Saturday, November 7, 2009

You Wanna Bet?


I'm sure, particularly at this time of the year, just about everyone has placed a bet on their favorite sports team and, if you're like most people, you've lost some money already, but that's part of the spice that goes along with the joy of watching a good game (as long as no one does it to excess). Now imagine for a moment (here we go again) that all the star players on your team have come down with some inconvenient, though not fatal, communicable disease and are too ill to play in the next game. Their opponents are all healthy and ready to play but your team is depending on second- and even third-string players for this match-up. Some players are having to double-up by playing both offense and defense. You will probably not want to place a very high wager on this game or negotiate for a large spread in the final score so as to give you some resemblance of a fair chance of winning the bet. You might even choose to not place a bet at all.

The insurance industry is a lot like gambling. Your insurance company is placing a bet that they will receive more in premiums from you over the time they carry your policy than they will ever have to pay out to you. They also hope to invest that money you pay them so as to put it to work to earn more for them. By having as many policy holders as possible your insurance company tries to reduce the chances that any one customer suffering catastrophic losses will not drain all their reserves by having more paying into their system than that having to be paid out. You already know that you will pay more than you will ever get but because life and the future is unknowable and uncertain you have the assurance that if things go bad for you then that aspect of your life that you have insured is covered (that's why it's called "insurance").

Insurance companies like to hedge their bets with you just like anyone else. They write contracts specifically stating where, when, and how much they will pay out for what. If they consider a situation to be a bigger risk than normal, then they charge a higher premium so as to offset any potential extraordinary loss they may suffer. And if all the odds are set against them, then they may not even make a wager which means they will not enter into a contract with some parties.

There are folks in Congress who are preparing to mandate that the health care insurance industry, under penalty of law, have to accept all comers, regardless of the inevitable loss some customers will cause the companies forced to comply. This is like holding a gun to your head to force you to bet for your team when you already know that it is going to lose. It might even be like forcing you to bet that the sun will not rise tomorrow morning.

Some companies will play along and eventually go out of business as financial failures. Others will refuse to place bets on such guaranteed bad wagers and leave the industry all together. This will be just as some Progressives have designed it so that we either end up with a Free-market health care system where patients pay as they go (highly unlikely except for a black-market) or a Socialist system where the government becomes the single-payer mega-insurance carrier and begins to control that aspect of your life as to how much health care you get and for how long of your productive life you get to have some.

Of course, as I have already stated, the future is unknowable and uncertain and I could most certainly be wrong about the whole thing. You just have to ask yourself if you are willing to bet your life and your liberty on it. "Do you feel lucky, punk?"

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