Insurance is inherently a poor investment. When you buy an insurance policy, odds are that in the long run you'll pay your insurance company more than they'll pay you. It has to be that way, else insurers would never be able to stay in business. Insurers profit from the laws of probability in the same manner as casinos - consider an insurance agent as a bookie who lets you place long-term bets on your own misfortune.

But that doesn't mean insurance is never worth having. The casino gambler places bets, against the odds, on something that he hopes will happen - not in ten years when he might really need his winnings, but in a few short seconds. The insurance gambler, on the other hand, bets on something he hopes will never happen, so that he'll be able to afford it if it does. Thus the purpose of insurance is one of security - to reduce risk to an acceptable level. A corollary is that it's not worth insuring something you can easily afford to pay for yourself. People who do such things are generally the same sort of people who play lotteries.

Unfortunately, most health insurance policies seem to be designed by devout Powerball followers. By involving middlemen in virtually every transaction involving medical treatment, they increase costs to both the patient and the practitioner. The only winners are the insurance companies, and presumably the elected officials whose campaigns they funded.

For purposes of analogy, suppose you own a house. Further suppose that your house is worth a lot of money - far more than you have in your savings account. If the house burns down, you're out of luck. You'll never be able to buy another one. So Bob the insurance salesman makes you an offer: if you pay him a hundred dollars a month, he'll buy you a new house in the event that yours burns down. Maybe you accept the deal - you'd rather make a poor investment than face the possibility of having to live at that scary motel down the street where fat cockroaches and skinny junkies scurry about all hours of the night.

But Bob's out to make as much money as he can, of course. Catastrophe policies like yours are profitable, but they're not the sort of thing that will enable him to retire to Tucson in ten years and live out his days in golfing bliss. So he also offers you the "deluxe complete home coverage package." If you pay him five hundred dollars a month, he'll still replace your house if it burns down, And now, for the price of a much higher premium, he'll pay to fix just about anything else that might go wrong with it. Roof leaking? Find a roofer approved by Bob's company, file a claim, and Bob'll pay the roofer to fix it. You don't have to negotiate the roofer's rate - Bob takes care of all of that. He might not be getting the best deal for the money, but you already paid him, so what do you care? Even routine maintenance is covered - every few years, your house is painted and your gutters cleaned at Bob's expense. Cat clawed the furniture? Drunken party guests vomited all over the carpet? You don't have to worry about such trivialities. You're covered. And Bob is shopping eagerly for a new set of clubs.

Then Bob starts to raise his rates. Pretty soon, you can no longer afford his "coverage," and you go back to your original disaster insurance. The next time your roof needs fixing, you pick up the telephone book and decide to shop around.

You soon find that the rates roofers are charging nowadays are astronomical. You try to negotiate, and they just laugh at you. They've been dealing with insurance companies for so long that the notion of getting paid by a customer instead of an insurer is practically foreign to them. For years, Bob and his friends have been telling roofers what they can do to fix people's roofs, and how much they'll be paid for it. The upshot is that roofers don't really have to compete any longer to offer their customers lower prices. In the long run, people lose more than money by purchasing too much insurance. They lose choice as well.

Most individuals aren't foolish enough to purchase the sort of insurance I've described on their homes. And come to think of it, most people who actually purchase health insurance don't buy such bloated policies either. I know I didn't - my deductible is a few thousand dollars. I'd be a fool to want to file insurance claims for something like penicillin or eyeglasses, which I could easily write a check for and be done with the matter.

But many people have such wasteful insurance coverage anyhow. It's become standard practice for an employer to add health insurance as a "benefit" when hiring someone for any job designated as "full-time." The employee usually doesn't have any choice in the matter - in most cases, he can't simply request the right to take care of his own medical needs in return for an increase in salary commensurate with his employer's cost for the unwanted insurance. It isn't really the employer's choice either, as long as companies receive tax benefits for funneling their staff into the gaping maw of the health-care bureaucracy. If the guy with the gun and the handcuffs tells you he'll take less of your money if you do things his way, you'll do it if you want to keep your business afloat.

The overall effect is a vicious cycle - the overhead and waste of insurance companies increase medical costs to the point where people without conventional, 9 to 5 jobs can't afford treatment, and are thus forced into entering the rat race, which means more money for the insurance industry and higer medical costs for people working outside of corporate structures. This makes it ever more difficult for self-employed artists, writers, programmers, farmers, cab drivers, strippers, etc. to earn a living on their own. That can't be a good thing.

Socialized health care is most emphatically not the answer. The prospect of the Federal government taking over, employing all the physicians and telling them what they can and can't do to treat your illnesses ought to be enough to scare you to death - perhaps, in the long run, literally. The Federal bureaucracy makes even the worst of the insurance companies look honest and efficient. Socialized medicine means an increase in pencil-pushers at the expense of practitioners. It's a mountain of red tape for a surgeon to tunnel through before he can even lift a scalpel to begin a life-saving operation unapproved by the Powers Above.

And it opens the door to abuse on a massive scale - a legal monopoly of the knowledge and equipment needed to repair bodies and save lives, held by the people responsible for the War on Drugs and the War on the Bill of Rights. Picture yourself in the following scenario:

"Sure, we'll fix your ankle right up. Just pee in this cup here and sign that loyalty oath."

I, for one, would hightail it (or in this case, probably limp!) to the nearest black market clinic. But if your condition were critical or you couldn't afford to pay cash to an underground doc, you'd have to choose between your freedom and your life. And all but the most zealous libertarians would choose the second - who wants to be a martyr to something as unromantic as a welfare state?

It's clear that medical costs are becoming outrageous. And it ought to be clear to anyone whose head isn't buried in the sand that the commonly proposed alternative is just a recipe for disaster. Centralization of power in the health care industry has had such deleterious effects that only a fool would seriously consider increasing it by handing it over to Washington.

I don't claim to have any magic pill to solve the whole problem. Anyone who does is probably lying. But there are a few ways to cut your own medical costs - the first and most obvious being if you don't have mandatory coverage from your employer, look for insurance yourself to get the best deal with the highest deductible you can reasonably afford. When you can, patronize self-employed physicians, dentists, chiropractors, etc. and make it known that you'll be paying your bill yourself. Small practices naturally have lower overhead, and are typically far more willing to deal with their patients individually in matters financial as well as medical. What's more, they generally don't have full-time "dealing with the insurance people" people on staff, so they'll welcome patients with less paperwork. You may be able to negotiate costs; if you can't, consider shopping around.

If you're unfortunate enough to have a major medical condition requiring continual, high-priced treatment, there's another route worth considering. I would never have thought of it myself until my mom went to work at a hospital a few years ago. In retrospect, it should've been obvious - just as a restaurant will give its employees free meals, a hospital might take care of its employees' medical treatment. Chemotherapy is expensive stuff, but when it's all done in-house and there are no claims and referrals to process, apparently the cost drops enough to make a hospital with an oncology department willing to provide it as a fringe benefit to a valuable employee. I can only speculate how great the difference is between the price hospitals charge insurance companies for chemotherapy drugs, and what it's actually costing my mom's employer to keep her healthy. But the markup has to be substantial.

On a related note, there used to be small towns where the local dentist would fix a poor farmer's teeth in exchange for fresh eggs every week. Such quaint Norman Rockwell-isms are long gone, but in principle there's nothing stopping someone from exchanging medical services for goods or services of some other sort. Such an exchange would almost invariably be "off the books," which is why politicians hate barter economies - they're much harder to tax. If you're an auto mechanic and your neighbor is a dentist, trading a timing belt and a tune-up for a filling or two just might be a better deal for both of you than "over the table" transactions that would have to be recorded and reported to the IRS. Come to think of it, insurance companies don't get a piece of the pie either. This is starting to sound better and better!

My last comment concerns a more long-term strategy to avert government takeover. There's an organization known as "The Shrine" whose members, known as Shriners, wear funny hats while marching in parades and incidentally operate a network of children's hospitals.Free children's hospitals, but they tend to be limited in scope. If your kid has a bunch of awful third-degree burns, though, the Shriners will help if they can, for no charge. Doesn't matter if you're unemployed and living out of your van, or working 60 hours a week deciphering old COBOL code. There's no "government assistance" involved - the Shriners are an entirely private organization.

I like the Shriners. The found something they considered worth doing, developed an effective way of doing it without impinging on anybody's freedom, and set about doing it. If you've just cashed in a bunch of stock options, I can't think of a more worthwhile way to keep that extra money out of politicians' hands than to fund people like the Shriners so they can fix up crippled kids. The Shriners' organization provides a model for what may ultimately be the best way for reducing government dependence and the taxation, graft, waste, and (some would say) war that inevitably follow. The philanthropist seems a dying breed, slowly squeezed out of existence by the taxman and his ever-replenished barrel of pork. The Shriners are still at it, though, operating with an efficiency that puts Medicare to shame. The chief fallacy of the welfare state is that to help the genuinely unfortunate get back on their feet, it's necessary to enact laws that engender a whole class of parasites. The Shriners, and those like them, prove welfare statists wrong every day. I see no reason why the tide can't be turned.