Sunday, September 13, 2009

Automobile insurance

In Obama's speech on Wednesday, he once again used the example of automobile insurance to make the case that it is within the scope of the Federal Government's authority to mandate that everyone carry medical insurance. I pointed out earlier that the cases are not at all analogous, and since then I have heard a lot of confusion on the topic, so I'm going to try to lay out my case more systematically.

First of all, notice that there is NO Federal mandate for drivers to carry automobile insurance. The fact that some states require drivers to be insured says nothing about the Federal government's authority in this matter. The 10th Amendment of the Constitution clearly grants rights to the states which are not granted to the Federal government. To be analogous to automobile insurance, the Federal government should let states decide if they will mandate medical insurance or keep it optional, just as they do now.

Secondly, no state requires that everyone carry automobile insurance. Children don't need to carry it, and neither does an adult who does not drive. Carrying automobile insurance is a requirement to perform a particular activity, not a mandate applying to everyone, simply because you exist.

Third, the purpose of mandatory automobile insurance is not to protect the holder of the insurance, but to protect everyone else on the road. Those states which do require insurance do not require that you carry collision coverage. The only requirement is to carry liability coverage which protects anyone else on the road who might experience bodily injury or property damage as a result of an accident you cause. Without that insurance, and without the means to pay for that damage, you might cause an accident which costs someone else tens of thousands of dollars, and not be able to pay for that damage. The insurance you must buy protects the other driver, not you. In every state, you can choose to not carry insurance to protect yourself. It is completely acceptable to self insure against damage to your own car. If you do that, you are accepting the risk that you might wreck your car, and if you do, repairing it or replacing it will be at your own expense. Medical insurance is analogous to collision coverage, not liability coverage, because it does not protect someone else against damage you might cause. It protects only you. To complete the analogy, those people who have the means to buy medical insurance but choose to self-insure must recognize that if they need medical attention, they will have to pay for it out of pocket, and they can't expect for society to pay the bill for them.

Finally, many states do not require drivers to carry insurance. They allow other options, including self-insurance. The State of Texas Transportation Codes contain the following options:


Sec. 601.051. REQUIREMENT OF FINANCIAL RESPONSIBILITY. A person may not operate a motor vehicle in this state unless financial responsibility is established for that vehicle through:

(1) a motor vehicle liability insurance policy that complies with Subchapter D;

(2) a surety bond filed under Section 601.121;

(3) a deposit under Section 601.122;

(4) a deposit under Section 601.123; or

(5) self-insurance under Section 601.124.

Self-insurance is an option. So using automobile insurance to make the case that self-insurance should not be allowed is a flawed argument.

This is a common argument, which comes up almost any time statists attempt another expansion of the power of the Federal Government. The argument is essentially that the government is already exceeding its authority, so why not exceed it some more? Even if the analogy held in this case, that's not a sound argument. It is one which leads to tyranny.


Colin said...

Seriously? Mandated auto-insurance is leading us to tyranny?

I think we need a reminder about what true oppression looks like. The bar seems to be getting lower and lower. The government mandating insurance that protects you in the case of an accident or provides you health care hardly resembles truly oppressive societies. And I reject the slippery slope argument that says this is the "nose of the camel in the tent" as some have said -- this country is obsessively focused on reining in government power, I don't think one reform like what's on the table for health care is going to turn us into a dictatorship any time soon, nattering nabobs on cable not withstanding.

This automotive insurance analogy has taken on a life of its own, as I noted in #7 here... I think we're getting too hung up on it. As I said over on my blog, the reason to bring it up is that it's just an existing insurance that government requires every citizen have in order to drive, that's all. And it didn't bring down the republic.

Now I did some research on self-insurance, and yes, it is an option -- but clearly a tiny exception of people use it. You have to document to the state that you can financially bear the cost of any accident you're caught in, which means you must be pretty affluent. And how many people really want to keep $100k in the bank just in case they have a wreck? It kind of makes no sense.

And yes, auto insurance is done by the states instead of the feds. But there's no way to get 100% health insurance coverage going through the states. I'd argue the only way this system could work would be at the national level. Several states have been out front in experimenting -- MA, for example -- but that's not a realistic path to the kind of change we need to solve the problem. It'd be a patchwork system riddled with the same kinds of problems we're trying to address.

As I said on my blog, I think the two compelling reasons for requiring everyone to have health insurance are: a) communicable disease and b) economic burdens to wider society. Those reasons justify making this a requirement of everyone in the country, because the effect of an individual's decision is not limited to only that individual.


Don Dodson said...

I think that you are misunderstanding what tyranny means. Tyranny is the arbitrary exertion of power and control over people by government. It does not necessarily appear as oppression.

In 1948, author C.S. Lewis wrote:

"Of all tyrannies a tyranny sincerely exercised for the good
of its victim may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies.
The robber baron’s cruelty may sometimes sleep, his cupidity may
at some point be satiated, but those who torment us for our own good will torment us without end for they do so with the approval
of their own conscience."

Colin said...


* Main Entry: tyr·an·ny
* Pronunciation: \ˈtir-ə-nē\
* Function: noun

1 : oppressive power (every form of tyranny over the mind of man — Thomas Jefferson_; especially : oppressive power exerted by government (the tyranny of a police state)"


Don Dodson said...

As I said, it may not *appear* to be oppressive.

It is not necessary to throw someone in a concentration camp to be oppressive. Ancient Rome conquered nations and enslaved them, sometimes by carrying them away and making them work in the mines or building roads, etc. but in other cases they simply left them where they were and taxed them, collecting 20% of what they produced as a "tribute". What you produce, whether the tangible product or the money you exchange it for, represents a portion of your life, and taking that from you arbitrarily is stealing a part of the most precious and finite resource you have. Taxation to fund the legitimate functions of government under the limited authority granted the government under the Constitution is not oppressive. But when government exceeds its authority by taking what you earn to fund wealth redistribution programs, essentially buying votes with money which is not rightfully theirs, that is tyranny. In 1840 Alexis de Tocqueville warned of what we see today in his book "Democracy in America" (volume 2, part 4, chapter 6), calling it a "soft tyranny." It takes on a benign, pragmatic guise of being necessary "for the children" or "for the poor" or "to save our economy" or "for our national security."

De Tocqueville wrote:

Above these an immense tutelary power is elevated, which alone takes charge of assuring their enjoyments and watching over their fate. It is absolute, detailed, regular, far-seeing, and mild. It would resemble paternal power if, like that, it had for its object to prepare men for manhood; but on the contrary, it seeks only to keep them fixed irrevocably in childhood; it likes citizens to enjoy themselves provided that they think only of enjoying themselves. It willingly works for their happiness; but it wants to be the unique agent and sole arbiter of that; it provides for their security, foresees and secures their needs, facilitates their pleasures, conducts their principal affairs, directs their industry, regulates their estates, divides their inheritances; can it not take away from them entirely the trouble of thinking and the pain of living?

Don Dodson said...

Oh, I forgot to say that our government consumes 34% of GDP, which makes health care look small. When you subtract out the legitimate part of our government spending, we are getting close to the 20% tax burden which was considered slavery by one of the most oppressive empires in history.

Colin said...

Oh, yeah -- we're very close to slavery. Except...

Our personal tax rate is one of the lowest in the world.

So everyone in Europe is much more of a slave than we are. I'm in Barcelona today -- going to see Sarah Sherwood for dinner, hopefully -- I'll ask her how she endures it. Over paella and sangria.

If you want our government to spend less of a percentage of our GDP, pass health care reform. That's the bulk of that %.

And I don't buy the tyranny talk. The US is the freest nation in the world. The government doesn't force us to do anything other than pay taxes and follow some very basic and easy to abide by rules which are clearly for our own good. The tyranny quotes from years ago are talking points for militias and FOX News, but they are totally inapplicable to life here in the US. I've seen oppressive governments, and this ain't one of them -- not even close.


Don Dodson said...

CS Lewis, Oxford professor, scholar, author of The Lion, the Witch, and the Wardrobe and about fifty other books. Crazy wingnut.

And De Tocqueville, a French historian and philosopher has been influential in American society for 170 years.

So what this all comes down to:

Some states mandate that people who drive carry insurance to protect others from the damage they may cause, therefore it is acceptable for the Federal government to require that everyone carry medical insurance to cover themselves.

If that works for you then run with it.