Thursday, August 27, 2009

The Myth of Health Insurance

About a year ago, I experimented with going into financial services, which included having to get licensed to sell life insurance. To meet the requirements, I had to learn the basics of insurance generally, and what life insurance is specifically. What I learned about insurance is that it's what we buy to protect ourselves against risk. Insurance is simply a way to transfer risk. What is risk? Risk is the chance of loss. Thus, you can't insure against certain losses, only uncertain ones.

In what areas are there the genuine chance of loss? We are all mortal, so there's a chance that I could lose my life, and so my family would lose their breadwinner. I have life insurance to cover my family in the event they lose me through death. I also have automobile and homeowner's insurance to cover my assets in the event of an accident, etc. I even have identity theft insurance to pay for the cleanup required if my name and credit are used without my permission.

Here to explain the myth that is health insurance, is Thomas Szasz writing for the May 2003 issue of The Freeman:
Forty million Americans are said to have no health insurance. Those who do have health insurance are frustrated by having to pay ever-increasing premiums for steadily diminishing medical services. Conventional wisdom tells us that we are facing a “health insurance crisis.”

It is important to recognize that what we call “health insurance” has little to do with health and nothing to do with insurance. We do not face a “health insurance crisis.” We face the consequences of a set of economic and social problems rooted in a futile effort to make the distribution of health care—unlike the distribution of virtually every other good and service in our society—egalitarian.
Read the whole thing here.

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