Today I was listening to a local NPR talk show while driving between jobs. The subject as what could people do to help small businesses grow in light of the President's speech. One small business owner talked about how hard it was was to provide benefits, such as health insurance to her employees. In fact it's practially impossible for many business owners who can't bring enough people along to negotiate like larger corporations. One commentator opined that if all people from firms large and small were free agents in the market small businesses would not work at such a hiring disadvantage.

He's probably right, but missed the point entirely. If we were all free agents responsible for buying our own health insurance very, very few Americans would in fact buy insurance. Insurance is simply too expensive for many individuals to afford as free agents, even if their employer kicks back their contribution.

Let me offer an example. About two years ago I spotted an advertisement for open insurance enrollment in the Dispatch. As an over 50, non-smoking but slightly overweight male my open enrollment premium would have been around $26,000. Which even if my employer kicked in more money is more then half my gross income.


To be fair insurance companies don't want people to sign up during open enrollment when they have to take you. They have to take the bad risks then. Presumably in a competitive environment I would pay less. Let's say 50% less for argument's sake. I would still be kicking in in a quarter of my gross income. Presumably I'd get a tax deduction, but i would not get $2k back of that under best conditions. I'd still be paying over $200 a week out of pocket for insurance. Given that I'd be paying such a large percentage of my income for insurance the question then comes open whether or not I should buy insurance.

At its core, all insurance is a gamble, and you pay in hoping not to collect. Most people (including me) are certainly willing to sacrifice a portion of their income to buy it, particularly when the potential costs are so great. But ten thousand dollars is a freaking lot of money! I make around the median household income in the US which means about half of all families earn less then I do. Imagine being charge $10K for insurance if you make $10/hour and work full time. Then it would be half your annual income, and you're pretty close to the edge of survival as it is. This for someone earning significantly above the minimum wage.

Really, if you make that much even at $5,000 year buying health insurance is stupid. It's too much to spend on "maybe I'll get sick" when the reality of bills coming fast and heavy for immediate survival is certain.

Now they might buy a lower cost "disaster" policy if one could be written that actually covered you in a disaster. And libertarians would argue that would provice a tremendous incentive for people to get preventative care. But that's foolish. Without a co-pay visiting my doctor would cost over $300 and would go much higher with routine lab work. So if you gross $500 per week (About $12/hr) you could easily spend two weeks pay for the doctor to tell you you're okay. The alternative is him telling you nothing you want to hear including "plan for bankruptcy". Are you really going to not buy your kids school clothes so you can hear that? Or give up dating?

The simple fact is in an free and open market I'd be surprised if half of all Americans were insured. Sixteen percent are uninsured right now. The uninsured will go to the doctor only when they have no other choice. In other words, when it's too late. They'll show up uninsured and dying.

Cue the people at the last Repubulican Presidential debate chanting "Let him die!"

America's free market has given us excellent trauma care. But we spend more on health insurance then anyone else in the world and in return the private sector has also given us the highest infant mortality rate along with the lowest life expectancy of any country in the developed world. That isn't all due to the cost of health care. But the truth is the system we have where employers are expected to provide insurance bought in the free market is a failure. And we need to remember it can get a lot worse. If we truly all become free agents in a free market many people will buy their health insurance from Smith & Wesson.

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