Mandatory Insurance—Ensuring Confusion and Waste

 
            Insurance is the sort of subject that makes most people’s eyes glaze over, but I would argue that it’s actually one of the greatest inventions of mankind, right up there with the wheel.

Life has always been a risky business.  Only the nature of the dangers has changed from primitive times.  Instead of worrying about being devoured by wild animals, we now worry about houses burning, crops failing, cars crashing or illness striking.

Reducing risk—and its corollary, enhancing security—has always been one of mankind’s dreams.  Examine the platforms of political parties through the ages and much of what you’ll find there is someone’s idea of how to reduce the risk of something-or-other for somebody-or-other.  That’s exactly what the socialist dream is all about—cradle-to-grave security, eliminating the risk of hunger, sickness, etc.

You can’t really quarrel with its goal.  Its methods, however, are another story.  In essence, socialism attempts to reduce the risk to each individual by forcing every individual to enter into a single, universal pooling of risk.  We all contribute taxes to the common pot and we’re all entitled to welfare benefits or medical treatment when we need it—or so the theory goes. 

However, mandatory universal risk-pooling has its problems.  Since everyone is entitled to its benefits regardless of what he contributes, the unscrupulous will claim everything and contribute nothing.  Even those with a conscience will have less incentive to take precautions to prevent disaster.  Precautions cost extra money or effort, but compensation from the system is “free”. These misincentives not only discourage risk prevention, but also raise the cost of after-the-fact damage repair for the country as a whole.

 The beauty of insurance is that it does exactly what socialists dream of—namely, reducing individuals’ risks—while employing methodology that is exactly the opposite.  Insurance pools risk on a voluntary, rather than a compulsory, basis. This method is not only more appealing to the soul, but it also happens to make the thing work properly.  Through co-payments, deductibles and risk-based premiums, it provides appropriate incentives for every member of the insured class to avoid making claims, i.e. to avert the perils insured against.

Our system of socialized medicine, which its proponents refer to as health care “insurance”, has actually destroyed the average Canadian’s understanding of insurance.  You buy genuine insurance as a method of dealing with catastrophic risks—those too big to handle on your own, not as a way of dealing with certainties.  You insure your car against the risk of an accident, but not against the certainty of having to put gas in your tank.  For that kind of predictable, recurring expenditure you do something called “budgeting”. 

Imagine how much more gas Canadians would use if they could fill up at will, free of charge, having already paid for it through their car insurance--just as they go to the doctor’s office whenever they wish, free of charge.  Gas consumption would skyrocket, as would car insurance premiums.

Most Canadians are now convinced that they shouldn’t have to pay for any medical services at all—even routine annual check-ups whose cost is known and could easily be budgeted for, rather than insured against.

For instance, my local newspaper recently went on an editorial rant about the large percentage of school children who were not being taken to the dentist, allegedly because their parents couldn’t afford it.  The recommendation was, predictably, that the government implement dental “insurance” similar to health insurance. 

I consulted my cheque book.  My last annual dental checkup, including X-rays and cleaning, cost only $92--literally only 25 cents per day.  My guess is that the average parent spends at least this much on soft drinks, candy and desserts for his kid.  In other words, parents are willing to spend the money that causes dental cavities, but not the money necessary to prevent them.  For that, the community is supposed to pay.  

Canada’s health “insurance” system hasn’t merely distorted Canadians’ conceptions of insurance.  Adding insult to injury, the state prohibits us from purchasing genuine health insurance for services that are also supposedly covered by the government’s so-called health insurance scheme, no matter how deficient the government system is in actually providing the service. 

This is the subject of a lawsuit commenced by a Quebec doctor, Jacques Chaoulli and his patient, George Zeliotis in 1997.  Mr. Zeliotis, who had to wait a year in excruciating pain for a hip operation, claims his Charter right to life, liberty and security of the person was violated by the Quebec legislation preventing him from spending his own money on private health insurance.

Dr. Chaoulli and Mr. Zeliotis have lost so far in Quebec Superior Court and at the Quebec Court of Appeal, but are now appealing to the Supreme Court of Canada.  It seems obvious to me that they should win.  Whose life is secure with today’s medical waiting lists?  And why should any of us bother to work if we’re denied the liberty to spend our earnings saving our own lives?  However, the Supreme Court has been known to disagree with me before. 

It promises to be an interesting decision.

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