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The American Principles Project is a 501(c)(3) organization dedicated to preserving and propagating the fundamental principles on which our country was founded - universal principles, embracing the notion that we are all, "created equal, endowed by our Creator with certain unalienable rights, and among these are life, liberty, and the pursuit of happiness."
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APP Founder
Robert P. George, J.D., D.Phil., McCormick Professor of Jurisprudence at Princeton University, is one of America's foremost scholars in the fields of constitutional law, ethics, and political philosophy.
Dr. George has won numerous awards for his academic and civic work, including the Presidential Citizens Medal. He has served on the President's Council on Bioethics and as a presidential appointee to the United States Commission on Civil Rights. He is a former Judicial Fellow at the Supreme Court of the United States, where he received the Justice Tom C. Clark Award.
| Private Insurance vs. Government Benefits |
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| Written by Emmett McGroarty |
| Tuesday, 15 September 2009 11:49 |
Emmett McGroarty discusses some of the key terms, concepts and myths of the Health Care reform debate. The President’s Healthcare SpeechThe President last night seemed to blame his party’s congressional leaders for having failed to deliver a healthcare bill and for having failed to garner the support of the citizenry. In regards to healthcare, he failed to even mention any Democratic member by name except for the deceased Senator Kennedy and Representative Dingell’s repeated re-introduction of his father’s 1943 bill. Several substantive points in his speech bear analysis, not the least of which is his call for a “public insurance option.” One problem with that call is that the term “public insurance” is deceptive. In reality it would be a benefit scheme similar to Medicare and Social Security. But those programs have created a crisis that severely threatens the ascending elderly generation --the baby boomers. To create another such program would exacerbate their precarious situation. Insurance Versus Public Benefit Programs A person has insurance when he holds contracted rights to certain services or money that will be provided if specified contingencies occur (e.g., someone gets sick, dies, has an accident, etc.). The insured person, or someone acting on his behalf, pays money to the insurer for such rights. The insurance company invests the money paid on behalf of all the persons it insures and invests it in anticipation of the contingencies. When an insured person gets sick, dies or gets in an accident, he or his estate collects the money or services. For two fundamental reasons, government is structurally incapable of operating an insurance plan. One, it does not have a true means in which to invest premiums. And two, a public benefit program such as the proposed plan rests on statutory rights rather than contractual rights. These points bear further discussion. Investment Versus Collection Investment is crucial to long-term robust medical treatment. Insurers invest excess premiums. Over time, this tends to produce an astounding gain or profit. An entity that has such an investment gain thereby has the power to do something new --something that it would be unable to do if it merely relied on premiums. That is particularly important in the healthcare field because science continually develops new wisdom, medicines and treatments and because nature continually produces new diseases. Investment gains enable insurance companies to provide cutting-edge treatments, to combat new afflictions, and to provide other benefits to society. As stated above, government does not have a true investment mechanism. Rather, it spends the “insurance” premiums for general government purposes (e.g., roads, defense, pork-barrel spending, etc.) and in return gives the benefit program “special public-debt” bonds. As President Clinton’s Office of Management and Budget admitted: These balances are available to finance future benefit payments … but only in a bookkeeping sense. These funds are not set up to be pension funds, like the funds of private pension plans. They do not consist of real economic assets…Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures.This means that, on the income side, the government takes the program receipts and then spends it for general purposes. And then on the expenditure side, it laments the deficit and contemplates tax cuts, borrowing from the public (from whom it already took the program money), or cutting benefits and services in order to pay the receipts back to the program. Now that the 78 million baby boomers have begun to retire, that predicament will shortly be upon us. As President Obama said last night, “If we do nothing to slow these skyrocketing costs, we will eventually be spending more on Medicare and Medicaid than every other government program combined.” Nonetheless, he still wants to create “a publicly sponsored insurance option, administered by the government just like Medicaid and Medicare.” Government benefit programs are more akin to church collections than to insurance. Both government and the church collect money (the church voluntarily and the government by tax) and then figure out who needs it and how much they can give to those people. Investment is not a part of the process (although some churches do have endowments). It would be far more accurate to use the term “public collection option” rather than “public insurance option.” Dark Clouds Rolling In: Contractual Rights Versus Statutory Entitlement and Baby Boomers It is also misleading to characterize a “public-option” as insurance because insurance implies that a beneficiary has contractual rights against the provider. However, under a public benefit program, a citizen’s rights would not be contract-based, but would rather be statute-based. Contract-based healthcare leaves the beneficiary with contractual rights that she can enforce against the insurance company. In contrast, a public option program would be statute-based and would thus be subject to the whims of the populace. The usual view is that it would be politically unpopular to eliminate or severely curtail a large government benefit program. However, the dramatic demographic and fiscal developments noted above threaten that safety. The federal government faces massive budget deficits and Social Security and Medicare entitlement costs that have spiraled out-of-control. As the baby-boom generation dwindles in number, they will lose their political clout. The succeeding generations are likely to be extremely bitter about the burdens placed on them by the baby-boomers --the surviving architects of the entitlement programs, the fiscal crises and the economic disaster. The citizenry of the near future will likely have far less compunction in eliminating or severely reducing such programs. True (i.e., private) insurance is far safer. |
| Last Updated on Tuesday, 15 September 2009 12:05 |
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Topics Miscellaneous Private Insurance vs. Government Benefits
Topics Miscellaneous Private Insurance vs. Government Benefits