Imagine, for a minute, that auto insurance was more like health insurance. What would that be like?
First of all, there’d be no deductible. Insurance would pay the first penny of every claim. It would also cover things that you expected to have to take care of, like yearly oil changes, brakes, tire replacement, wiper blades, and so forth. You couldn’t just buy liability insurance, or just liability and fire and theft. All policies would have to cover collision, too, with no deductible.
States would pass laws mandating that these things were covered. You couldn’t opt to get a simpler policy that would cost less. Some states would mandate that all auto insurance policies would also have to cover any mechanical problems, regular detailing, tuneups, and some custom parts.
Of course, this would make it extremely expensive. A lot of unions would negotiate car insurance into their employment contracts. Many people wouldn’t buy insurance at all, figuring that the chance of needing it was pretty slim. And some states would allow you to buy auto insurance to cover a pre-existing mechanical problem or collision damage. This would push the cost of insurance even higher, as policies would have to cover the full cost of the existing liabilities as well as any yet to come.
Insurance would also be required to cover alternative car treatments- practices that weren’t approved by the manufacturers but were popular with a growing number of car owners. Things like installing crystals in the car to focus energy, and having an expert choose the right color for your car.
Of course, with all this money being tossed around, automotive malpractice would be a major concern. Most mechanics would have to carry a lot of insurance, which would be reflected in their charges, as would the cost of their insurance overhead. They’d spend a lot of time writing up justifications for replacing headlights and changing oil, using manufacturer’s replacement parts instead of generic parts and so forth.
No doubt many politicians would demand that the government should take over the auto insurance business, as well as the car repair business, like they do in some other countries. Sure, there might be some waiting times for repair- and some cars might be deemed not worth repairing, but everyone would get the same treatment.
That would be pretty bizarre, wouldn’t it?
Now imagine that medical insurance was more like auto insurance.
People would cover their expected or planned medical costs themselves. Insurance wouldn’t pay for checkups, or inoculations, or maternity care. There’d be a reasonable deductible for all drugs and care. You’d only draw on your insurance for really big and unexpected medical hosts, like hospitalization, surgery, serious illness- expenses that exceeded, say, 4-5% of your annual income. Most doctor visits would be paid for with cash. There’d be very little paperwork. YOung people in good health would decide that medical insurance was a pretty good bet, since they could get it very cheaply.
Now that would really be bizarre.