I Don't Understand This Compromise
Monday February 13, 2012
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Ever since the White House announced its new rules on requiring employers that provide health insurance to provide contraceptive services with no additional cost to their employees.
I understand this is broadly interpreting the rule, but I am not going to discuss the policy, religious, moral, or any other aspect of the rule itself.
It apparently only came as a surprise to the White House when conservatives and Catholics (among others) rose up in vocal opposition on the grounds that charities run by religious organizations - like hospitals - would have to provide a specific insurance benefit which is contrary to their religions tenets.
Others have debated the pros and cons of that in other venues and I won't get into that again here.
The White House hurriedly announced a "compromise" which is an odd construct in that like Republicans in the House and Senate during the writing of the underlying health care legislation, only Democrats were involved.
The Administration backed away from its original proposal to the extent that religious charities still have to offer the services but are not required to pay for them. The insurance companies have to provide the benefit at no cost to the employer or to the employees.
That's the part I don't understand.
Insurance companies offer insurance. Insurance - again broadly written - is taken to mean that a person or organization ("The Insured") pays the insurance company a sum of money ("The Premium") to provide financial protection against loss ("An Insurable Event.")
If you have automobile insurance, the premium you pay is so the insurance company will pay to get your car repaired if you have an accident. If you have health insurance the premium goes to pay for some, most, or all of a doctor's visit, prescriptions, and/or a medical procedure.
Insurance companies make money because they have very smart people, "The Actuaries," who are very good at math and figure out how much the company has to charge to make sure the income ("The Premiums") exceed the outgo ("The Outgo").
Some insurance companies are dreadful at this. There was a famous case a few years ago involving an insurance company named AIG ("The Mathematically Impaired") that provided insurance against losses for those who were investing in mortgage-backed securities ("The Worthless Crap.")
When the financial melt-down occurred, based largely on the worthlessness of mortage-backed securities, AIG ("The Welcher") couldn't pay off all its policy holders ("The Welched") and so you and I ("The Powerless") kicked in $85 Billion and got 80 percent of company in return.
According to the Associated Press, AIG stills owes us about $50 billion.
This all happened in September, 2008 so don't send me some anti-Obama screed. He was still 10 weeks away from even being elected, much less sworn in.
For AIG it was like every car in California was totaled on the same afternoon. No auto insurance company prices its products with that thought in mind. It has the same probability of a wrench, that had once drifted away from an astronaut, falling out of orbit and hitting you in the head.
But, insurance companies do provide coverage for certain insurable events at a certain price. That's what they do for a living.
Now, the Obama Administration has, by executive fiat, determined that a private company must give away its services to a class of people it ("The Administration") has determined should get these services.
Going back to our California example, what is to stop the Federal Department of Energy from requiring auto insurers to provide no-cost insurance to anyone driving a car running on electricity, natural gas, or bio-diesel - to promote the use of those vehicles.
For that matter, what's to prevent the U.S. Government from telling GM (which still owes us about $25 billion) they need to provide small, fuel efficient cars to people who cannot otherwise afford them, but live in areas that have limited public transportation?
I don't understand where that authority comes from. But it worries me, very much.
On the Secret Decoder Ring page today: A link to the White House position paper on the compromise (I'm not endorsing, I'm merely providing); also links to the definition of "fiat," to the whole AIG thing and to the current list of who still owes us money from TARP.
Also an amusing Mullfoto from Mt. Vernon last Friday and a Catchy Caption of the Day.
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