Thursday, August 27, 2009

Economic Ignorance Is A Pre-Existing Condition by Tom Naughton


“U-Save Insurance, Janet speaking. May I help you?”

“Yeah, I need auto insurance.”

“I’d be happy to help you, Sir. Do you need liability coverage, or comprehensive?”

“Which one covers stolen cars?”


“That one.”

“Very good, Sir. Would like me to email you a quote so you can compare our rates to other-”

“No, no, no. I’ve already called around. I want the coverage.”

“Excellent! I’ll just need to take some information over the phone. Your name?”

“Tom Naughton. That’s N-A-U-G-H-T-O-N.”

“Okay, Mr. Naughton. Your age?”


“Have you had any tickets or moving violations in the past three years?”

“Nope. None.”

“Very good. With your age and clean driving record, we can definitely give you our lowest rates. Now, what type of car did you need to insure?”

“It was a 2005 Mitsubishi Mirage.”

“Okay, and the … excuse me, did you say was?”

“I guess it still is, now that I think about it. Sorry.”

“No problem. And the zip code where the car is parked?”

“No idea. But I’m in 91604, if that helps.”

“You don’t park the car at home?”

“Of course I do. Well, I did, anyway.”

“Sir, are you telling me the car was -”

“Stolen, yes. And don’t try to get funny on me with the reimbursement just because it was - is - a five-year-old car, because the resale value on that model is still pretty high.”

“Mr. Naughton, I’m sorry, but I believe there’s been a misunderstanding. We can’t cover a car that’s already been stolen. You need to buy the policy before the car is stolen.”

“You’re going to deny me a policy just because I have a pre-existing condition?! Dangit, you insurance people are all a bunch of greedy bastards! I need coverage, and I need it NOW!”

“Sir, please calm down.”

“Fine! I’m calm!”

“Now, you’ve had this car for five years, correct?”


“So why didn’t you buy a comprehensive policy before?”

“I didn’t think I’d ever need it! This is supposed to be a safe neighborhood.”

“Yes, but that’s how the business works. You mix low risk with higher risk, and-”

“And let’s face it, lady, your policies aren’t cheap. Man, if I had your big, fat profit margins, I’d be retired already.”

“Our profit margin is around six percent.”

“Bull! You made millions last year!”

“That’s because we have millions of customers.”

“Don’t go playing math games on me, Lady. I did some checking on the internet, and I could buy a policy in Nebraska for, like, half of what you charge. But you greedy capitalists won’t let me buy a policy there, will you?”

“Actually, Mr. Naughton, it’s the government that won’t let you buy a policy there, not us.”

“Which just proves the gist of my point is still moot! What you people need is some old-fashioned competition.”

“Mr. Naughton, we have competition. You said you were calling around before -”

“No, no, no! I mean real competition, like a public option to keep you money-grubbers honest.”

“Uh-huh. I see. You want a government auto-insurance company that won’t turn down people who wait to buy insurance until their cars have already been stolen.”

“In a compassionate society, that’s exactly what we’d have.”

“Mr. Naughton, how much money do you think your car was worth?”

“At least $15,000.”

“So you want a system where nobody buys insurance until they need a $15,000 reimbursement. Do you have any idea what the premiums would be for that kind of a system?”

“Well … uh … then the government should force everyone to buy insurance.”

“You want the government to force you to buy insurance, even though you chose not to buy insurance on your own?”

“That would be different! They wouldn’t be trying to make a profit, so they wouldn’t charge such stupidly high rates!”

“Mr. Naughton, if we eliminated all our profits, we’d be able to cut our average policy rates by about $40 per year. And you may not believe this, but those profits are why we answer the phones, and show up when there’s an accident, and pay the claims.”

“Don’t give that profit-motive double-speak, Lady. The government service would be even better. They care about people.”

“Uh-huh. By the way, have you called the police about your car?”

“Of course.”

“And what did they say? Were they helpful?”

“Well … uh … I don’t know yet. They said they’d get to me in a couple of days.”

“Goodbye, Mr. Naughton.”


A few facts:

  • The vast majority of those in the U.S. who don’t have health insurance are 1) recent immigrants, both legal and illegal, 2) young adults who choose not to buy policies that cost around $100 per month, 3) seniors who qualify for Medicare but haven’t enrolled (and will receive coverage when they do, pre-existing conditions or not), or 4) families with household incomes of at least $50,000 per year who choose not to buy insurance.
  • States where health-insurance rates are sky-high are those in which the legislatures have mandated that all policies must cover a slew of non-threatening conditions, such as infertility.
  • Those same states have made it illegal for their citizens to buy cheaper policies offered in other states. For all their talk about the wonders of competition, the Obama administration isn’t interested in addressing this government-imposed restraint of trade.
  • The average profit margin the health-insurance industry is about 3 percent. That means if my insurer eliminated all profits, my rates would drop by about $11 per month. Whoopie. They’d also lose all incentive to answer the phone.
  • If insurers are forced to cover people who wait until they’re sick or injured to seek coverage, rates will skyrocket. They’d have to.
  • FDR, who hated private utility companies, first claimed that government-produced electricity would merely compete with private utilities to keep the rates down. Then he used tax dollars to subsidize the government entities so they could offer power at below-market rates and force the private companies out of business - which is what happened. If you think the Obama administration wouldn’t pull a similar stunt to get rid of private health insurance and bring about their dream of a Canadian-style single-payer system, you haven’t been paying attention.
  • My car is still in my driveway, thank you.

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