May 01, 2005
Paint your home every summer?
From Just One Minute, a bit of clarity...
...To illustrate my concern with an example - homeowner's insurance covers catastrophic losses because they are infrequent and (for most of us) unaffordable. An easy way to think about it - homeowners each put aside a small amount in a reserve which is paid out to the rare unfortunate who experiences a fire. This turns a large, unpredictable, unaffordable expense into a small, predictable one.Posted by John Weidner at May 1, 2005 07:36 AM | TrackBack
But homeowners insurance does not cover the cost of re-painting the home - that expense is predictable and affordable (or not). Furthermore, if it were covered by insurance, there would be a tendency to "overconsume" - some people would change the color of their home every summer at the expense of the other participants in the "paint insurance" pool.
Similarly, auto insurance covers accidents but not oil changes.
Yet health insurance is in crisis if folks don't have coverage for routine visits to the doctor?....
Yes- regular doctors visits can improve quality of life dramatically. Being able to afford basic prescription antibiotics when one is ill will allow for a significantly better recovery time. New glasses are also a regular expense. Someone unable to afford insurance can probably also not afford new glasses without the help of insurance...
And, gods! Lets not forget that those who can’t get health insurance are not only unable to afford regular (possibly life-saving) checkups, but also are unable to afford the catastrophic insurance. If I didn’t get mine through work (or school), I wouldn’t be able to afford any kind of healthcare. Since work pays for a lot of it, and co-pays are fairly cheap, I can “consume” enough to keep me fairly healthy...
Good points. If homeowner's insurance paid for a regular checkup by a plumber, many a disasterous flood would be prevented. (But also there would be more uninsured homeowners, because people would call a plumber for things they would otherwise fix or prevent themselves, so the price of insurance would be much higher.)
I would be interesting in pondering the posibility of some sort of mandatory HSA, perhaps with a government "starter" contribution at birth. We'd still have the benefit of people being careful how they spend their own money, but nobody would be left out. I can see various drawbacks of course, but....(Yes, I know I'm wandering into strange Third-Way Compassionate-Conservative territory that doctrinaire conservatives will disdain. But I'm not doctrinaire.)
Private Accounts in SS are a sort of mandatory personal retirement savings.
Posted by: John Weidner at May 2, 2005 09:16 AM
