Why you can’t buy health insurance like auto insurance

During the debate over health insurance reform, you’ll occasionally run into the idea that health insurance should be provided more like auto insurance. After all, in most states everyone has to have auto insurance, so everyone’s covered. If you have a decent driving record, you’ll have lots of choices among providers; and most people can find the minimum required insurance, even if it’s in a high-risk pool.

If the market works for auto insurance, why not health insurance? The answer is simple: People and cars are different. We (rightly) value them differently. And the market can’t account for that difference. Here’s why:

First, car insurance is a very restrictive form of catastrophic coverage. It doesn’t cover the everyday items that keep cars running, like oil changes; nor does it cover mechanical breakdowns, even when they cost you a fortune. You can put off an oil change, and eventually your car will break down, but your auto insurance won’t help you then. It only comes into play when you hit someone/something, or they/it hit you.

Your health is different. Your body can break down in numerous ways – cancer, pneumonia, or a collision with a bus, for example. To be effective, health insurance has to cover both preventative *and* catastrophic care, because the two are inextricably connected. People will put off a yearly check-up if it isn’t covered by insurance. (Yeah, you say you won’t, but the behavioral economists out there have the data – you will.) And when small health care problems go unnoticed or untreated, they become full-blown problems that cost a great deal more to treat in an emergency room.

Second, as the #2 comment on this post highlights, the replacement cost of your car is known. That means you and and your insurer can come to an agreement about things you would likely never agree on when it comes to your health, let alone life or death:

If the repairs on your car cost you too much, or take too long, you can always junk the car and buy another. That is, you may choose not to pay for repairs that exceed that car’s replacement cost–or are just too much of a hassle. Because you can always buy another car. None of that is true with health care. While my own body’s health problems are costing society $80,000 a year in maintenance, I can’t junk my body and get another. The Lord gives each of us only one body to a customer. And you have to pay to maintain it, no matter how much it costs–unless you prefer death.

In other words, there are no emergency rooms where you can get car-saving treatment regardless of your ability to pay.  There are only mechanics who will give you a quote for the work, and you can take it or leave it. And there is a good reason for that: as inanimate objects, cars have finite value.

But a moral society would never do that for people, because only a very few of us could afford the Life Flight helicopter ride from a crash scene. We provide emergency care regardless of ability to pay because it would be unethical to do otherwise.

Health insurance reform is about ensuring everyone has more than catastrophic coverage or the emergency room to rely on — because it’s healthier and cheaper for everyone, and ultimately better for our communities and our economy. If everyone can easily access and afford preventative care, that means fewer expensive trips to the emergency room.

A better analogy for health insurance is the local fire or police department. It doesn’t matter how much you earn, or how high up the social ladder you are, you get the same fire engine. Maybe you can afford better home monitoring and security if you are wealthy, but you don’t get better fire engines or faster patrol cars. And you don’t get a bill in the mail when a fire is put out, or a burglar is caught.

Odds are, you will need the fire or police department far less often over the course of your life than you’ll need a good doctor. We subsidize the cost of everyone’s personal safety with our collective tax dollars. Health care should be no different.

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