Hillary Clinton 2007 Presidential Candidate: "If you have private insurance you like, nothing changes — you can keep that insurance." No Way! Way!

“When former President Clinton this week critiqued President Obama's broken promise that Americans would be able to keep their health insurance plans under the Affordable Care Act, Clinton was also knocking a similar plan once proposed by another politician: his wife.

"I personally believe, even if it takes a change in the law, the president should honor the commitment that the federal government made to those people and let them keep what they got," Clinton said in an interview with OZY.

The remark came across as a stern rebuke of current White House policy — but it could also prove tricky for former Secretary of State Hillary Clinton, who is moving toward a bid for president in 2016.

When she was last a candidate for president in 2007, Hillary Clinton unveiled her own health care proposal, which, like Obamacare, included beefed-up benefits and a catchy pitch: "If you have a plan you like, you keep it." Obama went on to defeat Clinton, but he adopted her tag line to help win support for his own health care plan -- making the same promise, for which he recently apologized.

You can keep the doctors you know and trust. You keep the insurance you have," Clinton said on Sept. 17, 2007, at the Broadlawns Medical Center in Des Moines, Iowa. "If you have private insurance you like, nothing changes — you can keep that insurance."

Clinton's campaign website echoed that claim. "If you have a plan you like, you keep it," it read.” - Hillary Clinton in 2007: 'If you have a plan you like, you keep it', Washington Examiner, 11/15/2013

Link to the entire article appears below:

http://washingtonexaminer.com/hillary-clinton-in-2007-if-you-have-a-plan-you-like-you-keep-it/article/2539118


　


　

Socialized Medicine - Milton Friedman

The Socialized Medicine Scheme and Health Savings Accounts

The current socialized medicine bill proposed in the house and senate discourages a cost containment method known as the Health Savings Account (HSA).


What is a health savings account (HSA)? Is the HSA a cost containment tool? Is the proposed socialized medicine scheme discouraging the use of the HSA?





What is a Health Savings Account (HSA)?

The health savings account (HSA) is a market based, consumer driven, health-care cost containment mechanism. Through the use of tax qualified deposits to the medical expense savings account and through withdrawals from the account of tax free money (tax free when used for qualifying medical expenses) the consumer is put in the a position of spending their own funds in the wisest manner. (1) (2)

The health savings account is the concept of moving insurance back to the realm of catastrophic coverage. That is, you are allowing insurance to perform its intended use and moving routine items to the sole direction of the consumer. In this way you remove the use of the "insurance mechanism" for everyday expense and/or basic health maintenance issues. (3) (4)

Is the Health Savings Account a cost containment tool?

Health insurance dates back to the artisans of imperial Rome. (5) Health insurance progressed over the years and between 1910 and 1945 the basic medical care expense program was introduced. However, basic medical care expense policies were inadequate against catastrophic accidents and illnesses that required long hospital stays and/or extensive treatment. (6) In extended stay and extensive care cases, the medical expense plan left the insured with large unmanageable bills that were not covered by the basic medical expense plan.

To address the short comings of the basic medical expense plan, Liberty Mutual Insurance Company in 1949 introduced major medical insurance to provide insurance coverage for catastrophic medical events. (7) Today major medical is the most common medical-care coverage available. (8)

However, as with any insurance plan, public or private, there is an inherent problem of the "third party payer system". That is, when a third party pays a bill on the consumer's behalf, the consumer is disenfranchised from the health-care cost and health-care provider. That the third party payer effect leads to the any cost from any provider phenomena. (9) (10) (11)

Major medical health insurance was designed to pay for catastrophes. However, in the recent past major medical has been combined with elements of the old basic medical expense plan with offerings (known as "extras") such as doctor office co-pays, specialist co-pays, prescription cards co-pays and co-pays for emergency room visits. The relatively small out of pocket co-pay with the remainder of the bill subject to the third party payment effect mentioned above, leads to over utilization at a high cost. That is, the cost of the routine expense and the provider of the routine expense are not items that the consumer directly measures in regards to expense or quality due to the third party payment effect.

If you price a typical major medical plan with a $1,000 deductible and include the menu of "extras" as mentioned above, then reprice the plan removing the "extras", you find, as a rule of thumb, a 30% reduction in cost. Further, by increasing the deductible from $1,000 to $5,000, you generally see another 15 to 20% reduction in cost. Hence the proponents of high deductible health plans (HDHP) point to the immediate savings to the consumer of the traditional major medical plan with a high deductible. In other words, taking the major medical plan back to its intended initial use as a "catastrophe plan".

With the removal of the "extras" and the increase in the deductible a major cost savings is achieved. This cost savings is then redirected into the health savings account. The health savings account then gives the consumer the ability to make cost effective decisions about more minor, mundane, everyday expenses such as routine doctor visits, prescription drugs, physicals, etc.. The consumer can shop these routine medical needs and find the best provider at the lowest cost. In other words, the third party payer effect is removed.

Is the current socialized medicine scheme discouraging the use of HSA's?


In both the house and senate versions of socialized medicine the health savings account is discouraged rather than encouraged. (12) Coverage never intended to be included in high deductible health plans are required to be included driving up cost for the major medical portion. Further, limitations on contributions and withdrawals are proposed in both house and senate plans.


The arguments to discourage the health savings account are class warfare based. The typical argument avoids the cost containment feature of the health savings account and concentrates on the class warfare argument associated with the tax qualified status of health savings account as well as the health savings account not being a popular program. (14) (15) However, the critical arguments to discourage HSA's are quickly dispatched as highlighted in a paper by Michael F. Cannon of the Cato Institute as well as other evidence . (16) (17) (18) (19)

Basically the arguments against health savings accounts are that the wealthy and/or high income earner takes advantage of the tax aspect of health savings accounts more often than low wage earners. The argument is the classic class warfare argument and has nothing to do with the main idea of cost containment. The arguments against HSA's point out that HSA's are not popular and have little impact on market share of health insurance. The popularity argument is based on notions and not empirical evidence. That in fact between 2004 and 2010, a mere six years, the HSA has captured 12% of the health insurance market place. (20) (21)(22)

One must take into account that the proposed socialized medicine scheme is nothing more that an elaborate and very complicated price fixing scheme. (23) Fixing prices has nothing to do with cost containment. In point of fact, price fixing schemes have always produced reduced supply. The proponents of price fixing schemes think fixing a price somehow affects basic underlying cost. The results of price fixing is well known within the discipline of economics. Its known to fail each and every time ever attempted. There is not one recorded incident in all of economic history where price fixing ever succeeded. Hence the discouragement of the HSA under the proposed socialized medicine scheme fits the proponents wishes as they are removing a cost containment measure in favor of price fixing.

Summary

The health savings account is a cost containment measure. The health savings account is an attempt to put health insurance back in the realm of catastrophe coverage and make routine medical needs a consumer driven point of sale decision hence creating a cost containment environment. The currently proposed socialized medicine scheme is in fact discouraging health savings accounts as a cost containment measure.


Notes:



(a) the phrase health savings account gets blurred. Many times the phrase health savings accounts (HSA) is used when referring to high deductible health plans (HDHP). Also, the phrase health savings account is sometimes used to refer to the combination of the health savings account and the high deductible health plan.

(b) an excellent source for health savings account information can be found as http://www.hsabankusa.com/.

(c) a very comprehensive discussion of the tax aspects of the health savings account can be found at http://www.irs.gov/publications/p969/ar02.html


(1)http://www.examiner.com/examiner/x-11804-Health-Care-Examiner~y2009m7d27-Health-Savings-Accounts-101-Twelve-reasons-to-have-a-Health-Savings-Account-HSA

(2)http://www.foxnews.com/opinion/2010/01/21/clgray-health-care-reform-obama-massachusetts/

(3)http://www.healthsavingsinfo.com/

(4)http://www.health--savings--accounts.com/hsa-weblog-arch/2009/07/hsa_plan_owners.html

(5)(6)(7)(8) http://www.mrm-mgu.com/sections.asp?sec=42

(9) http://www.healthsavingsinfo.com/

(10) http://www.euclidmanagers.com/downloads/legrev/LRSept04READER.pdf

(11) http://www.answers.com/topic/economics-of-health

(12) http://blog.group-insurance-guide.com/2010/01/14/health-savings-accounts-effects-of-health

(13)http://blogs.wsj.com/wallet/2009/06/26/health-savings-accounts-come-under-fire/tab/article/

(14)http://industry.bnet.com/healthcare/1000865/health-savings-accounts-much-ado-about-nothing/

(15) http://money.cnn.com/2009/09/14/smallbusiness/health_savings_account_HSA_reform/index.htm

(16)http://www.cato.org/pub_display.php?pub_id=6395

(17) http://www.health--savings--accounts.com/hsa-weblog-arch/2009/07/hsa_plan_owners.html

(18) http://articles.moneycentral.msn.com/Insurance/InsureYourHealth/3-health-insurance-blunders-to-avoid.aspx

(19)http://blogs.wsj.com/wallet/2009/06/26/health-savings-accounts-come-under-fire/tab/article/

(20) http://www.healthsavingsinfo.com/

(21)http://www.kff.org/insurance/7672/

(22) http://www.ahipresearch.org/pdfs/2008_HSA_Census.pdf

(23)http://thelastembassy.blogspot.com/2009/12/socialized-medicine-scheme-bending-cost.html

The Socialized Medicine Scheme: Medicare is a popular government-run program?

An argument put forth by proponents of Socialized Medicine is that Medicare is a popular government run medical program. (1) That the Medicare program is popular among participants.

Is Medicare popular or is it popular as no alternative medical plan is available to participants? Is Medicare popular with suppliers of medical services? Is Medicare popular with participants as the price paid by participants (tax levied) is too low in regards to benefits derived? What part does Medicare's monopolistic price controls forced upon suppliers of medical services and the consequential subsidization of price through private insurance have to do with popularity or satisfaction of Medicare?



Medicare is a popular government-run medical program?


The argument supporting the popularity of Medicare among participants and hence a popular government run health-care program points to a 2007 CAHPS survey (2). In the survey 51% were satisfied or very satisfied when asked how they rated their health plan (Medicare).


The survey question that yielded the above results is as follows: "Using 0 to 10, where 0 is the worst possible and 10 is the best possible, how would you rate your health plan?" A glaring problem exists in regards to the survey question mentioned above: how can a survey respondent rationally judge satisfaction regarding Medicare when the survey respondent has no other alternative regarding their health-care? How can any survey respondent, in any survey, regarding any product or service, rationally rate satisfaction when no other choice(s) are presented to the survey respondent?


The survey question was posed to another group that in fact have alternate choices and can rationally judge satisfaction. Reviewing the results of the above mentioned survey regarding private insurance yields a result of 40% satisfied or very satisfied. However, in this case the survey respondent has many alternative private health plans available to base their response upon. Health plans in the private sector cover the entire spectrum from basic scheduled medical indemnity plans, to traditional major medical plans, to health savings accounts, to plans with expansive coverage with low out of pocket costs. Hence if the survey respondent has a health plan but perceives an alternate health plan as more desirable, would the survey respondent score his/her current plan with less satisfaction merely because they desire another alternative plan?


Therefore, since Medicare represents a monopoly on health-care for survey respondents, would the existence of alternate plans for the survey respondent to choose from have caused the survey results to vary? If the survey respondent was not faced with a monopolistic provider (Medicare), would alternatives, if available to the survey respondent, seem more or less satisfactory to the survey respondent than the zero choice alternative provided by the monopoly known as Medicare?



What about Medicare's popularity among suppliers of health-care?


The survey question and survey results mentioned above are purely a demand side examination. That is, the survey is only examining those that receive health-care or in other words, the demanders of health-care supply.


What about the popularity of Medicare on the supply side of the equation. How satisfied are suppliers of health-care regarding the health insurance plan known as Medicare?


Suppliers are completely dissatisfied by Medicare. More and more doctors are no longer accepting Medicare recipients. (3) Medicare services providers as well as medical care device makers are forced into accepting an artificial below market price from Medicare. This artificial price is being rejected by some while other consequences of the artificial below market price are doctors not investing in the latest technology as well as medical device supplier not investing as quickly in advancements in devices.(4)


Hence in this particular demand and supply segment of health-care you have the demanders 51% satisfied and the suppliers so dissatisfied they are more and more opting out of providing health-care through the Medicare mechanism of monopolistic price controls.


A scenario of satisfied demand and completely dissatisfied suppliers can not last long as the suppliers will find a better use for their resources. In other words, resources will be employed in a more productive manner, likely in other indusrties with no price controls, by those making up the current health-care supply.



Medicare's artificial price affects satisfaction for both Demand and Supply


Medicare is going bankrupt. Imminent bankruptcy is around the corner. On the demand side of the equation Medicare recipients are being charged an artificially low premium. The artificially low premium (tax levied) for Medicare is unsustainable as medical-care expenditures are greater than receipts. When expenditures are greater than receipts over an extended period of time, such as the Medicare case, then insolvency is the eventual result.


Receipts or premiums in this case is the tax revenue for Medicare. The imminent bankruptcy of Medicare is in large part due to underfunding (tax receipts). Had current Medicare recipients been charged a higher tax rate and/or been taxed on larger amounts of income, would the Medicare survey mentioned above yielded a different satisfaction percentage? Did an artificially low tax rate during the working years of current Medicare recipients affect the satisfaction level of the survey mentioned above?


On the Supply side of the equation, artificially low payment rates forced upon Medicare suppliers creates dissatisfaction. Any supplier forced to take a payment below market rates will always be dissatisfied. Price controls always create supplier dissatisfaction.



Artificial Medicare prices and the Private Insurance Subsidy


Given the Medicare program is facing bankruptcy, and with Medicare artificial pricing affecting satisfaction in regards to Demand and Supply, what is holding the plan together on a current basis? Medicare is on life support through subsidies from private insurance.

One way to get around Medicare price controls forced upon suppliers is for suppliers to make up the below market payments by over charging another group. Medical-care suppliers have raised prices they charge for goods and services to Private Insurers hence subsidizing Medicare. (5) (6)


The current Socialized Medicine proponents want to eliminate or strongly reduce private health care. If you eliminate private health insurance where will suppliers of medical-care find the revenue lost from over charging the segment known as private health care?

Summary


Proponents of Socialized Medicine, pointing to Medicare as a popular Government run plan, are using a highly flawed argument.How can any survey respondent, in any survey, regarding any product or service, rationally rate satisfaction when no other choice(s) are presented to the survey respondent?


Basing an argument on the the demand side of health-care without regard to the dissatisfaction of the supply side is an incomplete argument. That price controls by the monopoly known as Medicare is creating artificial satisfaction on the demand side of health-care and price controls are directly creating dissatisfaction on the supply side of health-care.

That the looming bankruptcy of Medicare due to underfunding is a direct result of insufficient tax revenue. With Medicare recipients paying an insufficient tax for benefits provided, would a sufficient tax in the past (higher tax and/or higher tax applied to more income) have impacted the current Medicare recipients satisfaction regarding the survey result?


Finally, the survey results are an attempt to argue for Socialized Medicine and the abatement of private health-care. The argument does not account for Medicare's monopolistic price controls causing suppliers to make up the deficient price mandated by Medicare through higher prices charged to private health-care. The elimination of private health-care would then cause suppliers to seek alternative uses for their resources as the price controls of the monopolistic provider Medicare could no longer be subsidized by private health-care.



(1) http://news.aol.com/article/government-run-health-care-is-already/809178


(2) http://yglesias.thinkprogress.org/archives/2009/07/the-popularity-of-government-run-health-insurance.php


(3) http://shrinkwrapped.blogs.com/blog/2008/06/government-run.html


(4) http://www.heritage.org/research/healthcare/wm2381.cfm


(5) http://online.wsj.com/article/SB10001424052970204884404574362543878647858.html

(6) http://www.lesjones.com/2009/06/23/are-medicare-cuts-being-subsidized-by-private-health-care/

Socialized Medicine Scheme: Universal Coverage does not equal Universal Access

The socialized medicine scheme is based in part on the premise that universal coverage creates universal access. What would be the true costs of universal coverage if it truly created universal access?

Defining Terms

(1) Universal Coverage: health insurance coverage for all persons in a state or country, rather than for some subset of the population. It may extend to the unemployed as well as to the employed; to aliens as well as to citizens; for pre-existing conditions as well as for current illness; for mental as well as for physical conditions. (1)


(2) Universal Access: universal access can be defined as access for all to quality health services if need be, with social health protection. Universal access is not, by itself, sufficient to ensure health for all and health equity. The roots of health inequities lie in social conditions outside the health system’s direct control, to be tackled through intersectoral collaboration. Universal access however is the necessary foundation within the health sector on the road to health for all and health equity. (2) (3)

Universal Coverage and Universal Access

From the definition above one can see that universal coverage is on the demand side of the equation. Demand for health-care products and services would certainly increase with universal coverage.

From the definition above, Universal Access is related to supply. Supply of health-care products and services would need to adjust to the increased demand caused by universal coverage.

The Missing Determinant

The missing determinant of universal coverage in relation to universal access, is price. That is, to achieve universal coverage a price (cost) must be paid for those currently uninsured. To achieve universal access an incentive price must exist for supply to accommodate demand.

Price/Cost
To achieve universal coverage a price/cost must be paid. To fully insure the entire population, income and/or wealth must be redistributed. The political class attempts to make the moral argument that redistribution of income/wealth must occur from the producer class to the recipient class as the recipient class is uninsured in large part due to price/cost. That is, the uninsured are in large part uninsured due to affordability of health insurance.

However, the price of health insurance is directly related to the cost of producing/providing health-care. In other words, in the free market, the demand for health-care intersects the supply of health-care, at point price. The price point of health care is known and hence the "price" becomes the cost of health insurance. That is, the risk of facing the price of health-care is then a major component of determining the cost of health insurance.


Price Controls

In the scheme of socialized medicine the argument routinely put forth is that the price to provide health-care is too high. That is, even though demand and supply produce price, the price point is too high. In other words, the natural or true price created by demand and supply becomes a socio-economic argument. As the argument goes, the price is too high because only a certain percentage of Gross Domestic Product (GDP) should be allocated to health-care. That somehow and some way, if the percentage of GDP allocated to health-care was lower, then the subsection of consumers uninsured would find coverage affordable. The argument goes on to compare costs in one country to costs in another country and/or percentage of GDP spent on health-care in one country to another country (one economy compared to another economy). Note that it is a price argument.

Welcome to artificial pricing. In a command and control economy "price" is set artificially regardless of demand and supply. Price can be set artificially too high or too low in a command and control economy. In the socialized medicine scheme argument, "price" is artificially set below the price produced by the previous free market for health-care.

Arguments for artificial pricing are artificial by nature. If consumers value an item then they demand the item. For example, if the Chinese economy demands rice, and rice makes up 20% of GDP, why is 20% wrong and 12% right? Price controls always backfire. (4)

Artificially Set Prices in the Socialized Medicine Scheme

As previous pointed out, in a free market, demand and supply intersect at price. The price point can be afforded by most consumers but a subsection of consumers can not afford price due to their particular command of resources (income). For example, the demand and supply of 42 inch flat screen TV's produce price (p). Price (p) attracts certain consumers while other consumers do not have the resources to allocate to a 42 inch flat screen TV.

In the realm of socialized medicine the political class argument is put forth that in order for the subsection of consumers to afford price, income and wealth (resources) needs transferred to to this subsection of consumers (redistribution of income and wealth). However, the producer class resists the redistribution to the recipient class. Further, the redistribution causes the producer class to have less disposable income to pay for health-care. In other words, the price point of health-care then becomes unaffordable for some producer class members due to the redistribution of income. That is, some of the producer class now slips into the recipient class due to redistribution of income and wealth.

Enter political-economy. If price is artificially set below the free market price, then the redistribution of income and wealth from the producer class can be set low enough to cut resistance and to stop the slippage mentioned above of producer class members falling into the recipient class.

The Effects Producing Universal Coverage through Artificial Pricing and Redistribution

When universal coverage is achieved through artificially pricing and redistribution of income the proponents of socialized medicine then promote that they have given the masses universal access. That universal coverage is the avenue to universal access.

However, access is supply driven. If Price is distorted (artificially set below the market) the supply, which is the summation of suppliers, now faces a disincentive in the form of an artificially low price.

Existing suppliers now have to decide to stay in the health-care field or allocate their resources to other ventures. If price is too low, some suppliers leave the market place. Further, with price set artificially low, many other potential future suppliers e.g. future doctors, nurses, medical device makers, pharmaceutical research companies, etc. shift their resources to other more profitable fields where price is set by the free market. However, other supplier will enter the health-care field but enter on "cost". That is to say, the cost sensitive supplier offers cut rate services, service quality below service quality that was available at Price (p) set by a free market. (5)

Hence artificially low prices set by command and control then causes supply to dry up and/or become of lower quality. The ability to access health-care is then diminished for the entire group of universal coverage participants as demand engulfs supply. Price (p) can not function as the rationing agent as it has been set artificially. Therefore, among an array of rationing agents, time (t) becomes a component of rationing. For example, at artificial price (aP) the supply of hip replacements is 1000 per day. However, universal coverage has created a demand for hip replacements of 5000 per day. Time must pass before the hip replacement can occur for the majority of demanders due to restricted supply.

Summary

Universal Coverage through redistribution of income and artificial pricing leads to a universal access that is rationed through time and the Universal Access is generally of lower quality. That the only way to create un-rationed universal access is to allow the free market to determine price through demand and supply.

However, if price is allowed to be the determinant, price set by the natural forces of demand and supply in a free market, then un-rationed universal access would have a price tag of redistribution of income and wealth that would break the back of the producer class. (6)

Hence universal coverage, with price set artificially low, as proposed by proponents of the socialized medicine scheme, actually leads to rationed universal access for the entire group of participants.

(1)http://www.mondofacto.com/facts/dictionary?universal+coverage

(2) http://www.becausehealth.be/becausehealth/PDF/seminar2009/becausehealth_140509_concept_bc_ws.pdf

(3) Advancing and sustaining universal coverage. In: Primary health care: now more than ever. The World Health Report 2008. Geneva, World Health Organization, 2008. http://www.who.int/whr/2008/whr08_en.pdf

(4)http://www.ncpa.org/sub/dpd/index.php?Article_ID=8146

(5) http://www.dailymail.co.uk/news/article-1234276/Britain-sick-man-Europe-Heart-cancer-survival-rates-worst-developed-world.html

(6) http://www.dailymail.co.uk/news/article-1234660/Pre-Budget-report-Clobbering-middle-earners-national-Insurance-raid-mean-40-000-find.html

The Socialized Medicine Scheme: Distortions in Risk Management and Pure Risk Transfer

Does The socialized medicine scheme, through mandated one-size-fits-all health care coverage, distort the individuals ability to deploy risk management and consequently distort the pure risk transfer mechanism ? In this article we explore the following questions:

(1) are the individuals decisions regarding risk avoidance, risk reduction, risk mitigation and risk retention being distorted by mandated coverage and the distortions leads to the immediate pure risk transfer aka purchase of insurance?

(2) does the socialized medicine scheme of mandate coverage reverse the proven process of insurance theory and practice and require the immediate transfer of risk (purchase of insurance) with risk management deployed after the fact via through tax disincentives ?

(2a) does the reversal of the proven process of insurance theory and practice lead to risk management becoming a cost item rather than a cost reduction item?

Defining Terms
(1) What is pure risk? A category of risk in which loss is the only possible outcome; there is no beneficial result. Pure risk is related to events that are beyond the risk-taker's control and, therefore, a person cannot consciously take on pure risk. (1)

(2) What is risk management? Risk management is the application of tools and procedures to contain risk within acceptable limits. (2)

(3) What is insurance? A promise of compensation for specific potential future losses in exchange for a periodic payment. (3)


Risk Management
Its well established within insurance theory and practice that one needs to review and employ risk management concepts and techniques before the consideration of the transfer of pure risk (insurance).

Risk management techniques reduce the need to transfer portions of pure risk. The less pure risk transferred means the lower the consideration paid (premium) for the transfer of risk. Hence risk management lowers costs.

Risk Avoidance

The first risk management technique one needs to explore is risk avoidance. This is simply avoiding the risk all together. For example, if you never want to sustain a football injury, then do not play football. However, risk avoidance has it limitations as not all risks can be avoided.

Risk Reduction
If the risk can't be avoided or you want to benefit from an endeavor that involves pure risk, then you need to go to the next step of risk reduction. That is, can one reduce the chances that pure risk might occur.

For example, risk reduction of operating and/or owning a motor vehicle includes taking drivers education, taking an advanced defensive driving course, reducing/combining trips to reduce miles driven, owning snow tires,etc.. Hence the pure risk of an auto accident can be reduced through safety.

Risk Mitigation

Risk mitigation is an exercise in risk management. Since the pure risk exists, and if the pure risk occurs, we need to mitigate the loss. Fire does occur. Owning a fire extinguisher, being trained in the proper use of a fire extinguisher, and placing the extinguisher in fire prone areas can mitigate the scope of the loss if fire occurs.

Risk Retention

Risk retention is the concept that if pure risk exists, and given the other risk management techniques have been deployed, then how much of the ensuing potential financial loss of the pure risk can you reasonably absorbed? This differs per individual. If the maximum potential loss is $100,000,000 can you retain $1000, $5000, or $10,000 of the risk? That is, given an individuals financial situation, what portion of a loss can be financially absorbed before it becomes financially disabling?

Therefore, before one ever explores the transfer of a risk (aka the purchase of Insurance), one must go through the risk management process to access risk avoidance, risk reduction, risk mitigation, and risk Retention.

The Transfer of Risk

Only after you exercise the steps of risk management can you intelligently determine that a particular pure risk exists and how to financially treat the risk. That you can or can't avoid the risk, that you have determined how much you can reduce the risk, that you have determined how much you can mitigate the risk, and a determination has been made on the amount of pure risk that can be financially retained.

Once you have passed through the risk management steps, and determination has been made that X amount of pure risk needs transferred then at this point one must attempt to find a ready market to transfer the portion of the risk that one can not retain i.e. purchase insurance.


The Dynamics of Risk Management and The Transfer of Risk Regarding the Individual
Applying risk management and determining the need to transfer pure risk is going to yield many and varying results among differing individuals with differing circumstances. For example, John Q. Buffet can likely retain the majority of pure risks whereas on the other end of the pure risk curve Jane Q. Public needs to transfer the majority of pure risk. Between John's situation on one end of the spectrum and Jane's situation on the other end of the spectrum are an endless series or risk management and pure risk transfer scenarios.

Enter the Socialized Medicine Scheme
The socialized medicine scheme proposed in the US House of Representatives and Senate imposes a one size fits all risk management and transfer of pure risk scenario which minimizes the incentive for risk management. The known dynamics that exist within risk management and pure risk transfer among differing and varying individuals are disregarded through the use of one-size-fits-all pure risk mandated coverage. The mandated coverage requires a relatively low set deductible and relatively low set out-of-pocket cost. The proposed plan also includes ancillary coverages such as relatively low doctor office co-pays and relatively low prescription card co-pays. The predetermined coverage with relatively low deductibles and co-pays causes little room for risk management. The predetermined mandated coverage design pigeon holes all risk management although its well known that individual risk management needs vary widely.

Consequently, the theory of risk management and pure risk transfer is violated by predetermined mandated coverage. The process of risk management immediately leading up to determination of the transfer of pure risk is minimized .

What are the Consequences of Minimizing the Risk Management step?
Inefficient Allocation of Resources

One very important consequence of minimizing the risk management step is the inefficient allocation of resources for individuals. For instance, why would John Q. Buffet want to allocate $10,000 per year for the transfer of pure risk when in fact he would rather retain the risk? The $10,000 is now transferred from other activities John Q. Buffet values to an activity John does not value. This becomes an inefficient allocation of resources for John Q. Buffet. The same inefficient transfer of resources cascades across the entire spectrum as the vast majority of individuals would have chosen deductible and plans different than the mandated plan and deductibles.


Incentives created to Minimize Risk Management Techniques

Another aspect of a one-size-fits-all approach which consequently minimizes the risk management step immediately prior the determination of pure risk transfer, is the effect on risk management techniques. When risk management becomes a minimized procedure so do the risk management techniques become minimized. Assume for a moment that John Q. Buffet wanted to retain the entire risk while Jim P. Public wanted a very high deductible major medical plan and retain a relatively large portion of the risk. John and Jim are now required to outlay resources they had allocated elsewhere in the past. This is an additional cost to John and Jim. John and Jim are now incentizised to minimize rather than maximize risk management techniques they otherwise would have employed in the past.



The risk management techniques, that would have been paramount when retaining an entire pure risk or retaining a major portion of a pure risk, are now minimized by the relatively low deductible mandated coverage. John and Jim now have an incentive, through low deductible insurance, to minimize risk management techniques. That is, John and Jim don't deploy risk management techniques as they have in the past.

John and Jim rigorously deployed risk management in the past when they were retaining all or large amounts of pure risk. The retained risk is so low under mandated coverage that John and Jim have no incentive to rigorously deploy risk management. Lets say John always wanted to sky dive. However, as a risk management techniques John avoided sky diving. Why not sky dive now as the risk of injury is covered by insurance on a relatively low out of pocket dollar basis. It boils down to the following sarcastic comment you have surely heard in the past when a person is questioned about a risky endeavor: "...why not, I have insurance"!

Incentives Introduced to Recover Cost (to over utilize)

Another item creeps into the realm of pure risk when insurance is mandated and risk management is minimized: return on the dollar invest in insurance. The theory of insurance clearly points toward buying insurance for the catastrophe. When insurance is purchased for everyday items, consumers of insurance then have an incentive to maximize what they perceive as cost/benefit. In other words, if a consumer is forced to buy insurance with a low deductible, with plenty of benefits, but at a perceived high cost, then the consumer will attempt to recover cost through utilization of benefit.

Attempts to Deploy Risk Management After the Fact via Tax Disincentives

In the socialized medicine scheme an attempt is made to deploy risk management after the fact. As discussed above, the mandated coverage of the socialized medicine scheme creates an incentive to minimize risk management techniques. From the consumers point of view, all the risk management in the world will not reduce the cost of the relatively low out of pocket cost under mandated coverage.



Proponents of socialized medicine attempt to deploy risk management through a cost increase to mandated Insurance consumer. Rather than risk management being used as a cost reduction technique for the consumer of health-care, they use risk management as a cost increase item for consumers of health-care.


The proposed Soda Tax is an excellent example. Proponents of socialized medicine believe the consumption of soda leads to health problems. Hence to reduce consumption of soda they propose a tax. Hence risk management suddenly becomes a monetary increase in cost to the consumer rather than a monetary reduction in cost to the consumer.


Many proponents of socialized medicine also support taxes on fast food. That fast food leads to weight gain and hence is unhealthy. Enter the tax as a risk management technique to reduce fast food consumption. Once again we have a back door, after the fact, risk management method that increases cost to the consumer rather than decreasing costs through traditional risk management.

Summary

Risk management has been distorted and minimized as a proven step in the determination of pure risk transfer through mandated coverage. Hence the method of deploying risk management after the fact becomes a cost increase rather than a cost decrease method.



(1) http://www.investopedia.com/terms/p/purerisk.asp


(2) http://msdn.microsoft.com/en-us/library/cc500392.aspx


(3) http://www.investorwords.com/2510/insurance.html

The Administrative Cost Argument of the Socialized Medicine Scheme

Proponents of the socialized medicine scheme (aka single payer, public option) make an argument that "administrative costs" would be lower under a socialized medicine scheme vs. private insurance. Is this a valid argument or are terms and conditions skewed? Are the mathematics/statistics of the argument presented incorrectly? Are monopolistic pricing powers being confused/included within the term "administrative costs"? What about the item dislocated labor markets?


Administrative Costs Defined

First of all what are "administrative costs" within the field of insurance? One needs to know the terminology.

The "load" is the term that refers to administration cost in the field of insurance. "Loading" is the addition of the administration cost to the pure cost of insurance. Here are two widely used definitions:

(a) addition to the pure cost of insurance that reflects premium taxes, administrative costs associated with putting business on the books, and contingencies,

(b) the amount included in the premium to meet liabilities beyond anticipated claims payments to provide administrative costs and contributions to reserve funds and to cover contingencies such as unexpected losses or adverse fluctuations. (1)

Socialized Medicine Administrative Cost Argument

One of the arguments put forth by proponents of socialized medicine is: the "administrative costs" will be lower with socialized medicine vs. private insurance. The problem is that proponents of a socialized medicine scheme have shaped their arguments around differing definitions of "administrative costs" none of which match insurance theory or practice.


Administrative costs arguments put forth by socialists:

(1) in argument number one Administrative Cost are the traditional costs of the broad concept of general paper work administration,

(2) in argument number two administrative costs are more comprehensive including advertisement and claim administrative costs, screening of applicants, general paperwork, billing,

(3) in argument number three, which appears to be their most common argument, they define administrative costs the same way as in one and two above, then leave the realm of administrative costs, and include within the argument, the monopolistic pricing power of a socialized medicine scheme. In other words, they add in an exogenous variable monopolistic pricing power related to the pure product which has nothing to do with administrative costs,

(4) none of the arguments add in contingency costs,

(5) all arguments rely on a statistic from medicare pointing to the low cost administration of Medicare,

(6) all arguments exclude service level/service value and the consumer's ultimate satisfaction with "administration".




Reverse of the Original AT&T Break Up?


Looking at the subject of administrative costs from a historical perspective, and given history is always a good teacher as well as a good story, let us discuss monopolist powers.

Atlantic Telephone and Telegraph was the only "provider" of telephone services 30 years ago. For those of you under 45 years of age, imagine a time when there was only one Internet Service Provider (ISP).

The consumer received one and only one menu of choices and the one and only one customer service from exactly one provider known as Atlantic Telephone and Telegraph.

Bonus: you received one and only one price.

Say for instance you thought there should be more choices or better customer service. Sorry. one choice and this is how it is.

The consumer got fed up with one choice and authoritarian customer service. In the 1970's everyone complained about "the phone company". If you are under 45 years old, everyone hated the one and only ISP.

Along the way, the one and only provider, Atlantic Telephone and Telegraph, became administrative fat. Oh yes! Pork and Union diet only. Why not! There was no competition!

When the AT&T break up occurred, the new competitors ate AT&T's lunch. The biggest lunch plate item? Oh yes, AT&T's administrative costs.

Welcome to the telephone competition of today. You have an endless menu of options from multiple providers. Providers that offer good customer service (or you have the choice to change providers). Providers who run very lean operations and administrative costs in comparison to AT&T before the break up.

In other words, from an economics perspective, after the break up of Atlantic Telephone and Telegraph you received choice at a lower cost vs. monopolistic powers.



Monopolistic Administrative Costs Argument of Socialized Medicine

The argument for monopolistic administrative costs of socialized medicine is articulated by Erza Klien in his June 8th article in the Washington Post. (2) He summarizes as follows: "Moreover, public insurance is simply more efficient. Medicare holds costs down better than private insurance".

Senator Bernie Sanders argues for monopolistic administrative costs of socialized medicine by stating "...you have to deal with the enormous amount of waste that is currently within the private health insurance industry. The estimate is about $400 billion a year in administrative costs, billing, in profits, CEO compensation, in advertising--all of these things which have nothing to do with the provision of health care..." Senator Sanders goes on to say "In California, my understanding is that 1 out of every 3 dollars of premium goes to administration". (3)

What about the Medicare administrative cost argument? Is it true or false? False. Medicare administrative costs are higher, not lower, than for private insurance. (4) (5)

What about the 33% administrative costs as asserted by Senator Sanders? False. California Private Insurers average 12.7% administrative costs .(6)


Monopolistic Pricing Power of the Pure Product

One must note that the argument put forth that socialized medicine would have lower administrative costs purposely becomes entangled with monopolistic pricing. That is, the argument leaves the realm of administrative costs and attempts to include in the argument the exogenous concept of pricing the pure product.(7) The argument is invalid as administrative costs are items you add to the pure cost of the product.

In Klein's article he states "...act as a public insurer. To use market share to bargain down the prices of services much as Medicare does". Monopolies do not bargain. Monopolies set the price suppliers will be paid. Take it or leave it. In other words, Medicare is basically a monopoly and sets the price it will pay for services. Either accept medicare patients at price "X" or don't accept Medicare patients.

What in the world does the exercising of monopolistic pricing power to suppliers of the components of the pure product have to do with administrative expenses? Nothing. The argument is a separate argument unrelated to administrative costs.


Impact on the Labor Market of Monopolistic Administrative Costs

Exactly what is the labor demographics of the private sector health insurance administrative mechanism? (8) By and large the administrative labor force is female. Would this largely female work force be dislocated by a monopolistic administration within socialized medicine? Yes, large labor dislocations at an enormous cost. (9)

Hence we dislocate hundreds of thousands of predominantly female non-union workers at an enormous cost, and replace these workers with a unionized government labor force. Does that sound like administrative cost savings? What about the start up costs for the new government unionized administration? (10) What about the ensuing chaos of untrained administration workers, with a new procedural manual, in a newly formed bureaucracy, that now needs to provide service to millions and millions of people. Chaos is an understatement.

Also, many of the private sector female administrators are telecommuters. That’s right, they are mom's that work from home. Its a cost saving tool for private insurers and the workers like the idea. What about the indirect cost to the family of dislocating these workers? Do government workers telecommute? Largely no. Only 6% telecommute. (11) Why does the government not use this cost saving and labor satisfying technique?


Summary

The argument that a socialized medicine scheme would have lower cost is incorrect. That monopolistic pricing of the pure product is out of place in the administrative cost argument. That the socialized medicine scheme would create a monopoly in administration with unintended consequences for consumers. Finally, the socialized medicine scheme argument for monopolistic administration would dislocate hundreds of thousands of workers at an enormous cost and replace a largely female non-union work force with a high cost unionized government work force.

(1) http://www.answers.com/topic/loading

(2) http://voices.washingtonpost.com/ezra-klein/2009/06/health_care_reform_for_beginne_3.html

(3) http://www.thenation.com/blogs/edcut/440938/a_seat_at_the_table_for_single_payer">

(4)http://www.heritage.org/research/healthcare/wm2505.cfm

(5) http://www.wellsphere.com/healthcare-industry-policy-article/rhoads-what-administrative-savings/598029

(6) http://www.lao.ca.gov/2008/hlth/sb840/SB840_analysis.pdf

(7) see (1) above

(8) http://www.dllr.md.gov/lmi/industryclusters/financedemographics.pdf

(9) and (10). see (6) above

(11)http://www.wharton.universia.net/index.cfm?fa=viewArticle&id=918&language=english

Socialized Medicine Scheme and Central Planning: Purple Marbles.

The socialized medicine scheme that recently passed the US House of Representatives is an attempt at central planning. That is, socialized medicine is centralized planning. Central planning is an attempt to allocate resources by "scheme" rather than allowing the free market to allocate. The 1994 pages of the socialized medicine scheme should have been paired down to "1984" pages so one could more easily identify it with "misery".


All one needs to do is study the former Soviet Union’s central planning, decades and decades of central planning, and one will find the best intentions, elaborate schemes, “planning”, etc. failed miserably.

What does a central planning scheme look like?


















If you didn't spend much time studying the former Soviet Union, central planning may be a foreign concept to you. The diagram above is a short version of a central planning scheme. Schemes inevitably gain a life of their own as the scheme can't allocate resources correctly. The final centralized planning chart will be much larger and much more complicated? Of course. Further, there will never be a "final chart". Schemes can not account for all the dynamics of free market allocation. Hence the chart will be amended over and over again yet never solving the problem of efficient resource allocation to competing ends.

Central planning always fails as regardless of the intricacy, elaborate modeling, planning, etc.: central planning always fails to allocate scarce resources to competing ends.

Regardless of the economic frame work, the ends are always competing. In the former Soviet Union, in the beginning of the fourth quarter of an annual cycle, the managers of different industries would on their own, outside the central planning frame work, begin to barter for scarce resources among themselves.

Why did they begin to barter for resources in the centrally planned system?

Every year, without fail, the central planners would mis-allocate resources. Some industries would have stock piles of unused items while other industries would have to halt production as they had no more inputs. Bartering would begin among the managers of the varied industries in an attempt to reallocate scarce resources. Of course bartering is a highly inefficient system. Hence some resources would be reallocated but most resources sat idle. The result was inevitably too many purple marbles and not enough eye glasses.

The allocation of scarce resources to competing ends is most efficiently done in a free market. Maybe the framers of the central planning document known as socialized medicine should read some philosophy from a fellow named Milton Friedman. They might find that economics is the study of incentives as well as the study of the allocation of scarce resources to competing ends.

However, when Economics is supplanted with politics, ideology, and agenda, when resources are not efficiently allocated.....well maybe the Picture Chart below explains the concept/result:

Schemes: Unintended Consequences

The Socialized Medicine Scheme as proposed and passed by the US House of Representatives is full of unintended consequences. That is, when you create a Scheme (1990 pages of Scheme) to replace a Free Market you immediately face the phenomena of unintended consequences and cascading unintended consequences.

This article merely looks at one immediately known unintended consequence regarding fines for not purchasing Health Insurance.

Take a look at the article below regarding "uninsured motorists" in regards to auto insurance. There is little new information in the article for the exception of Web Based Tracking Pilot Programs. There has been a zillion articles written on the topic of uninsured motorists. However, please keep in mind the gist of this article is enforcement and fines regarding the uninsured motorist.


http://articles.moneycentral.msn.com/Insurance/InsureYourCar/wanted-auto-insurance-outlaws.aspx


Also keep in mind that when arguing for the Socialized Medicine Scheme, proponents like to compare Compulsory Auto Insurance to Socialized Medicine. That argument is invalid. The non-validity of the argument is explained here:



http://thelastembassy.blogspot.com/2009/10/socialized-medicine-scheme-compulsory.html


Martin Feldstein of Harvard University recently wrote an article stating that the Socialized Medicine Scheme, as proposed and passed in the US House of Representatives, creates an incentive for paying the fine and skipping the purchase of Health Insurance. Please see that article below:

http://www.nber.org/feldstein/washingtonpost_110909.html


Now, think about Martin Feldstein's recent article regarding people being incentivized to pay the fine and avoid buying health insurance under the Socialized Medicine Scheme. You pay the fine then buy coverage when you are sick as the Preexisting Conditions clause is invalidated.


Feldstein's article makes the assumption that HomoEconomicus makes the rational decision to pay the fine as outlined in his article.

What if Feldstein's assumption of paying the fine is replaced by the decision not to pay for anything at all. In other words, just like the phenomena of "uninsured motorists" you have the "uninsured and non-fine paying" health insurance non buyer.

Will the "uninsured and non-fine paying" phenomena occur in the Socialized Medicine Scheme? Absolutely. Hence that takes you back to the discussion in the uninsured motorist article (above) regarding "enforcement and fines".

"Enforcement" costs money. Who pays? Lets look around. Yes, you pay! If one is going to enforce the payment of fines, one must create a mechanism to collect the fines. More Bureaucracy? Of course!

Lets say we develop an Enforcement Bureaucracy and they track down and fine a non-insured and non-fine paying person. What then? Suspend their privilege to have health insurance? They, by definition, have no health insurance. If you suspend their privilege then they are part of the uninsured which supposedly is the reason for the Socialized Medicine Scheme (cover everyone). Gets murky does it not?


OK, we collect back fines as the enforcement. We further fine the back fines (a fine on a fine). However, the vast majority of Uninsured Motorists are uninsured as they can't afford insurance. It would be the same phenomena in non-insured and non-fine paying in the Socialized Medicine Scheme i.e. non-insured and non-fine paying people can't afford the fine or the insurance in the first place. What are the chances of collecting a fine on accumulated non paid arrears fines from a person that can't afford the fine or the insurance in the first place? Gets more murky does it not?


Can't pay the fine on the fine and the back fines? We throw the person in jail. Ops! The jails are already full! Ah, the evil of it all!


It should become clear that replacing a Free Market with a "Scheme" is absolutely full of unintended consequences. The phenomena mentioned above is merely one of hundreds and perhaps thousands of unintended consequences of the Scheme known as Socialized Medicine. Any good unintended consequence worth its salt will interact with other unintended consequences causing Cascading Unintended Consequences. Schemes generally end up a messy proposition.

The Socialized Medicine Scheme: Puzzle Palace on the Potomac

Within the field of Health Insurance, its well known that the cost of Health Insurance is a direct reflection of the cost to provide Health Care.

Conversely, you can argue that the existence of Health Insurance creates a third party effect where you have the effect of spending someone else's money as in the Four Ways Money is Spent put forth by Milton Friedman. (1) The existence of Health Insurance clearly does create inefficiencies in expenditures.

However, at the end of the day, the cost of Health Insurance is more directly related to the cost of providing Health Care.

Looking back several months, the conversation in Congress was “Health Care Reform”. That discussion morphed into “Health Insurance Reform”. Regardless of the title of the discussion, its clear the buzz phrase is “rein in costs”.

One must further remember that Legislators are not students of the Field of Insurance. The most glaring example of insurance naivety of politicos, showing they have no grasp of the concept of Insurance, is the discussion leaving “Health Care Reform” and becoming a discussion of “Health Insurance Reform”. It’s the classic case of the-cart-before-the-horse. That is, reforming Health Insurance does absolutely nothing to address the buzz phrase “rein in costs”.

Think of it another way: since the cost of Health Insurance is a direct reflection of the cost to provide Health Care, then the cost driver (providing Health Care) is overlooked in “Health Insurance Reform”. You are trying to reform the final result of a formula without reforming/changing the components of the formula. Hence, Hospital Costs, Doctor Costs, Drug Costs, etc. are directly related to Insurance Costs. How do you reform Insurance Costs without reforming the components that yield Insurance Cost?

Its not to say that increased competition among private insurers and more policy/coverage choices for consumers through deregulation of state required benefits would not yield price competition. But the competition among provides and more affordable coverage choices can only go so far in reducing costs. Its reducing costs at the margins.

Another question arises: is the cost to provide Health Care actually the direct reflection of the Demand and Supply for Health Care. In other words, its very, very possible that the price of Health Care is an accurate reflection of the market. If the cost is accurate, regardless of the outcries that Health Care is too expensive, then your only recourse is to again reduce costs at the margins. That is, the “core costs” can’t be reduced.

Enter the wonderful world of Price Controls, Regulations, Bureaucracies, and homogeneous product. These four horsemen of failure have already been proposed. When Politicos can’t solve a problem that they set out to solve, and when the results of the market place are not to their tastes, they love to repeat the failure of Price Controls and its cousins Regulations, Bureaucracies, and single product for all. (2)

Price Controls always end in miserable failure. Further, when Demand and Supply are not allowed to meet at Price, when Price is set at an artificial level, then price is not the allocation agent. Rationing becomes the allocation agent of Demand and Supply.

The thousand tangent discussion occurring at the Insurance Puzzle Palace on the Potomac needs to be immediately stopped. Erase the chalk board. Start over again as the debate is completely off track and completely off target in regards to "reining in costs".


(1)
http://bartsblogg.blogspot.com/2008/10/milton-friedman-4-ways-money-is-spent.html

(2)
http://www.rasmussenreports.com/public_content/politics/current_events/healthcare/october_2009/fear_of_losing_private_health_insurance_trumps_public_option

The Socialized Medicine Scheme: the Compulsory Auto Insurance Argument

If you look at the 09/21/2009 post on The Last Embassy you will see a discussion entitled The Socialized Medicine Scheme: now its like Auto Insurance?

http://thelastembassy.blogspot.com/2009/09/socialized-medicine-scheme-now-its-like.html

The post discusses the fallacy in the argument that compulsory health insurance and state mandated compulsory auto insurance are one in the same. The argument was put forth in some circles, then consequently used as a “talking point” by Mr. Obama in regards to the “obligation” to purchase health insurance being the same as the “obligation” to buy auto insurance. The fallacy of the argument is the failure to understand the obligation aspect of the insurance.

However, the argument has taken on a new dimension.

When health-care reform (aka health insurance reform) is debated you'll notice a new argument that the public will be forced/obligated to buy health insurance which is unconstitutional and the proposed penalty for non-purchase is unfair. Under the proposed health-care legislation, failure to buy health insurance results in a significant fine and potential jail time. Forced purchase of any item, including health insurance, is unconstitutional. That the significant fine and potential jail time is a sever penalty on the middle class, and an even worse penalty on the poor.

The rebuttal to the argument is: then you think compulsory auto insurance should not be the law and the public should have no protection?!?

The rebuttal is extremely flawed. Its a complete disconnect. Why is the rebuttal flawed? The flaw is the misconception of the term “obligation”.

Many people think insurance is insurance. That is, that the many types of insurance are basically generic. Hence the compulsory auto insurance state law requirement is exactly like, akin to, and the same as compulsory health insurance.

Compulsory auto insurance laws are required due to the bodily injury and property damage liability arising from the operation of vehicles. That is, the required auto insurance coverage mandated by state law is for the benefit of an exogenous party. Your "obligation" is that of liability to another party.

Health insurance is the exact opposite of compulsory auto insurance in regards to who benefits and what obligation exists. That is, health insurance is purchased for the direct benefit of the policy owner. Health insurance is not purchased for the benefit of an exogenous party. The "obligation" is to yourself. Your failure to purchase health insurance does not create a bodily injury or property damage liability to an exogenous party.

Hence compulsory health insurance being used as a direct comparison to compulsory auto insurance ignores the obligation aspect and the party that benefits from the insurance.

Going back to the rebuttal mentioned above, the failure to buy health insurance has nothing to do with the public protection aspect of the rebuttal argument. There is a clear and major difference between the obligation to the “public” being protected against negligence and the obligation of the “public” being required to buy health insurance for their own benefit.

Health insurance has absolutely nothing to do with public protection against negligence. That is, within compulsory auto insurance the public protection element is negligence and the public’s recourse is the insurance. In health-care/health insurance reform and consequently the argument for compulsory health insurance, where is the public protection element? The public suffers no negligence and hence does not need insurance as a recourse for negligent acts.

Hence the rebuttal mentioned above, then you think compulsory auto insurance should not be the law and the public should have no protection, holds no water as the "public protection" aspect is confused in regards to the separate and distinct points of obligation to the public and the obligation of the public.

Therefore, compulsory auto insurance and compulsory health insurance are two separate and distinct concepts that are most comparable in their many differences and very few similarities.