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Tuesday, December 14, 2010
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Is Health Insurance Like Car Insurance?

In case you hadn't heard yet, a Federal District Court has ruled the mandate portion of ObamaCare is unconstitutional. This of course brings up a lot of interesting questions. First of all, other district courts have ruled the law to be constitutional, and other cases still haven't made their way through the system, so this will almost certainly end up in the Supreme Court. And in response, many people are pulling out their old favorite... comparing compulsory health insurance to compulsory auto insurance. After all, most states require drivers to carry auto insurance, so why can't the Federal Government require people to buy health insurance?

I'm going to skip past the most obvious difference... one is a state regulation, while another is a Federal Regulation which ought to be constrained by the Commerce Clause. Instead, I'm going to concentrate on the fact that compulsory health insurance is completely different than compulsory auto insurance. The key to this argument is understanding who the insurance is meant to protect.

States which require drivers to carry auto insurance require that they have some minimum level of liability insurance (usually a combination of bodily injury and property damage liability). What that means is that if you cause an accident with your car, the insurance that you are required to purchase will pay the other person's hospital bills, as well as pay to repair any damage to their car or other property (if you were to hit a house for instance). What that insurance won't do is pay for your hospital bills or damage to your car. In other words, the state requires that if you are going to drive, then you have to have insurance to pay for any direct damage you may cause to another person during the operation of your automobile.

Now then, some people will then come forward and recall that when they bought a new car, they were required to show proof of a comprehensive insurance policy. But it's important to note two things. First of all, that is not mandated by the state. It's mandated by your loan company as a condition of getting an auto loan. Secondly, it's not intended to protect you. It's intended to protect the loan company.

In the case of an auto loan, your car is the collateral for the loan. If you fail to make your loan payments, then the loan company can repossess your car, and attempt to sell it in order to recuperate the money. The loan company is naturally afraid that if you were to total your car, then you'd simply walk away from the loan, and they'd have nothing of any value to repossess and sell. They require you to have a comprehensive auto insurance plan so that they can get paid if you destroy your loan collateral. Most banks have similar requirements to carry home owners insurance as a condition of home loan for the exact same reason. If your house is destroyed in a fire, they want to make sure that you won't walk away from the mortgage and leave them with nothing to sell. Furthermore, once you have paid off your loan, you are free to drop the comprehensive insurance plan, even if you aren't selling the car.

So how is the ObamaCare mandate different? ObamaCare requires that you buy health insurance, to protect yourself. Some people will argue of course that by not carrying health insurance, you have an indirect influence on health care because you might go to an emergency room and not pay after. They have no proof that you will directly do that. You might decide to pay for x-rays and a cast for your broken arm with cash.

With car insurance mandates, there is a direct liability, and damages that you directly cause. In the case of health insurance, there is a Rube Goldberg argument that you're not carrying health insurance might cause some other prices to go up depending on all sorts of bowling balls rolling down hills, turning on fans, and dominoes falling in the right order. Auto insurance mandates force you to protect other people who you might directly harm. The ObamaCare mandate is meant to force you to protect yourself. This is why it is such a fundamental blow to individual liberty.

# Posted at 9:26 AM by Nick  |  Comment Feed Link 7 Comments  |  No Trackbacks

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Tuesday, December 14, 2010 10:25:41 AM (Central Standard Time, UTC-06:00)
Yes, it's different in the ways you describe. I don't think it naturally follows, however, that it's a "fundamental blow" to liberty. Or that it's unconstitutional. Or that it's a bad idea.

What I find particularly ironic is that Republicans characterize this as a threat to liberty. But fifteen years ago it was their idea, their way of preserving the private insurance industry in the face of much-needed reform. Now that Democrats have suggested it, it's eeevil.
Tuesday, December 14, 2010 10:30:16 AM (Central Standard Time, UTC-06:00)
Requiring you to not only do something you don't want to do... but spend your own money doing it, simply because someone else with the power of law says so is not a fundamental blow to liberty? Sorry... its hard to see how it's not.

Secondly, I really don't care that Republicans once suggested it. That doesn't mean it's a good idea (then or now) and only reinforces what I've said time and time again, that Republicans and Democrats A) Aren't all that different and B) Aren't interested in individual liberty.
Tuesday, December 14, 2010 1:34:32 PM (Central Standard Time, UTC-06:00)
Well done Nick but you left out the obvious point.

To make Obamacare like car insurance you also have to consider the pre-existing conditions.

Under the Obamacare model you could drive without any insurance, pay a fine for that and then when you get into an accident you could obtain insurance and mandate that your new insurance pay for that accident.
Tuesday, December 14, 2010 2:42:24 PM (Central Standard Time, UTC-06:00)
Nick, requiring people to do something they otherwise might not do via the power of law is about as far from unprecedented as can be. Therefore I would not characterize it as a fundamental blow to liberty. Doing so is hyperbolic.

Fred, we've already agreed that health insurance is different from auto insurance. But that doesn't make it a bad or unworkable or unconstitutional idea.
Tuesday, December 14, 2010 4:32:49 PM (Central Standard Time, UTC-06:00)
The problem Scott, is that unlike many other things which are mandated by the government (many of which I would also classify as an assault on personal liberty), there is no way to avoid the mandate. If you don't like having to have car insurance, then you can sell your car. If you don't like having health insurance, you'd have to kill yourself.

All other mandates (besides taxes of course) are based off of a decision to do something. The health insurance mandate is based purely on the fact that you are alive.
Friday, December 17, 2010 12:08:07 PM (Central Standard Time, UTC-06:00)
Where's the Constitutional prohibition on the government providing more universal health care and paying for it with taxation?
Friday, December 17, 2010 12:47:48 PM (Central Standard Time, UTC-06:00)
Actually, you're thinking about it backwards John. Remember, the Constitution defines limited and enumerated powers of the Federal Government. So the question "What is the prohibition" is a poor one to ask. The Federal Government is prohibited from doing everything except what it's enumerated powers. So the question you should be asking is, "Where in the Constitution does it say that the Federal government can provide universal health care and pay for it with taxation." And if you read the document, I don't think you'll find a place.
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