Full Coverage Government

[Ziggurat]

It wouldn't hurt to adopt a tone of civility. I'm debating with you, not trying to steal your grandmothers liver.

You're right, I've been posting while annoyed, and I've been more confrontational than necessary.

Give examples

Well, for example, there's the Insurance Institute for Highway Safety.

and explain why the government couldn't do the same.

I'm not suggesting government can't do the same. That's not my point at all. My point is that nothing about the automobile insurance market separates it from any other business in any meaningful way. The arguments that have been put forward for why a government takeover would be beneficial (no need for profits, reduced overhead) apply to basically any profitable business. And yet, we know that when governments try to run the economy, the results are disastrous. So there's a fundamental flaw in the argument. We can debate until the cows come home exactly what that flaw is (I have an opinion, but it doesn't even matter if I'm right about it), but the fact that it's flawed has been proven time and time again by real-world experience.

Now, this doesn't mean that government can't do anything. That's not what I'm suggesting at all. If we decide that we want government to run some particular service because doing so will produce some benefit besides simple efficiency improvements, that may be worthwhile, if we're willing to pay the associated costs. I am also not claiming that the free market is perfect. There are a number of rather specific conditions under which it can fail, and these conditions are pretty well understood. But they don't apply to auto insurance.

And to show that I'm not simply out to bash government either, I'll note that one of these conditions does apply to health care insurance. I'll leave it as an exercise for you to figure out what that condition is.

 

[stokes234]

Except that study doesn't compare total compensation, it only compares wages. It ignores benefits, which are ridiculously high in the public sector.

How high? I only ask because you previously claimed that public sector pensions were "out of touch with reality", but when questioned on it, you were completely incapable of providing any figures on what public sector pensions actually paid out - all you could do was point towards a deficit in the pensions saving scheme.

 

[Augustine]

How high? I only ask because you previously claimed that public sector pensions were "out of touch with reality", but when questioned on it, you were completely incapable of providing any figures on what public sector pensions actually paid out - all you could do was point towards a deficit in the pensions saving scheme.

See Congressional Research Service Report "[FONT=PalatinoLinotype,Bold][FONT=PalatinoLinotype,Bold][FONT=PalatinoLinotype,Bold]Income and Poverty Among Older Americans in 2008" dated October 2, 2009[/FONT][/FONT][/FONT]

Public-sector employees not only are more likely to receive a pension in retirement than are workers in the private-sector; they also receive larger pensions than those who worked in the private sector. Among the 4.4 million people aged 65 and older who reported income from a government pension in 2008, the median annual amount was $18,000. Twenty-seven percent of people receiving a public-sector pension had pension income of less than $10,000 in 2008, while 26% reported pension income of more than $30,000. (See Figure 13.) Among the 8.8 million people aged 65 and older who reported income from a private-sector pension in 2008, the median annual amount was $7,584. Fifty-nine percent of private pension recipients reported that their pension income was less than $10,000 in 2008 and 9% reported pension income of more than $30,000.

[FONT=PalatinoLinotype,Bold][FONT=PalatinoLinotype,Bold][FONT=PalatinoLinotype,Bold][/FONT][/FONT][/FONT]
[FONT=PalatinoLinotype,Bold][FONT=PalatinoLinotype,Bold][FONT=PalatinoLinotype,Bold]
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[JoelKatz]

I've not followed the arguement perfectly, but i'll add that while I am in favour of nationalising insurance, I don't support any of the above ideas, in that I don't believe public insurance should offer lower risk insurance to higher risk people. I would favour the same risk calculations and resulting insurance costs being used as are currently being used by private industry, with the main savings passed on to customers in my eyes being on advertising and executive pay.

That's less awful them. However, the "savings" you imagine will remain imaginary.

Companies aren't stupid. They don't advertise if there's no benefit. Advertising brings in new customers, which reduces each customer's share of their operational overhead. It also reminds customers to expand their coverage when that's appropriate, which also reduces each customer's share of their operation overhead. The savings from eliminating advertising are probably less than zero.

And reducing executive pay probably also has negative savings. It's the executives who make sure the underwriting standards are optimal, which helps minimize the loss cases you agree are bad. It's the executives who run thinks like fraud detection. If it were possible to pay executives less and get the same performance, why wouldn't companies do it? And if you think it's because of perverse structural incentives and the like, you should see how bad those things are in government.

Don't forget, profit serves as an important metric. Government has no analogous metric.

 

[TriangleMan]

I realise that this is an “U.S. politics” section but there are examples from other countries that may offer insight into the public versus private debate for auto insurance rates. In Canada auto insurance is overseen by the various provincial governments and some of those governments have decided for auto insurance to be sold by the private sector while some provinces decided to sell it through the public sector (e.g. you purchase it from the government “Crown” corporation).

This became a hotly debated issue in 2003 when in some provinces the rates were increasing by 30+ percent. You can click on the links below to find out which sector was impacted and for further discussions of the issue of public versus private auto insurance.

http://www.consumer.ca/pdfs/030910_report.pdf

http://www.mapleleafweb.com/old/features/general/insurance/index.html

 

[King of the Americas]

Right, and the lower salaries are, the better for everyone. Society would be so much better if we could just get wages lower.

In this case, lower salaries, or more accurately ZERO high paid executive or board member salaries, would mean savings for ALL insurance holders. This savings would mean more general revenue for shoppers, providing an economic boost in other spending habits.

Right, and the less people know about what products and services are available to them, the better. Who needs free ad-sponsored television content when we can just pay for what we want. Society would be better without free content.

Government advertises and sends out mailers to detail what is happened and why. They simply do so at a lesser rate than for-profit private companies do. This is because private companies have to 'compete' with one another, each trying to procure a larger portion of the market. A government provided insurance would have no such burden.

Right, and profits are bad, they can be used to pay worker salaries. And they can even be used to finance government employees retirement. So we need to end that if we possibly can -- no more profits.

Profits simply wouldn't be necessary in a government system, any that occurred with be returned in the way of increased claims paid out.

Quite the reverse, each of these is more harm such a change would do. Salaries would on average be lower in the insurance industry. Less advertising revenue would mean ad-sponsored content couldn't be as valuable. And the absence of profit would mean a lack of incentive to minimize costs and maximize efficiency.

The absence of a profit margin, reduced advertisement spending, and non-existent 'high salaries' would ALL mean "more claims paid to policy holders".

But the worst part of your plan is that by artificially forcing insurance to be underpriced for people who are high risks and overpriced for people who are low risks, you create a dangerously unstable system. People with high risk won't pay the full costs of those risks, so they'll be likely to buy more insurance than they really should. People with low risks will be subsidizing the high risk people who get forgiveness too quickly, so they will buy less insurance than they really should. This will exacerbate the problem because more freeloaders will mean even higher rates for the people with the lower risks, leading to a death spiral.

If I am fully covered for anything that is stolen and even get quick insurance cost forgiveness, what is my incentive to minimize my theft exposure? And if low-risk people are overcharged because they get no benefit from the generous forgiveness and the high tide of high risk people raises all ships, why would they buy your insurance at all?

The BEST part of my plan is that it eliminates discrimination, and allows everyone to share risk equally. And given the prices will be lower, MORE people will purchase it, making the shared risk even broader than it currently is.

The incentive is built in to how we set next year's rate. Instead of having to provide to bloated budgets, the rate is ONLY designed to replace last year's losses, so that the fewer overall claims made, the lower everyone's tax rate.

So, in summation, you are totally and completely WRONG.

 

[Ziggurat]

In this case, lower salaries, or more accurately ZERO high paid executive or board member salaries, would mean savings for ALL insurance holders. This savings would mean more general revenue for shoppers, providing an economic boost in other spending habits.

This argument applies to most businesses. You're either advocating socialization of most of the economy, ignorant of your own argument, or simply dishonest.

Profits simply wouldn't be necessary in a government system, any that occurred with be returned in the way of increased claims paid out.[/qupte]

Same as above.

The BEST part of my plan is that it eliminates discrimination, and allows everyone to share risk equally.

That's the worst part of your plan. Careful drivers shouldn't have to share equal risk with reckless drivers. Making people pay in proportion to their risk is a mechanism for encouraging responsible behavior AND for controlling costs. You simply cannot credibly claim that government would save money if they're operating on such a basis.

And given the prices will be lower, MORE people will purchase it, making the shared risk even broader than it currently is.

Prices wouldn't be lower. Because of the lack of discrimination, low-risk people would opt out to avoid having to subsidize bad drivers, and bad drivers would sign up in order to be subsidized by the remaining good drivers. The lack of discrimination would drive costs up, not down.

So, in summation, you are totally and completely WRONG.

No, he isn't. You are.

And again, your arguments in favor of socializing auto insurance apply to most businesses. So again, you're either advocating socialization of most of the economy, ignorant of your own argument, or simply dishonest.

 

[King of the Americas]

This argument applies to most businesses. You're either advocating socialization of most of the economy, ignorant of your own argument, or simply dishonest.

Profits simply wouldn't be necessary in a government system, any that occurred with be returned in the way of increased claims paid out.[/qupte]

Same as above.



That's the worst part of your plan. Careful drivers shouldn't have to share equal risk with reckless drivers. Making people pay in proportion to their risk is a mechanism for encouraging responsible behavior AND for controlling costs. You simply cannot credibly claim that government would save money if they're operating on such a basis.



Prices wouldn't be lower. Because of the lack of discrimination, low-risk people would opt out to avoid having to subsidize bad drivers, and bad drivers would sign up in order to be subsidized by the remaining good drivers. The lack of discrimination would drive costs up, not down.



No, he isn't. You are.

And again, your arguments in favor of socializing auto insurance apply to most businesses. So again, you're either advocating socialization of most of the economy, ignorant of your own argument, or simply dishonest.

Oh, I am TOTALLY advocating socializing insurance.

If you are a 'careful' driver, then don't get insurance... YOU can personally be as low risk a life liver as anyone else in the world, but that doesn't mean you won't encounter some moron who just drank a 6-pack, and jumped on a motorcycle. Accidents happen, that they happen to some more than others should NOT be a reason to discriminate and charge someone more. The whole point of insurance is to share risk, so that when something bad does happen, it doesn't hurt so bad, BECAUSE we are all sharing the load.

My suggestion here is that we should socialize ALL insurance- life, home, health, auto, property... There is NO reason, or clear benefit to allowing stockholders, CEO's and board members to make a good living, denying claims, while spending 10's of billions on advertising.

Private insurance companies 'produce' nothing...except deficits in claims for profit...

It is time to stop legalized discrimination.

 

[Ziggurat]

Oh, I am TOTALLY advocating socializing insurance.

But not the rest of the economy. Even though NONE of your argument is actually specific to insurance. So you still haven't addressed this fundamental flaw in your argument.

If you are a 'careful' driver, then don't get insurance...

Sorry, not an option. The state won't let me.

YOU can personally be as low risk a life liver as anyone else in the world, but that doesn't mean you won't encounter some moron who just drank a 6-pack, and jumped on a motorcycle. Accidents happen, that they happen to some more than others should NOT be a reason to discriminate and charge someone more.

Sure it should. That's a rather major incentive to make people drive better.

The whole point of insurance is to share risk, so that when something bad does happen, it doesn't hurt so bad, BECAUSE we are all sharing the load.

Yes, pooling risk. But if you add more risk to the pool, then it's quite proper to pay more.

My suggestion here is that we should socialize ALL insurance- life, home, health, auto, property... There is NO reason, or clear benefit to allowing stockholders, CEO's and board members to make a good living, denying claims, while spending 10's of billions on advertising.

I've got news for you: government insurance denies claims too.

Private insurance companies 'produce' nothing...

Well, they don't manufacture anything, but they sure as hell provide a service. For example, my car got hit by someone in a parking lot. They were insured, so they just gave me the contact information for their insurer. I called them up, told them what happened, they sent out a claims agent to look at my car. They gave me some paperwork, I brought the paperwork to the car shop, and the car shop fixed my car, and the insurer paid the shop. The service provided was rather obvious: I didn't have to try to collect money from the guy who hit me, I didn't have to pay the shop, the guy who hit me didn't have to pay me or the shop, the shop got paid, my car got fixed. That's a service. And that service has value.

It is time to stop legalized discrimination.

No it isn't.

And I don't even believe you that this is your motive, because this argument is actually at odds with your claim of saving money. You'd have more of a leg to stand on if you claimed that we should socialize insurance to end discrimination because that benefit is worth the cost, but you aren't making that claim. You're making two contradictory claims: that government insurance would lower costs (which it can't do if it ends discrimination) and that it would end discrimination (which would raise costs). Which do you really care about? Because there isn't a chance in hell that you can have both.

 

[stokes234]

I realise that this is an “U.S. politics” section but there are examples from other countries that may offer insight into the public versus private debate for auto insurance rates. In Canada auto insurance is overseen by the various provincial governments and some of those governments have decided for auto insurance to be sold by the private sector while some provinces decided to sell it through the public sector (e.g. you purchase it from the government “Crown” corporation).

This became a hotly debated issue in 2003 when in some provinces the rates were increasing by 30+ percent. You can click on the links below to find out which sector was impacted and for further discussions of the issue of public versus private auto insurance.

http://www.consumer.ca/pdfs/030910_report.pdf

http://www.mapleleafweb.com/old/features/general/insurance/index.html

Thanks for the links. The first one doesn't seem to have any data, or i'm missing it, but the second one appears to show that public insurance is cheaper than private insurance in canada.

 

[King of the Americas]

But not the rest of the economy. Even though NONE of your argument is actually specific to insurance. So you still haven't addressed this fundamental flaw in your argument.


Sorry, not an option. The state won't let me.


Sure it should. That's a rather major incentive to make people drive better.


Yes, pooling risk. But if you add more risk to the pool, then it's quite proper to pay more.


I've got news for you: government insurance denies claims too.


Well, they don't manufacture anything, but they sure as hell provide a service. For example, my car got hit by someone in a parking lot. They were insured, so they just gave me the contact information for their insurer. I called them up, told them what happened, they sent out a claims agent to look at my car. They gave me some paperwork, I brought the paperwork to the car shop, and the car shop fixed my car, and the insurer paid the shop. The service provided was rather obvious: I didn't have to try to collect money from the guy who hit me, I didn't have to pay the shop, the guy who hit me didn't have to pay me or the shop, the shop got paid, my car got fixed. That's a service. And that service has value.



No it isn't.

And I don't even believe you that this is your motive, because this argument is actually at odds with your claim of saving money. You'd have more of a leg to stand on if you claimed that we should socialize insurance to end discrimination because that benefit is worth the cost, but you aren't making that claim. You're making two contradictory claims: that government insurance would lower costs (which it can't do if it ends discrimination) and that it would end discrimination (which would raise costs). Which do you really care about? Because there isn't a chance in hell that you can have both.

Public models wouldn't work efficiently within 'manufacturing', which is why I am only advocating that government take over the insurance sector. Insurances ONLY purpose is to pool risk, and distributes premiums paid back as claims. It does NOT use premiums to create a product or invest in other capitalistic opportunities. It ONLY holds and distributes funds, while keeping a portion for administrative fees.

Some states DO indeed mandate that you carry insurance. I know Texas does. Talk about a money making monopoly! You HAVE to have auto insurance, if you drive, but there's no limit as to what you can be charged, AND they lobby daily for more criteria on which to judge you. Do you smoke? Do you carry a cell phone? What sex are you? How old are you? These are broad sweeping generalizations. YOUR PREMIUM price is NOT set based on YOUR PERSONAL DRIVING HISTORY. Shouldn't it be though? How many accident have YOU actually caused? You MIGHT well be a chain smoking blackberry holder who's a 22 year old girl, but doesn't does NOT mean you are indeed a worse driver. According to the statistics you 'probably' are, but that is the very definition of discrimination. You are judging the one, from the actions of the whole...

The incentive in my model is still intact.

Everyone is a risk of making a claim. Especially within a major catastrophe. So, those who paid a lower rate, aren't or didn't pay their fair share. Rates should be set to ONLY cover actual losses, and everyone should carry the burden of loss equally.

Government would NOT deny "as many" claims as private insurers, and that is my point.

Government ran insurance that did not discriminate would RAISE taxes for everyone who wanted insurance. It would in turn provide LOWER insurance rates paid out as premiums, while at the same time returning MORE back in claims paid out.

More than enough information has been posted that PROVES these claims. If you refute or otherwise don't believe me, then you are employing the "Willful Ignorance Fallacy". (*A phrase I coined that means you are willfully/actively ignoring present information contrary to your stance. It is catching on, albeit slowly.)

 

[Francesca R]

Insurances ONLY purpose is to pool risk, and distributes premiums paid back as claims. It does NOT use premiums to create a product or invest in other capitalistic opportunities. It ONLY holds and distributes funds, while keeping a portion for administrative fees.

See post 47. Your ignorance of what insurance is remains your error, and your apparent inability to correct this remains your failure. Enough information has been given to you. It will not be given again since you have wilfully avoided it. Your continued claims in this area can be dismissed as refuse without comment as they are transparently woo.

Have a good day

 

[King of the Americas]

See post 47. Your ignorance of what insurance is remains your error, and your apparent inability to correct this remains your failure. Enough information has been given to you. It will not be given again since you have wilfully avoided it. Your continued claims in this area can be dismissed as refuse without comment as they are transparently woo.

Have a good day

There's nothing 'in' post #47, either.

You have repeatedly presented no argument or information that refutes what has been posted.

Your non-response responses have no power here.

You did however inspire my blog this week:

http://betterliberalarguments.blogspot.com/2011/03/raising-taxes-to-save-money.html

THANKS "Francesca R"!

 

[Francesca R]

Except what you wrote is not an argument, not better, and most certainly not liberal.

There is absolutely nothing liberal about the state reaching into inherently private affairs and commandeering them.

I think you have that upside down (like everything else)

 

[King of the Americas]

Except what you wrote is not an argument, not better, and most certainly not liberal.

There is absolutely nothing liberal about the state reaching into inherently private affairs and commandeering them.

I think you have that upside down (like everything else)

We've been seeing things in completely opposite ways for a while now...

 

[TriangleMan]

Thanks for the links. The first one doesn't seem to have any data, or i'm missing it, but the second one appears to show that public insurance is cheaper than private insurance in canada.

?? The first link has a lot of data, starting around page 13. It's the charts and comparisons that examine many of the statements made by posters here.

 

[Ziggurat]

Public models wouldn't work efficiently within 'manufacturing'

Why not? Every problem you refer to in regards to insurance exists there too: highly-paid executives, advertising expenses, and the need for profits. Yet government still fails there. So clearly these opportunities for cost savings don't get realized.

Insurances ONLY purpose is to pool risk, and distributes premiums paid back as claims.

So what? None of that has anything to do with where you claim the cost savings can come from. Furthermore, even if we accept (with no reason) that manufacturing is somehow different, that still leaves every other service industry ripe for socialization, if we are to take your argument seriously.

Some states DO indeed mandate that you carry insurance. I know Texas does. Talk about a money making monopoly!

Except that it's not a monopoly, since auto insurance companies can and do compete vigorously. But you want to replace that competitive market with a government monopoly. If monopolies make you nervous, this is a rather perverse response.

YOUR PREMIUM price is NOT set based on YOUR PERSONAL DRIVING HISTORY. Shouldn't it be though?

I don't see why. Your risk profile isn't determined exclusively by your driving history, particularly for young drivers. But again, the fewer criteria you allow insurers to use when determining insurance rates, the less efficient and the more expensive that insurance will be. I could understand it (though I wouldn't agree) if you wanted to pay that increased cost on the principle that insurance shouldn't discriminate, but to simultaneously advocate for a government takeover on the mutually exclusive grounds of saving money and ending discrimination is just complete and utter bullocks.

Everyone is a risk of making a claim.

But not everyone is at the same risk.

So, those who paid a lower rate, aren't or didn't pay their fair share.

Bull ****. Your "fair share" is the share which accounts for the risk you add to the pool. If you add less risk to the pool, it is unfair to make you pay as much as the person who adds more risk to the pool.

Government would NOT deny "as many" claims as private insurers, and that is my point.

And yet, government is going to save costs. Yeah, right.

Government ran insurance that did not discriminate would RAISE taxes for everyone who wanted insurance. It would in turn provide LOWER insurance rates paid out as premiums, while at the same time returning MORE back in claims paid out.

And they'll do it with magic!

More than enough information has been posted that PROVES these claims.

You must have a very strange notion of the definition of "prove".

If you refute or otherwise don't believe me, then you are employing the "Willful Ignorance Fallacy". (*A phrase I coined that means you are willfully/actively ignoring present information contrary to your stance. It is catching on, albeit slowly.)

So why aren't you advocating for socializing the entire service sector of the economy? After all, the service sector doesn't produce products. "Willful ignorance" indeed.

 

[Ziggurat]

?? The first link has a lot of data, starting around page 13. It's the charts and comparisons that examine many of the statements made by posters here.

I looked a bit at that. What seemed conspicuously absent was any attempt to control for possibly confounding variables. It also doesn't look like it actually calculated average costs for actual policyholders, but only average costs for a sample of quotes. If the population of quotes differs from the population of actual policies (which may also vary from location to location - only one of the possibly confounding variables I alluded to which wasn't controlled for), then this comparison doesn't actually tell us what we really want to know.

 

[TriangleMan]

I looked a bit at that. What seemed conspicuously absent was any attempt to control for possibly confounding variables. It also doesn't look like it actually calculated average costs for actual policyholders, but only average costs for a sample of quotes. If the population of quotes differs from the population of actual policies (which may also vary from location to location - only one of the possibly confounding variables I alluded to which wasn't controlled for), then this comparison doesn't actually tell us what we really want to know.

The study took the exact same 34 profile to 40 different cities to compare prices. Each one of the profiles kept the same vehicle, same driving record and same claims history. As for obtaining the quotes the study noted:

In the case of those provinces in which private insurers provide auto insurance the study ensured that the rate quotes obtained reflected the range of prices likely to be found in those markets. In those provinces ten different rate quotes for each driver profile for each city was obtained representing those insurers that have significant market shares in those provinces.

In the four provinces with public auto systems rate information was obtained directly from each public auto insurer.

And in almost all provinces they took results from more than one city, not just the biggest city. The four provinces that had government-issued motor insurance were cheaper than the six provinces who sold motor insurance through private companies.

I think the study tried to do a reasonable job in dealing with "confounding variables". And what variables would lead to such consistent results?

Did you take a look at the example of the city of Lloydminster? Same city, two provinces, yet private comapnies are charging typically more than double what the government insurance costs.

 

[Ziggurat]

The study took the exact same 34 profile to 40 different cities to compare prices.

If that profile is not representative of the profile of actual policies (which may not be the same from city to city either), then that does not tell us what the actual costs to the average policy holder is. The fact that the same profile was used each time doesn't solve that problem. They did not measure the average cost of coverage to actual policy holders. We do not know how that compares. Maybe it tracks with the study results, but the study certainly doesn't guarantee that.

I think the study tried to do a reasonable job in dealing with "confounding variables".

No, it did not. It didn't try to control for any such variables, as far as I can tell.

And what variables would lead to such consistent results?

Well, for example, accident rates may be different in different places. Are they? I don't know. But neither do you, because the study didn't try to determine this.

Did you take a look at the example of the city of Lloydminster? Same city, two provinces, yet private comapnies are charging typically more than double what the government insurance costs.

What I saw was that certain policies had similar costs, and certain policies had much greater costs. And I have no idea, and no way to determine from the study, how representative those sample policies are of actual policies that people have. In addition, it should be noted that if you want a quote on an insurance policy, it isn't just your statistics that matter (ie, your age, record, and car), but also what kind of coverage you want. The deductible you pick can make a big difference, for example. So maybe a low-deductible insurance rate is a lot more expansive for one driver for private insurance compared to government insurance, but the high deductible plan might be comparable. Again, no way to know from the limited data, and no way to determine how the actual average policyholder does. Hell, it's not even guaranteed that the coverage really is identical, different places may have different insurance requirements as well as different rules regarding liability, so even a "close as you can get" comparison may not be identical. And frankly, it wouldn't surprise me at all if states without government insurance also mandated more coverage and/or had stricter laws about liability assignment when the government itself isn't the one who has to actually do that stuff. Again, a possible confounding variable which simply wasn't addressed.

And lastly, of course, are any of these government insurance plans subsidized? I don't recall the study saying either way, but that's obviously of potential significance, and we would need to know to make any sense of this.