I was arguing in favor of an Australian style National Health Care system for the U.S. My friend, a classical Ayn Rand libertarian, naturally disagreed.
I mentioned that simply having insurance is good, even if you don’t use it. There is utility in being covered. It makes you safer, allows you to act more freely, etc. For instance, with no coverage, I’d be reluctant to go bicycling. With coverage, I’d feel better about it.
My friend insisted that utility can only be measured concretely. If I actually do break my leg, and my coverage pays for part of the care and treatment, that is a “utile good,” but that hypothetical goods can never be utile.
This makes me think a little of the guy who once said, “Why did we build all those cold-war era nuclear warheads, if we never used them?” One response is that we did use them: we pointed to them and said, “Looky what we got here. Don’t invade West Germany, eh?”
Isn’t health insurance the same? It’s good to have, even if you don’t use it? Or is the only proof of a pudding in the eating?
People without health insurance are much more reluctant to go to doctors, hospitals. While this is helpful in controlling costs, on the other side of the coin it means people wait too long and don’t get life-saving interventions. For example suppose you have chest pains. If you don’t have insurance you’re going to think of the thousands of dollars it would cost to call an ambulance and go to a hospital emergency room–so you are not going to do it unless you are absolutely certain it is NOT something relatively minor–and then it may be too late.
Insurance makes you pay a premium to stabilise your costs - instead of a 10% chance of a $10,000 expenditure, you may have a 100% chance of a $1,500 expenditure. The utility is the increased reliability of the expenditures. Of course, this does not mean this utility is worth more than the money you’re losing to the surcharge.
Your friend’s position is in error because future decisions must be based on predictions of future outcomes and not 20/20 hindsight.
A “classical Ayn Rand libertarian” who doesn’t understand the value of insurance? I would say not so “classical” and not so “libertarian”. Anyone who knows anything about Ayn Rand would know that she considered private insurance as a way for people to secure for themselves what others expect the government to provide.
I’m wondering if maybe you were talking past each other. I don’t know much of anything about Australis’s health cares system, but if it’s mandated by the state then I can understand why a libertarian would object, although not for the reason you gave.
Of course, it’s always problematic to debate some off-board conversation someone had with some undefined person. More than likely, the scenario presented is missing some key aspects.
There are millions of people in the US who would like to retire but can’t because they are only able to get health insurance through work. There are also a lot of people (I have no idea if it is millions) who are stuck in unhappy relationships because they need their spouses health insurance. Others want to start their own business but can’t because they are tied to health care through work. So there are already a lot of examples of people considering the risks of health care in their decisions for the future.
He seems like he is saying nothing matters until it happens, like he rejects the concept of metaphors, the utility of warnings, or the ability to plan for the future.
Thing is you cannot predict if and when you will break a leg.
One thing we do know is nearly ALL people will require medical care at some point in their life. I have been remarkably lucky and at 46 years old I have been in the hospital twice. Last time (a year or so ago) I was in for one week in the hospital…cost…a bit north of $100,000 (kidjanot). The time before that I was in 7[sup]th[/sup] grade and again it was weird (Osteomyelitis…I get the weird shit it seems…see below).
What I had recently was nothing that could be predicted or controlled by lifestyle or anything. Random shit (FTR it was Guillain-Barré Syndrome).
Medical care is not consumed the same way as pretty much everything else we consume is.
Medical care is not sought but needed (most times and sought after care is never insured…e.g. cosmetic surgery)
Medical care is not predictable (e.g. no one plans on breaking a leg)
Medical care is not shopped for best prices (I was NEVER given a choice when in the hospital for “cheaper” alternatives…they just did whatever they felt necessary with no discussion of cost…I got the bill later)
Here is the trick your libertarian friend ignores:
ALL people in the US receive medical care (not sure about Australia but betting you get care there too before ability to pay is assessed). You are not carded when wheeled into the Emergency Room for ability to pay. You are not wheeled to the curb and dumped if you cannot pay. The hospital WILL take care of you and if you cannot pay the cost is passed along. Put another way your friend (everyone in the society) pays for that care. The hospital does not suck it up. The hospital passes its costs along to others via higher prices for services.
In short, your friend is paying for the uninsured already and has been his whole life. The alternative is wheeling the poor to the street to die.
If he does not want that then he shares the cost…libertarian ideals be damned.
The rub is paying for ER treatment is WAY more expensive than paying for regular care. Treating cancer before it is advanced is cheaper than paying for it after it has advanced.
If your libertarian friend is in an auto accident and unconscious ask him how the hospital is supposed to assess his ability to pay and what they should do till that is determined.
Entirely possible. He may have been rejecting only state-sponsored health insurance but not private insurance. I was pretty sure he was insisting that things can only have value (or utility – to be honest, I’m not totally clear on the difference – if they are concrete. I think he was rejecting the idea of “hypothetical utility.”
As with a lot of SDMB debates, it’s quite possible he and I were using the same words to mean different things.
I have noticed a tendency among some libertarians to insist that projects and programs they disagree with “have no value.” They are reluctant to concede that a “socialist” national health care could possibly be good for anyone, and want to argue that a program of that sort must be harmful for all. But, again, this is arguing from the point of view of a third person, and is awkward. It’s intrinsically unfair, and I regret this.
(I’ll bet a pickle he’s right now on some libertarian discussion site similar to this one in structure, talking about the foolish statist he knows!)
I guess most of the point of this thread was “How do I argue against such a point?” PastTense and Grumman give me some starting points: Thank you!
Invite your friend to join this MB so we can actually know what is argument is. But I’m not sure why you don’t simply challenge your friend’s understanding of AR’s actual position wrt insurance. Ask him for cites that she saw no value in insurance. Because there is no way she didn’t. If your friend really thinks AR was against insurance, he’s ignorant and you should tell him to “check his premises”.
Never accept your debate opponent’s premises without having them cite what the are basing those premises on. That’s the best debate advice anyone can give you.
One argument - albeit not one that’s going to appeal to any objectivist - is that you benefit from your insurance payments when other people collect.
Insurance companies couldn’t exist if everyone was collecting. They have to have some customers who are putting more money into the system then they’re taking out. If there weren’t a lot of people who are paying in without collecting, no insurance would exist.
Anyone who became seriously ill or injured would have to pay their costs out of pocket. You’d see more people being financially ruined by health care costs. And many of them simply wouldn’t be able to pay and would either have to receive health care at government expense or charities or have the medical system eat the costs. Or they would have to be denied medical care.
You’d also have a health care system that was starved for funds and couldn’t provide the same service even to the people who could pay.
So insurance payments benefit healthy people essentially be transferring their money to the sick people who need it. The healthy people who don’t get sick don’t benefit directly from this transfer but they benefit indirectly by living in a society which isn’t burdened with untreated sick people.
This is actually a very well understood problem. I couldn’t find any easy to understand explanations but here are some course notes (pdf) about it. We cover this in our behavioral economics for engineering class since certain things you build into computer systems to diagnose problems when things break must be justified in the same way insurance is.
Basically, the expected utility of the insurance is the cost of an event in which it pays times the probability that this event will occur (summed over all such events.) To a purely rational person, any insurance costing less than this is worthwhile, any more is not. But people have risk aversion which tends to increase the perceived cost of the event happening. When the life insurance agent drives that hearse up to the back door to scare the family, he is increasing their risk aversion and thus their willingness to pay for insurance.
I’m oversimplifying terribly, of course, but that is the basic idea.
This is clearly true, since other wise no one would buy term insurance, since it usually goes unused - and sometimes never gets used, such as the stuff you get from work. But we don’t feel ripped off at the end of the year by not dying, do we?
However, speaking subjectively and speculatively, the friend’s quote has a sort of a well thought out sound to it, to me. It doesn’t just sound dumb, even though I disagree with what I think I am specifically hearing. I suspect there is more reasoning behind it that we just aren’t privy to. Can we hear more about this?
I have a question about this characterization on the basis of a person being “purely rational”. It implies, I think, that risk aversion is a deviation from rationality, and I don’t think it should be.
Usually when I choose whether to buy insurance, I ask myself whether I could absorb a sudden unanticipated expense, and whether being unable to absorb it would lead to serious disruption in my life, and weigh that against the cost of insurance. My health, my house, and my car are insured on this basis, even though I think the insurance company is profitable because the expected utility (as defined above) of the insurance is less than what I pay for it. Isn’t this insurance worthwhile to a purely rational person?
While I generally don’t buy insurance for small consumer items that I could afford to replace, when I bought my marvelous iPhone, I actually felt nervous in the store about dropping it and breaking it, and thought that this nervousness combined with a replacement cost of many hundreds of dollars would inhibit me in my daily use of the phone. If I can’t pull it out while walking down the street to check it, for fear of dropping it, then it’s not as useful a device. I assume that phone insurance is a profitable business, but I bought the insurance and so enjoy greater effective access to the product and greater utility every day. Is this not a worthwhile use of insurance, to a purely rational person? Or, if not, does it hinge on the “nervous feeling” as irrational (noting that feelings are things aside from rational processes)?
A better argument is that without insurance you’d have to stash away a large amount of cash in case of an emergency. In fact, you’d have to stash away more cash than most people can afford. That’s the whole idea of insurance-- pooled risk.
This is an astounding statement. In economics, to say that “utility can only be measured concretely” is like saying in a physics class “atoms don’t have protons in them,” or a person arguing over American hitory saying that Booker T. Washington was the first President.
Utility is subjective by definition. It is a preference for some goods over other goods. If you prefer to have insurance, it has utility. There is no argument whatsoever to the contrary; that is the textbook definition of utility.
Your friend needs to put down “Atlas Shrugged” and pick up an Econ 101 textbook.
I have to point out that despite the perception riding helmets are creating, bicycling is still statistically pretty far down the risk as far as dangerous things to do. Probably safer than taking the car, or even staying home and eating junk food instead of getting out on the bike.
Part of the problem is that I don’t know Ayn Rand’s views well enough. I suspect my friend may be one of that vast class of people who only thinks he follows Rand. It would be fun to get him to participate here. I have a feeling… Um… 'Nuff said!
Certainly there is a public benefit to having more healthy people in one’s society. They’re productive, and pay in to health insurance programs, thus supporting others who may be at need. That sounds a bit socialist – Rand fans, as I understand it, don’t care much for social goods.
This makes sense to me. Seems entirely cut and dried: purest simple economics.
Grin! Yes, definitely, non-rational decision making complicates all the equations. It’s hard to do game-theory when some of the players aren’t rational. Humans…
I’ll try to get him to elaborate, but I don’t think he’ll want to post here himself. He isn’t a stupid person!
I think he meant the kind of irrationality of not buying insurance because it’s scary to think about what might happen. “If I have an insurance policy that pays me for a broken leg, I might get a broken leg! Oh noes!”
(Much like parents who refuse to let their children have condoms, because that might make it more likely they’ll have sex. Not necessarily the best reasoning.)
Another irrational thing might be someone who has insurance might feel safer, and thus might take more risks. I’ve heard (here on the SDMB) people argue that safety features in cars don’t save lives (!) because they only produce an illusion of safety that permits people to drive more dangerously. I don’t agree with the latter example – I think seat belts do save lives – but I can see the chance of someone with insurance feeling more willing to go skiing than someone who doesn’t. (Is this “irrational?”)
Well, if you die before spending any of it, then, yeah, it was kind of useless to you. (Your heirs will be happy…) I think the reasoning is along those lines: “If I pay all those premiums, and never get sick, I’ve wasted my money.” It doesn’t fully take into account the probability of getting sick.
My friend may have been thinking of it in Las Vegas terms, as a “bet.” I’m betting I will get sick, and they’re betting I won’t. If I get sick…I win. (Such a victory!)
I’ve never seen someone on the SDMB write that; it’s hard to believe such a comment would pass without someone pointing out that traffic accidents and fatalities have, per mile driven, absolutely PLUNGED in the period of time safety features have been added to cars.
To be perfectly honest, I do not. People have insurance to avoid financial ruin. They avoid accidents to avoid pain and suffering.
No, that’s not true.
Financial security in the form of savings accounts and insurance has the effect of providing the owner with peace of mind. That is in itself a form of utility. Cost certainty is something people very commonly desire.
Well a lot of actuaries and underwriters will be sad to hear that. Tell your friend to Google the term “expected utility”. It’s a pretty simple formula. It’s basically the sum of the outcomes * the probability of each outcome for a particular action:
U(A) = o1p1+o2p2+…+on*pn
For example, if you have a 10% chance of breaking your leg and it would cost you $50000 without insurance and $500 with insurance (with a $100 premium if nothing happens), your utility is as follows:
IOW, you can expect a utility of $4,860 for having insurance vs a utility of -$5,000 if you choose not to have it. (I think)
None of this has much to do with Ayn Rand or Libertarianism (which actually also don’t have much to do with each other).
What Rand would say (which I think was already pointed out), is that this is a service that should be provided by the private sector. I presume if you didn’t have insurance and couldn’t pay, you would simply go into debt or be refused service at the discretion of the doctor or hospital. Rand’s philosophy is basically that someone isn’t obligated to provide the fruits of their labor for you just because you need it to survive.