I like Mark Cuban a lot, or at least as much as you can like someone that you've never met or held a conversation with. I find his BlogMaverick to be entertaining and informative, and I love that he does his level best to keep the NBA honest. He is an obviously intelligent man, a wildly successful businessman, and someone whose opinion I always consider whenever I read it.
However, his though process on ObamaCare, and his comparison to auto insurance is a bit convoluted. He stated in this email exchange with CNN's S.E. Cupp when asked what his thoughts on ObamaCare were:
I love the concept. The execution, to this point, has been miserable. Part of that misery is because of the tech issues it has faced; the others are because of the choices states have made to opt in or out.
I will repeat my mantra: The risk never leaves the system.As a country, we have chosen to not let people die on the streets or suffer. We as Americans have chosen to help our fellow citizens when in need. Right now, I believe the past approach of letting insurance companies skim the most profitable customers off the top and let all of us pay for the rest in the most inefficient manner possible has been a mistake.
We have recognized this with car insurance. No insurance? (Then) you can't drive. We all share in the cost.There are a few things to consider here:
- Auto insurance (along with home insurance) are not cumpulsory.
- Allowing persons with pre-existing conditions to receive "health insurance", that is simply sharing the burden of ones own medical bills with the general public, something that Cuban seems to hint at in the first part of his response.
Within the Commonwealth of MA, the only parts of insurance that are mandatory are parts 1-4, which are as follows:
Part 1 Bodily Injury To Others (compulsory limit of $20,000 per person/$40,000 per accident.) This coverage will pay if the policyholder (or a listed driver, or a driver who is operating with consent.) injures another person with their vehicle, while driving on a public road (read: not parking lots, driveways, or private drives of any sort) within the boundaries of MA. In order to have coverage on private ways, driveways, parking lots, or anywhere outside of the boundaries of MA, the policyholder must purchase additional coverage via part 5, Optional Bodily Injury to Others. As the description of the part states, this coverage is optional, not compulsory. There is nothing in the world to keep a MA driver from heading over the border to RI, CT, NH, VT, or other points on the map and causing an accident for which there is no coverage.
Part 2 Personal Injury Protection This portion of insurance is known as "no-fault", meaning the company will pay for anyone who is injured during an accident, with the limit of $8,000 per person (There are exceptions- pedestrians are covered, but those on motorcycles, motorbikes, mopeds, or any motorized vehicles are not. Those operating under the influence of drugs {including marijuana} or alcohol, and those committing a crime or evading police.) This portion of insurance benefits the Companies, mostly, because it saves them the process of finding out who and what is responsible for minor injuries, and the losses sustained became of them. This part is compulsory, but the policyholder may exclude her/himself from the coverage.
Part 3 Bodily Injury Caused By An Uninsured Auto This part of insurance will cover the policy holder or any guest occupants in the event that they are in accident that is the fault of vehicle driven by a person who chose to not have an auto insurance policy. This coverage protects the Commonwealth, for the most part, because the Commonwealth would be on the hook to pay for damages elsewise. Or at least that's my interpretation of it.
Part 4 Damage to Someone Else's Property Again, this coverage is in the event that the policy holder damages someone else's property (or a business, or public property. The worst example of this I saw involved a claim for over $400,000. If you live in MA, and you don't have at least $100,000 per incident on this coverage part, you're making a big mistake. The dollars saved on the policy are negligible unless you drop down to the mandatory limit, which is $5,000.)
That's all the coverage that is mandated to operate a motor vehicle within the Commonwealth of Massachusetts, and as I laid out above, the coverage parts you must carry are to protect others, not yourself. The parts of coverage that you may purchase are called optional for a reason- you do not need to carry them. The exception to this is if you are purchasing a vehicle and financing it, the finance company will mandate that you purchase part 7 (Collision) and part 9 (Comprehensive, known as "other than collision" in most places that are not MA.) This in no way compares to what Cuban says a good reason to have ObamaCare in place. Perhaps in Texas, where I have no insurance experience, the rules are different, but I don't feel that is true. I think that in this one instance, Cuban was simply parroting rhetoric that he has hear other intelligent (but misinformed) persons state. They're wrong, and so is he for repeating their words without actually investigating how auto insurance works.
To my second point, and one of the bigger problems with ObamaCare (there are so many, that even when using a phrase like "one of the bigger problems", I feel I'm being overly general. Scrapping the law is the only way to solve the problems that exist within the legislation.) is that there was a huge push for those with pre-existing conditions to get coverage, which of course led to exploding costs for the insurance carriers, and necessary bailouts in order to keep the companies solvent. This is the type of sharing that Cuban was discussing, however, it is not insurance. It's downright theft.
Insurance, both by the dictionary definition, and how a policy is designed to work, is a risk reward type proposition. Insurance companies bank on the law of large numbers- by insuring many people they assume they will only pay out on a specific, smaller segment of those they insured, and they will then turn a profit on the remaining policies. This doesn't always work out for insurers- a few years back a company called Narragansett Insurance (I hope I'm recalling the company name correctly) had begun to expand their coverage to more interior markets, when they previously had been more of a by the sea type of company. It likely seemed like a good idea, given that home insurance policies away from the ocean are usually a pretty reliable source of income for companies, even if there is not huge premiums.
The problem was, Mother Nature came calling and delivered the first tornado that many people had seen in at least a generation, if not longer. Narragansett took huge losses in the wake of that disaster, and then began to retract their inward expansion. The risk-reward does not always pay out for the insurance companies, but most times, it is an adequate model to stay afloat. On the consumer side, the risk is a comparatively small premium (depending on driving history/claim history) to cover substantial losses. For $100,000 of property damage coverage, I pay about $$300 a year, and a lot of that cost is due to the urban setting in which I live. If I lived in Florida, MA, my premium for that part of insurance would be much less. If I had to pay $100,000 out of my own pocket, I would have to become an indentured servant to the person's property I damaged, because there is no way in the world I could raise those kind of funds. My paychecks would be attached until 6 years after the Apocalypse. So for a relatively small risk, there is the potential of a big reward should I be the cause of loss for someone else's property.
It is my firm belief that health insurance should be a policy that is what insurance actually in intended for: catastrophic events. Further, mitigating factors such as alcohol, drug, and tobacco use, along with how a person chooses to live their life (jumping out of airplanes or skiing down a black diamond mountain are necessarily riskier than sitting at home, knitting a sweater.), and the type of jobs they work at to earn a paycheck (though other types of insurance covers workplace injuries, there is a difference on the long-term affects each job causes each individual.) Further, insurance policies should be only for catastrophic events, not for coughs, colds, temperatures at 99.2. It's ridiculous. Insurance has been taken over by so many special interests, that it's beginning to lose what it was designed to do. Cuban misses the mark, but he's not the only one that has. There's a country full of politicians whose job it is to not miss the mark that did the same thing, but much worse. At least Cuban can fall back on all of his real-life accomplishments. Those politicians have nothing.
