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What Health Insurance Is and Isn’t

March 4, 2010 4 comments

I’m not going to use this blog to stump for any particular side of the health care debate, but I want to clear up a misconception that’s been bothering me since the debate began.

Many of the arguments made for reform include comments about insurance companies denying coverage to individuals with pre-existing conditions. This has been represented as a greedy and heartless practice by insurance companies to avoid having to pay claims. This argument is being made by many who (in my opinion) do not understand the basic concept of what insurance is.

Insurance is the management of risk. Each of us lives in risk of suffering harm or illness at any point in our lives; health insurance helps us manage that risk by allowing us to pay (comparatively) small amounts of money over our lifetimes with the promise that funds will be provided for our care should such harm or illness befall us. We enter into this agreement with an insurance company knowing full well that we may never need those funds — we may pay out our entire lives and never get back. On the other hand, we may end up needing far more than we ever pay in. Several people doing the same allow the risks of these outcomes to be spread out over a larger group so that no one person bears the entire burden.

Insurance is not a discount program. It is not a way to get medical services for less than their market value. The money for insurance coverage has to come from somewhere, and there has to be enough of it available to cover any needs that may arise.

A person with a pre-existing medical condition who has to see a doctor or have procedures performed regularly will draw out more than he or she puts in. They are not managing risk, but receiving discounted care. They are denied coverage because there is no chance that their premium payments will ever equal or exceed the benefits they receive, so there is no risk to manage.

To borrow an analogy from a popular (if misinformed) YouTube video, imagine that maintaining a fire department was not one of the normally responsibilities of government. Instead, imagine that you had to pay $6,000 each time a fire needed to be put out at your home. You may never need fire service during your lifetime, or you may need it several times.

To help manage the risk, you and 9 other people in your neighborhood decide to pool your resources. You research statistics on home fires and determine that it is likely that one of your homes will catch fire in any 10-year period1. To manage this risk, each of will pay $5 per month (10 people × $5 per month × 120 months = $6,000). Your expectation is that any one of you may need to draw out this money at any time in a 10-year period. You may go 10 years with no fires, or there may be 2 fires, but at least this way the risk (and the charge) are spread out among the 10 of you so no one bears the burden by themselves.

One day a neighbor comes to you who is not part of your pool. His house is on fire and he wants to pay his $5 to become part of your pool. There is no risk to spread out here; you know that if he enters the pool you will have to immediately pay out the $6,000 to cover his bill, for which he will pay only $5. He is under no obligation to continue in your pool after he receives his money. This is what it is like when someone who has a pre-existing condition is applying for health insurance. He is asking you to pay his costs — which is not insurance, it is a subsidy.

Now I’m not saying that we shouldn’t have ways for everyone to have affordable access to health care. I’m not defending any other practices that insurance companies may or may not engage in. I am simply saying let’s stop using coverage denials due to pre-existing conditions to demonize insurers. Insurance is not a subsidy or discount program, it is risk management. If there is not a chance that you may not need your benefits, then it defeats the entire purpose and function of insurance.

Now let’s get back to debating.


1. This is of course not a real statistic and is only being used for illustrative purposes.


How Measure 67 Will Hurt Me

January 15, 2010 Comments off

I’m a little late joining this conversation, but here is the bottom line (for me, anyway):

I was laid off in February of 2009, and my friend Scott was laid off in April that same year. Unable to find new jobs, we started a new business designing websites. We made a grand total of $1,050 for the entire year — about $300 after expenses. As an LLC, our minimum tax on that $300 that we have to split will be $150.1

I was denied my unemployment, my savings are dwindling and I have a brand new baby in the house. I don’t need this problem too. Vote no on Measure 67.

Update: Scott tells me that we did not collect that $1,050 until after the the beginning of the new year, so those revenues will be taxed in 2010. That makes our income for 2009 about -$700, and we will still have to pay $150 in taxes simply for being an LLC.




1. “2009 Corporate Tax Law Changes.” Business Taxes Home Page. Oregon Department of Revenue. 14 Dec 2009. Web. 15 Jan 2010. <http://www.oregon.gov/DOR/BUS/corp_tax_changes_2009.shtml>

A Meditation on the Pledge of Allegiance

July 4, 2009 2 comments

By Red Skelton:

“Getting back to school, I remember a teacher that I had. Now I only went, I went through the seventh grade. I left home when I was 10 years old because I was hungry. (laughter) And .. this is true. I worked in the summer and went to school in the winter. But, I had this one teacher, he was the principal of the Harrison school, in Vincennes, Indiana. To me, this was the greatest teacher, a real sage of..of my time, anyhow.

He had such wisdom. We were all reciting the Pledge of Allegiance one day, and he walked over. This little old teacher … Mr. Lasswell was his name. He said:

“I’ve been listening to you boys and girls recite the Pledge of Allegiance all semester and it seems as though it is becoming monotonous to you. If I may, may I recite it and try to explain to you the meaning of each word?

I: Me, an individual, a committee of one.

PLEDGE: Dedicate all of my worldly goods to give without self pity.

ALLEGIANCE: My love and my devotion.

TO THE FLAG: Our standard, Old Glory, a symbol of freedom. Wherever she waves, there’s respect because your loyalty has given her a dignity that shouts freedom is everybody’s job.

UNITED: That means that we have all come together.

STATES: Individual communities that have united into 48 great states. Forty-eight individual communities with pride and dignity and purpose; all divided with imaginary boundaries yet united to a common purpose, and that’s love for country.

AND TO THE REPUBLIC: A state in which sovereign power is invested in representatives chosen by the people to govern. And government is the people, and it’s from the people to the leaders, not from the leaders to the people.

FOR WHICH IT STANDS, ONE NATION: One nation, meaning “so blessed by God.”

INDIVISIBLE: Incapable of being divided.

WITH LIBERTY: Which is freedom, the right of power to live one’s own life without threats, fear, or some sort of retaliation.

AND JUSTICE: The principle or quality of dealing fairly with others.

FOR ALL: For all, which means, boys and girls, it’s as much your country as it is mine.

And now, boys and girls, let me hear you recite the Pledge of Allegiance:

“I pledge allegiance to the Flag of the United States of America, and to the Republic for which it stands: one nation, indivisible, with liberty and justice for all.”

Since I was a small boy, two states have been added to our country, and two words have been added to the Pledge of Allegiance: “under God.” Wouldn’t it be a pity if someone said that is a prayer, and that would be eliminated from schools too?

Happy 4th of July, everyone.


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Twist Ending

August 23, 2008 1 comment

Some time before I saw The Sixth Sense, a friend’s girlfriend was telling me how much I needed to see it and how the movie had a “twist ending,” to which I immediately replied “so Bruce Willis is dead?” She tried to deny the statement, but I knew.  She’d ruined it for me.  What other twist ending could someone put into a movie about a kid who sees dead people?

Last night, my wife and I finally watched Indiana Jones and the Kingdom of the Crystal Skull.  For months, Frank Marshall and others on the production denied that Shia LeBeouf’s character Mutt Williams was the son of Indiana Jones. Less than halfway through the movie, he is revealed as exactly that.

Just a few days ago, Senator Joe Biden claimed that he was “not the guy” when asked about the possibility of being Barack Obama’s running mate.

Why do people keep lying to me?

Via HotAir:

I have some important news that I want to make official.

I’ve chosen Joe Biden to be my running mate.

Joe and I will appear for the first time as running mates this afternoon in Springfield, Illinois — the same place this campaign began more than 19 months ago.

I think there is a belief that keeping a secret for as long as possible gives it more impact when the secret is finally revealed, and in some cases that can definitely be true.  Continuing the movie comparisons, I really wish the first knowledge I’d had of The Lord of the Rings films had been the trailer with the ring spinning through the air interspersed with the famous “One ring to rule them all…” line rather than knowing about the filming years ahead of time.  That said, when someone’s on to your secret, fess up. Lying to me doesn’t fool me — it just makes me trust you less.

Categories: Politics Tags: , ,

They Don’t Fall from the Sky

August 22, 2008 Comments off

I won’t embed the video due to content, but I appreciate this sentiment from the late George Carlin.

Via Jawa Report:

Now there’s one thing you might have noticed I don’t complain about: politicians. Everybody complains about politicians, everybody says they suck. Well, where do people think these politicians come from? They don’t fall from the sky. They don’t pass through a membrane from another reality. They come from American parents and American families, American homes, American schools, American churches, American businesses and American Universities and they’re elected by American citizens…If you have selfish, ignorant citizens you’re going to get selfish, ignorant leaders.

This is essentially the same sort of thing I’ve been saying to anyone who will listen to me for years now. Our political system is the product of our culture and society, and our culture and society are the products of each of us individually. If our political system is corrupt, it is because our society is corrupt.  If our society is corrupt, it is because our society is made up of corrupt individuals.

Personally, I don’t think our society is corrupt, or at least that it is not completely corrupted. We have problems and they need to be addressed.  The way to do it, I think, is the way so few seem to seem willing to try, however — it is to look within ourselves and improve what we find there.

There are far too many people among us who are far too willing to blame the problems they perceive in our world (whether those are objective problems or the world not comforming to their subjective views) on others.  These other people may be vague or very definite, such as people with different political or economic views. All too often, the blamed group become targets of ridicule and anger. Of course, ridicule and anger don’t solve any problems. Yelling and screaming don’t change minds, especially if you’re yelling and screaming about subjective opinions and not factual truth.

But I digress.  The way to truly fix the problems we have is to rid ourselves, each and every one, of the hatred and blame. We rid ourselves of dishonesty, greed and selfishness. We begin to care more about the welfare of other others and about getting along with the people we meet regardless of differing views — even if other peoples’ views don’t include giving us the same courtesy.  Then we raise our children to do the same.

Eventually, our children, our grandchildren and so on will be the politicians, the business owners and the community organizers. If they have been raised right, if they do not automatically hate or dismiss others because they are too tolerant or not tolerant enough or because of political or religious differences, then the change will have been made.

At least, that’s what I think.

Categories: Politics Tags: ,

Scenes from the Floor

August 4, 2008 Comments off

The beginning of the guerrilla congress on Friday afternoon.

Via the Foundry:

Republican Uprising

August 4, 2008 Comments off

I’m sure many of you have heard about the revolt going on in Washington D.C., where House Republicans refused to vacate on Friday after the congress was adjourned and demanded that congress be re-convened in order to debate energy bills meant to address current gas prices, etc.  I’ve linked the the Twitter feeds of Representatives Pete Hoekstra, John Culberson and GOPLeader John Boehner to cover the proceedings, which continued today when the Republicans returned to the House and began working on energy bills in their shorts.

I’m told they’ve ordered pizza.  Now I wish I was there too.

Additional Link: House Republican Uprising Live Blog

H/T: Michelle Malkin, HotAir

Update via Laura Elizabeth Morales: The “guerilla congress” has a Facebook group and a website supporting them.  Also Twitter links for Representatives Rob Wittman and Dan Burton.  My rss widgets have been updated accordingly.

Last Update: There are too many representatives twittering this now, so I’ll just confine myself to listing the Don’t Go website and rss feed.

Revision: I’ve dropped the Don’t Go rss feed due to lack of activity.