You Can't Come Out Ahead Buying Lunch Insurance

On the front page of yesterday's New York Times, Robert Pear has another of his many long articles on the back and forth over the HHS regulations requiring all insurance policies under Obamacare to pay for birth control.

If you get your news on this subject from the New York Times, seemingly the big and only issue is how to deal with the objections of religious organizations who assert that they are being forced against their principles to pay for something they find objectionable on religious grounds.   The latest is that on Friday the government came up with a new proposal for a  "complicated arrangement " whereby the insurers would have to pay for the contraceptives and the government would give them a kick-back in the form of some kind of credit, and it would all be so opaque that nobody would be able to follow the money.  Needless to say, spokesmen for the religious groups were not satisfied. 

I don't mean to make light of the religious freedom issue, which I think is important.  But in all this discussion of the contraception mandate, not just in the New York Times, I can find almost no mention of an issue I think is at least as important, namely the preposterous idea that it makes sense to buy "insurance" for this kind of thing.  By "this kind of thing," I mean an ongoing, low-level expenditure that is expected and planned for. 

In the voluntary world, we buy insurance for the unexpected loss or destruction of valuable assets, such as destruction of your house by a fire or of your car by an accident.  Does anybody buy insurance against the cost of eating lunch every day?  Nobody ever really thinks much about it, but if you do give it a few moments' thought, you quickly realize that the reason there is no insurance market for such a thing is that you couldn't possibly come out ahead.  The premium would be the amount you were going to spend anyway, plus a mark-up for the profit of the insurance company.  Not to mention that some of the people with lunch insurance would immediately take advantage of the situation to go out and have steaks every day, and that would promptly get figured into your premium.  Before long, we'd all be broke.   

There is no sense in which third party payment of ongoing, expected and planned expenditures is "insurance."  It is just a particularly poorly designed form of income transfer.  If you're going to do an income transfer and just hand out the cash, at least you know how much cash you are going to hand out.  If you are going to do an income transfer and give people carte blanche to buy whatever kind of birth control (or lunch, or whatever) they want, you can be sure that they will buy the most expensive options and that the cost will zoom out of control.

Apparently this "free" birth control thing was a material part of our president's very successful campaign to get the backing of young and single women for his re-election.  Well, young women, now that you've bought into the income transfer state, here's your deal:  you get "free" birth control (worth maybe a couple of hundred dollars a year) and in return you get to pay (1) additional health care premiums that will go up by the cost of the most expensive birth control plus some profit for the insurance companies, plus (2) you pay for totally free health care for those over 65 (which will not still be around when you are that age), plus (3) you get to have a hopelessly indebted Federal government which will have had a massive retrenchment before you reach the age of getting the real benefits.  How many of you are able to figure out that you are big, big losers in this trade?