Obama just a few days ago.

We are absolutely confident that the basic issue that this judge identified — that we say that in order to make sure that insurance companies have to provide care to people with pre-existing conditions, we’ve got to make sure that everybody has some kind of insurance — the same way that they have car insurance. That’s something that makes sense to most people. Think about it — when it comes to car insurance, we wouldn’t say that you can wait until you get into a car wreck and then you can go to the insurance company, say hey, I want to buy some insurance for my car. If you can’t do that for car insurance, why can you do that for health insurance. How can you wait until you get sick and then go and say I want to buy some insurance? That isn’t fair and I think most people understand it isn’t fair. All we’ve said is everybody has to get some basic insurance so that we’re not paying for you when you get sick. And that helps keep everybody’s cost down and it makes sure that insurance company can’t discriminate against you if you’ve got pre-existing conditions. It’s the right thing to do, and I’m confident that the courts will uphold it.

Attorney General Eric H. Holder Jr. and Health and Human Services Secretary Kathleen Sebelius even inserted it into an op-ed in the NYT as the pivot point of their whole argument in support of the mandate.

If we want to prevent insurers from denying coverage to people with preexisting conditions, it’s essential that everyone have coverage. Imagine what would happen if everyone waited to buy car insurance until after they got in an accident. Premiums would skyrocket, coverage would be unaffordable, and responsible drivers would be priced out of the market.

Clearly this will not be the last time they will trot out this propaganda in defense of the indefensible.

Now comes the parsing by a guy without the Harvard degree.

First of all, people are mandated to have liability car insurance which simply covers damages to someone else. Comprehensive coverage, or coverage that would cover damages to one’s self, is voluntary. The only time that comprehensive coverage becomes mandatory is when the lender (if the purchase of the car is financed) requires the coverage (damn the evil free market solution!). Furthermore, the state mandates coverage as they license drivers and register cars.  In other words, it is up to the consumer how they want to spend their auto budget.  Drivers can choose to finance that expensive new car with the understanding that the insurance company will require them to carry more expensive comprehensive coverage or they can go and pay less for a used car and only pay liability, provided they don’t finance the used car.  That is the consumers choice though which is unlike the Obamacare mandate.

Second, people only file auto claims when significant damage occurs.  They don’t file claims for preventive maintenance like tune-ups and oil changes which is one of the reasons that auto insurance is inexpensive compared to Health insurance.

Third, auto insurance pricing is determined by risk.  Those that live in areas where there is bad weather or high crime will pay more as there is more risk of damage or theft.  Those that drive more miles pay more because they are statistically more likely to get into an accident.  People of driving age at both end of the age spectrum will pay more because they statistically cause more damage and therefore are a bigger risk to insure.  Additionally those with a clean driving record will pay less than those who have had accidents or tickets.  Auto insurers can even drop coverage for an individual or group policy if they have shown themselves to be too big of a risk.  The federal government is fairly hostile to health insurance companies who try to risk price their health care coverage all in the name of “fairness” but it means that we all will pay more for our coverage.  What’s worse is that it does not incentivize folks to lower risk (quitting smoking, losing weight and so on…).  I have a speeding ticket on my record and I can promise you I am watching the way I drive because I want lower car insurance premiums.  What I will not do is go over to my neighbor, who has a clean driving record, and ask him to chip in on my higher rates in the name of fairness. 

Forth, driving a car is voluntary.  When driving on the public roads the state requires you to license yourself, your car and carry the basic liability insurance.  If you are driving on private property you are not required to do those things.

Lastly, Obama’s said, “when it comes to car insurance, we wouldn’t say that you can wait until you get into a car wreck and then you can go to the insurance company, say hey, I want to buy some insurance for my car.”  Hmmmm, isn’t that exactly like the pre-existing conditions though.  Basically anyone with any condition regardless of the risk is able to walk up and demand coverage from a health insurance provider. 

The intellectual dishonesty in this analogy is staggering and insulting.  Sadly, it might work if the media just mindlessly regurgitates the claim and there are still enough uninformed idiots people like this still out there.  You have to hand it to the White House though because they certainly know who their target audience is.

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10 Responses to “Car Insurance and Health Insurance Are Not The Same; Or How A College Dropout Schools A Harvard Educated Lawyer”

  1. Daniel B. Says:

    How about the main problem with the auto insurance argument/analogy: it is a violation of Congress’ powers to regulate commerce to require individuals to participate in the economy. I believe it is states that require auto insurance, not the federal government.

    To look at the car insurance analogy, we can see that individuals only buy insurance when they choose to buy a car. If they don’t buy a car, they don’t buy insurance. It’s that simple. As long as they do not voluntarily engage in the stream of commerce, they do not enter into an area–mandated insurance to cover liability for injury of another driver–that the government regulates.

    In contrast, health insurance requires that every individual participate in the plan. Why? Because the only way that it is affordable to insure the sick, the poor, and those with preexisting conditions is for a critical mass of the healthy to participate. Health insurance companies already know this number, which is why they are able to turn away individuals with preexisting conditions. They know that a certain percentage of their already covered healthy individuals will, with time, eventually acquire a health condition that would otherwise be “preexisting” and will at that time require more payout than they pay-in.

    For the US government to do the same, nationwide, the critical mass is the entire population. Judge Hudson (?) noted this, calling it the lynch pin of the individual mandate. If the government cannot require the participation of the entire population, the government will be unable to afford to insure those who cannot acquire or cannot afford health insurance elsewhere. Sebelius and Obama quite rightly understand that if they cannot have the whole country on board, the plan fails.

    It’s just that simple for it to fail. The federal constitution limits the federal government from doing more than regulating intrastate commerce. It cannot require individuals to participate in commerce if they do not want to (at least not yet). However, the Act requires individuals to engage in commercial activity that they might not otherwise engage in. Risk, choice, and cost, as you noted, are all factors that differentiate auto and health insurance, but the most important reason that this fails is that it violates the federal constitution in that it regulates and requires something that the federal government does not have the power to regulate.

    On that note, it might be an interesting policy for any state government, if not limited by their own constitutions or laws, to try doing what the federal government is doing with this law. They are not limited from regulating this activity in the same way by the federal constitution. At that point, questions of public policy would be cost, choice, fiscal impact, etc. Just a thought…

  2. Daniel B. Says:

    Oh, and thanks for the post, Holly. I love it when you attack their rhetoric. I get tired of hearing the administration make the auto analogy. The analogy big fat FAIL as an appropriate analogy.

  3. JBT Says:

    Medicare is essentially a government mandated health insurance that goes into effect when one turns 65. All workers are required by the government to pay their premiums as part of their FICA withholding from their earned wages. This has been held constitutional since its inception in 1966. There is no difference between this and government mandated health care coverage BEFORE the age of 65.

    The analogy between health care insurance to automobile insurance is obvious. A driver is required to purchase insurance not only for his own benefit, but for the benefit of others. Yes even liability insurance benefits the insured. Try having a serious injury accident without it—you could easily lose your home or your life savings, or both. In other words making a bit of a personal financial sacrifice that not only benefits one’s self but that benefits society as a whole. This is a simple concept that conservatives just can’t seem to understand.

  4. Pops Says:

    Personal responsibility, a key enabler of liberty, is a concept that liberals just can’t seem to understand. They do seem to have a good grasp on how to quench Lady Liberty’s torch.

  5. JBT Says:

    Mindless vague slogans suit you pops. Keep them coming. They will continue to give you the false but comforting illusion that you are actually saying something.

    What about responsibility to others, thinking of “we” rather than “I” all the time?

  6. cgb Says:

    @Daniel B:

    Let’s go a little bit further with your argument.

    A visit to the doctor’s office or hospital is a voluntary decision to engage in a commercial transaction. So, can Congress, consistent with its Commerce Clause authority, require anyone who visits a doctor or a hospital over the course of each year to purchase health insurance? Individuals who choose to be treated by a doctor have voluntarily injected themselves into the stream of commerce. Maybe the only people beyond the reach of Congress’ regulatory authority under the Commerce Clause–at least with regard to the health insurance mandate–are those who do not visit doctors’ offices or hospitals.

    To me, trying to draw the type of distinctions people are drawing is borderline silly. I don’t think you can say, with a straight face, that people have any more of a choice to drive a car (and thereby be required to purchase auto insurance) than they have a choice to go to a doctor (and thereby be subjected to the health insurance mandate) when they’re sick. What would we do, require everyone to elect, in advance that year, that they would never visit a doctor and are therefore health insurance exempt?

    I think the Constitution allows Congress to regulate people’s economic decisions that, in the aggregate, have economic effects on interstate commerce. The decision whether to carry health insurance is one of those decisions. There are very few decisions that aren’t. So, the upshot of my conclusion is that I don’t think the Constitution imposes much of a check, if any at all, on Congress’ legislative authority vis-a-vis the states.

    The Constitution’s primary check on the powers of Congress is in the domain of individual rights, not the state-federal balance. Federalism is a political, not a judicial issue. So, in that sense, the check on the reach of the federal government vis-a-vis the states is legislative, not judicial. Let Mike Lee and his friends fight the good fight on its merits in Congress. This is a battle for the legislatures, not the courts.

    Just my $.02

  7. Daniel Burton Says:

    Fortunately, CGB, your arguments fail for logic and reality, as was noted by Judge Hudson’s decision. People have, as Holly has correctly noted, choice on how much, to what extent, and how they wish to pay for their choices. Should we pay collectively for coverage for the person who choses to smoke? Should we pay coverage for the person who chooses to work in a high risk industry, such as professional football players or prostitutes? Under your collectivist logic, the constitution has about as much meaning as you want it to have, and the plain meaning of its language is lost.

    Address, directly, the arguments that are made: why is it fair to force all to participate and pay for something they can either get on the free market at their own cost and choice, how does Congress have the power to do so, and, related not one iota to legality and solely to prudence: how do you compensate for the cost on the economy and to producers?

  8. Pops Says:

    What about responsibility to others, thinking of “we” rather than “I” all the time?

    Well, that’s the illusion of liberalism: that it’s morally superior to use government to take other people’s property to do your good deeds. Why don’t you all man up and do your good deeds with your own property?

  9. Ronald D. Hunt Says:

    To quote my favorite socialist founding father,

    “”All the property that is necessary to a Man, for the Conservation of the Individual and the Propagation of the Species, is his natural Right, which none can justly deprive him of: But all Property superfluous to such purposes is the Property of the Publick, who, by their Laws, have created it, and who may therefore by other laws dispose of it, whenever the Welfare of the Publick shall demand such Disposition. He that does not like civil Society on these Terms, let him retire and live among Savages. He can have no right to the benefits of Society, who will not pay his Club towards the Support of it.”” — Ben Franklin

  10. cgb Says:

    @DanielB:

    I don’t know that there is much collectivist logic in my post, aside from the logic that Congress has broad authority to regulate private economic decisions when acting under the Commerce Clause. But that logic doesn’t imply that I think it would always be wise for it to do so.

    I think the health care mandate, though unwise (and yes, perhaps even unfair in some cases), is, nonetheless, in its current form, constitutional. The fact that Congress has now ventured into an area heretofore left to private or state regulation does not mean it has exceeded the extent of its powers under the Constitution. That fact that one may think that people have the right to choose the extent of their insurance coverage or that they should not be burdened by paying for the coverage of at-risk individuals only means that that person has a policy disagreement–not a constitutional one–with Congress. Reverse the mandate congressionally, not judicially.

    Finally, as to your practical question: Well, this is the debate, isn’t it? Whether the cost to the economy is greater to mandate coverage for all or to have individuals and businesses continue to bear the hidden costs of the uninsured? I don’t pretend to have an answer to that question, but I will tell you that my primary problem with the current law is that it contains nothing to slow skyrocketing premiums despite mandating universal coverage. It seems to me to be, at least economically, the worst of both worlds.

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