Seven Ways Automobile Insurance Isn’t Like Health Insurance

Tell americans to get car insurance and nobody bats an eye .. tell them they all need health care and all of a sudden everyone has a fit.

It’s the newest meme. Why are so many Americans so concerned with the health insurance mandate? They already buy insurance for their cars and their houses, their lives even. It’s illegal to drive without insurance already. What’s the big deal? It’s the same thing, right? 

Wrong. 

Here’s a short list of ways that health insurance is not the same as car insurance:

1. I can opt out of driving, and thus auto insurance.

If I don’t want to drive, I can make other arrangements. I can use a bicycle, run, walk, skateboard, ride a scooter, ride the bus, ride the train, hitchhike, carpool, or just get your walkin’ shoes on. If I don’t own a car, I will never have to purchase insurance.

On the other hand, there is only one way for me to opt out of the ACA: pay a yearly penalty to the IRS.

2. Auto insurance doesn’t increase consumption when more people are insured.

To me, this one is the biggie.

If I buy auto insurance, my consumption of auto insurance related services and goods isn’t likely to change dramatically. Very few people go out, buy a car, and immediately attempt to wreck it as often as possible in order to take advantage of their newly purchased insurance. Thus, as more people buy auto insurance, consumption remains a fairly steady rate and costs can decrease based on the newly created pool of insurance premiums received. There may be a more need for auto repair shops and tire stores as more cars are put on the road, but there isn’t a flood of new drivers every year. The rate remains about the same, and depends entirely on population statistics.

The new healthcare mandate opens up all sorts of new consumption related problems.

Starting January 1st of 2014, the following “Ten Essential Benefits” must be included under all insurance plans:

• Emergency services
• Hospitalizations
• Laboratory services
• Maternity care
• Mental health and substance abuse treatment
• Outpatient, or ambulatory care
• Pediatric care
• Prescription drugs
• Preventive care
• Rehabilitative and rehabilitative (helping maintain daily functioning) services
• Vision and dental care for children

Setting aside the benefits of having this kind of thing available to everyone, let’s talk about only one aspect: consumption.

Now that these ten services are going to be required to be covered by insurance companies in every plan offered, there will be an explosion in the use of these services. That increased use is going to drive up costs and then will drive up the cost of insurance. Consumption is going to go through the roof and remain that way indefinitely.

To put it another way, if your insurance company were forced to include oil changes, tires, windshields, timing belt replacements, rental car fees, radiator flushes, brake replacements, serpentine belt replacements, and headlamp replacements in every policy they sold, wouldn’t you use those services more often? And if that were the case, wouldn’t the cost of those services have to be made up from somewhere? Where do you think that is?

3. I’m not penalized for not having auto insurance.

Let’s pretend I buy a car, with cash, register it with the state, and don’t buy liability insurance. I can go for a long time, possibly forever if I never get in an accident, without buying insurance. Yes, I’m legally obligated to buy it, but I could go without as long as I don’t cause damage with my car.

On the other hand, if I’m alive in the United States, starting in 2014 I have to pay a penalty for not buying health insurance. Whether I like it or not.

4. The IRS doesn’t collect fees from me if I don’t have auto insurance.

This is one of the weird parts of the ACA for me. You’re going to have the Federal agency responsible for collection of taxes enforce a penalty if I don’t buy insurance? Mixed signals. Maybe that’s why the IRS is buying guns

Guns or not, the IRS is the agency responsible for assessing whether I have purchased an adequate amount of insurance.

With auto insurance, I don’t have the IRS wondering whether I bought a liability policy on my ’04 Honda Odyssey.

5. There is no Federal agency responsible for insurance.

Holy crap, that can’t be right!! You mean there are 50 states with differing standards of liability levels and responsibility laws concerning traffic violations and accidents? It’s anarchy out there!

As far as I understand auto insurance, there aren’t really even any national guidelines, just that if you own a car you need to have your state’s required level of liability insurance.

Instead of respecting states rights, the ACA creates all sorts of new levels of bureaucracy and federal offices to regulate and enforce the new health care law.

6. Auto insurance is governed and regulated at the state level.

All auto insurance is governed at the state level. Where most governance should occur. Where health insurance governance should occur, if it is to occur anywhere.

 

Our new healthcare mandate creates national standards, exchange, taxes, and departments to regulate and enforce the law.

If health care is an issue that has anything to do with government, and I don’t think it does, it should be handled at a state level. I don’t remember the Constitutional clause that says that the states passed on the responsibility of the health of their citizens to the national government…because there isn’t one.

7. Auto insurance insures against your liability.

I buy an auto policy for a couple of reasons: to protect myself financially if I cause damage to someone’s property while driving, to appease the requirements of the loan I may have on my car, to protect my own car from damage from other people, etc. It’s all about protection from liability in the case of harming someone else’s property.

I buy a health policy for different reasons: to protect myself from the medical bills that may occur in the case of catastrophic illness or disease, to spread out the cost of certain procedures that I may wish to obtain in the future, but most of my insurance choices are to help with the cost of consuming health care services and goods at some future point.

Except with the ACA. You are now required to pay for all sorts of fun things you may or may not ever use. See reason number two.

Have any of your own? Leave them in the comments below.

4 Comments

  1. Clarence January 10, 2014 at 7:41 pm #

    Hmm, I might need easier to understand version of this?
    lol

  2. James January 24, 2014 at 4:20 pm #

    We don’t have health “insurance”. We have health care reimbursement today. Fully 75% of healthcare expenses are a result of lifestyle choices with overweight and smoking being the two biggest epidemics.
    An orthopedic doc tells me he would have only half his patients if people maintained a healthy body weight. A sleep study facility tells me two thirds of their sleep apnea patients would be gone if BMI was under 25. A pain management doc shares that over half his patients would be fine if the got weight under control. And in my own family, 60 years of smoking has resulted in tens of thousands of dollars in surgeries and on and on and on….
    There is no penalty today for bad behavior or poor choices. “Hey, my insurance will cover it.”

  3. Caleb February 21, 2014 at 9:41 am #

    Auto insurance is not like health insurance in many ways, but both are essential to have. It is important to invest in both for you and your family.

  4. secchione9 March 6, 2014 at 5:42 pm #

    Essential is a strong word. I’ve lived for ten years without health insurance and I have been just fine…

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