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Amendment 63 on Colorado’s ballot this November would prohibit the state from forcing people to buy health insurance, a provision of the new federal health care law , further cluttering our state constitution with yet another amendment which violates the U.S. Constitution (in this case, the Supremacy Clause of the U.S. Constitution, to be precise, which states that federal law takes precedence over state law). Many think this is a good idea. And the argument for it seems straightforward enough: Free people should not be compelled to buy any good or service from any private company that they do not wish to buy.

But most people acknowledge (albeit grudgingly) that some taxation is necessary, and so the qualifier “private company” is necessary. Taxes, after all, are the government forcing people, collectively, to buy goods and services from the government. You don’t get to choose if you want to contribute to the provision of a military, police and fire departments, schools, and other public services that we have not yet been foolish enough to eliminate (though some are trying to get us there), and most people don’t object to that. Certainly, no rational people do.

There are some who advocate for more privatization of public services, contracting more out (as the military has done, for instance), more private-public partnerships, more market dynamics and competition (in the form of school vouchers and cap-and-trade regulation, for instance). Few, again, would argue that government cannot tax citizens for any service that it contracts out in part or in whole, so, again, the prohibition we are discussing must be against government forcing people to buy any good or service directly from any private company; government forcing people to pay private companies indirectly is fair game.

What, exactly, is the moral or pragmatic distinction between government using tax revenues to pay for contracted services, and government cutting itself out as the middleman, and mandating that citizens buy certain services directly? Is the issue a concern that we mandate only taxation for the provision of public, not private, goods?

But insurance very much is a public good. It is the spreading of risk so that all pay some part of a collective burden that we all share, rather than allowing the whims of chance to dump crushing burdens on a few at a time when they are least able to bear them. Ideally, we would dispense with “insurance” altogether, and instead spread the risk universally, and seek to reduce it together through a preventative and proactive health care regime, conceptualizing health care not as an individual service that is individually consumed, but rather as a basic need that we collectively provide to all of our citizens.

In the absence of that ideal, in a compromise with our dysfunctional prior system, the next best choice is to have a highly regulated private market, one which uses private insurers as agents of a public function. To ensure that the pool of contributers is sufficient to cover the demands that will be placed on the system, mandating that people pay into it is functionally no different from mandating that people pay their taxes for services that are publicly provided.

Some argue that this is just a boon to the “evil” insurance companies, that exist to maximize profits by collecting the highest premiums possible while denying as many claims as possible. There is some truth to this, and it points to a basic defect of private insurance: When you pay now for a service whose future provision depends on a judgment by those responsible to provide it, you create the perverse incentive for those enterprises to be biased in favor of judging against providing it. As long as we rely on private insurers with some discretion to accept or deny claims, we will be facing an uphill battle, individually as consumers of that service, and collectively through our government agents, to force them to uphold their end of the bargain in good faith.

As an aside, in the case of liability insurance, it creates the added defect of commercializing the meeting of moral or ethical burdens in such a way that they will be minimally met if at possible. If a parked car is totalled by a drunk driver, that driver has a moral obligation to make the owner of the parked car “whole” again, to ensure that no loss of any kind is borne by the victim. But insurance companies have no incentive to view that moral obligation as being as compelling as it is; they will not pay for anything that the victim cannot document is owed to him or her, despite the fact that no burden should fall on the victim at all. (This observation is derived from personal experience, in which, in the above scenario, State Farm Insurance sought to pay me less than the real value to me of the car the drunk driver had totalled). In other words, when you buy liability insurance, you are paying a company to fulfil your possible future moral or ethical obligations, and that company is then motivated to do so its best to shirk that responsibility on your behalf.

Relying on private insurance is problematic in a variety of ways. The insurance companies are incentivized to refuse those most in need of insurance (those most likely to have to collect on it), to bear too little of the crushing burden of health care expenses when most needed by clients who have already paid for their insurance, and to charge exorbitant prices for the under-provision of these services. With the enormous wealth thus amassed, these financial giants can then aggressively lobby Congress to do their bidding, legally bribing and blackmailing their way to almost unstoppable heights of political influence.

But, boon to private insurers or no; a sad and frustrating tribute to a corrupt system or no; our goal is not to punish insurance companies or cut off our nose to spite our face, but rather to move incrementally toward more functional social institutional arrangements, and this often means acknowledging and accommodating existing distributions of power and influence, in order to move in a direction which makes their exercise more utility-producing. The best road we have forward, both to diminish the future political clout of insurance companies and to constrain them more narrowly to provide the service for which they’ve been contracted, is to increase government regulation, and increase public participation.

Requiring everyone to buy into health insurance pools is a necessary step toward developing a fully functioning national health care system.

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  • MaryP:

    More reason to have a public option available!

  • Mary, I’d like to have universal single-payer, and just be done with it. That’s the economically, morally, and socially responsibly rational course. Unfortunately, it’s not on the table right now, and, though a public option is not as far out of reach, it’s not on the table right now either. We have to first make our politically crippled first step work, before we’re going to get another bite of this apple.

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