The Makings of an Insurance Crisis

Wayne Dunn at Capitalism Magazine has a good article on the makings of the health insurance "crisis":

Is there something special about health insurance that makes it crisis-prone? I mean, we never hear about the horrible "house insurance crisis" or the "spiraling cost of auto insurance."

It wouldn't be too hard to create such a crisis though. In fact, let's try to map one out.

Just imagine if politicians resolved that, since automobiles are vital for getting people to work, companies ought to provide for the care and maintenance of its employees' vehicles.

So political pressure is applied to employers-- maybe through the tax code, or perhaps legislation is passed outright; and, before long, auto insurance is restructured to cover not merely accidents, but routine maintenance and service. For a monthly premium and a $10 or $15 "co-pay,"

your car insurance would cover the cost of an oil change, tune up, new tires, whatever it needed.

Something odd would begin happening though. Mechanics would stop hearing the now pervasive, "How much will it cost?"

Why? Because if all you had to do is plop down ten or fifteen bucks and your insurance paid the rest, why would you care what the mechanic charged? Heck, you'd start taking your car in for an oil change every 1000 miles instead of every 3000. Rather than getting your tires rotated, you'd just have new ones put on. And that rear electric window that won't lower, you'd not think twice about having fixed.

The influx of customers seeking what would be virtually free service means, however, you'd have to wait days, even weeks, to see a mechanic.

Costs would skyrocket. Since comparison shopping would be a thing of the past, auto service centers would have no pressure to lower prices.

Moreover, they'd have to buy more equipment and hire more employees to accommodate the heavier workload, driving costs still higher.

Insurance companies would have to raise premiums. Some people wouldn't be able afford it. So politicians would trot out new government programs -- Car-aid, Car-care-- to help the "disadvantaged." We'd see another deduction on our pay stubs. The numbers of "disadvantaged" would swell.

Resultantly, auto shops would have to hire more clerks to manage all the red tape generated by the government programs and regulations, making costs even higher. Perhaps by then an oil change might run $200 and a brake job $1000.

You can read the rest of it here.