Champions of the free society have long warned that the welfare state-in which the government does for people what they ought to do for themselves-has a corrosive effect on the character of human beings. There is no better evidence of this than what people have come to expect from what we mistakenly call “health insurance.”
Nary a day goes by that someone isn’t demanding that his health plan pay for something that is imprecisely described as “medical.” People are perfectly ready to ask the government to mandate coverage. The latest examples are Viagra and contraceptives, which is humorous: apparently fertility as well as impotence are medical conditions.
Before getting to that, let’s dispose of the question, “what has this to do with the welfare state?” It has a dual connection. First, the “entitlement” mentality fostered by the welfare state was always likely to be spill over to private insurance. Once people believed that the government should and will provide basic and not-so-basic things, it wasn’t long before they expected the same from other providers of services. Health insurance companies are prime candidates.
This is aggravated, of course, by the government’s policy of mandating that insurance companies or health plans to provide specific coverage. Politicians, hoping to score points with voters, love to tout legislation that would require coverage for some kind of purported medical service apparently free of charge. Health coverage, subject as it is to legislative fiat, is today little more than an adjunct of the welfare state.
It is connected to the welfare state in another, related way. Government policy irrationally encourages people to get health coverage through their employers. If your boss pays you partly in coverage, that portion of your compensation is exempt from income tax. But if you take your pay entirely in cash and buy coverage yourself, the premiums are not exempt. That bias goes back to World War II, when the government controlled wages. It permitted employers to offer workers noncash benefits as a way around the controls and chose not to tax the benefits.
As people came to rely on their employers to buy health coverage, they lost their sense of responsibility about an important matter. No longer did they have to shop for the best value in coverage and medical services, personally pay the premiums, and monitor their company’s performance. It was all taken care of by the boss. Since people didn’t pay the premiums directly, they didn’t experience the full connection between their demand for medical services and the cost of coverage. The cost-conscious medical consumer disappeared. That, of course, led to the over-use of medical services. When spiraling insurance price increases got out of hand, employers became interested in HMOs and other devices for controlling costs. Now people are mad because they can’t have all the services they want at unrealistically low prices.
This brings us to the current demand to have contraception included in health coverage. The welfare-state mentality now has people demanding health insurance for events that are uninsurable and not strictly related to health. The purpose of health insurance was originally to protect people from the financial disaster of relatively unlikely illness or injury. It makes no sense to insure against something that is likely to occur. That would not really be insurance at all. It would be prepayment for future services-and a bad deal to boot, since the premium would include not only the price of the product or service, but also the administrative overhead. Few people would spend their own money to “insure” against the need for contraceptives.
That’s why government is being pressured to mandate the coverage, that is, to force others to pay. Whatever happened to that old proverb “take what you want and pay for it”?
The only way to straighten out the medical mess is to get the government out and let consumers freely bargain for the medical coverage that suits them.