Insurance Savings Accounts?

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Let’s accept – for a moment – the core argument that’s typically trotted out in support of forcing people to buy car insurance: You might hurt someone or cause damage to someone else’s property; if you don’t have insurance, these costs will be borne by “society.”insurance lead

Therefore, “society” has a right to demand that you carry insurance.

Well, ok.

But our dollars don’t go into a general slush fund, held in trust, to be used to pay for various mishaps that occur (if and when they actually do occur). Instead, our dollars are taken from us for profit.

For the financial benefit of private businesses that use government force to compel us to “stand and deliver.”

These businesses pay out the occasional claim, it’s true. But they fight it tooth and nail; liability is limited (read your policy if you don’t believe me) while their profit margin isn’t. The truth is only a small percentage of the funds we’re all forced to hand over ever go to pay for crashes and injuries to people and property. The lion’s share goes to shareholders, to pay for big glassy buildings and executive suites and well-coifed lawns, the six-figure (probably seven) salaries of corporate officers; the millions paid out to thousands of employees.

“Society” gets pennies on the dollar.

Why not cut out the middle man?middleman pic

 

You have probably heard of health savings accounts (HSAs). These were popular, pre-Obamacare. The idea was, you put money aside, into the HSA, where interest/investment income accrues. If you need to use the money to pay for medical treatment, it’s gone. But if not, it’s available for other things. It does not disappear into the ether of What If? – as your insurance premium dollars do.

Under the current system, your money is gone the moment you sign the check or authorize the debit. Even if you never actually have an accident, never impose a penny in costs on “society.” There is something very wrong about this. You’re being made to pay for nothing.

It doesn’t get more wrong than that.

Think about it. Let’s say you pay out $500 annually for a policy. For the next 30 years. During that time, you manage to avoid so much as dinging anyone else’s doors. You’ve transferred no costs onto anyone else’s lap. Yet you are punished for your prudence. To the tune of $15,000 – not counting the “opportunity cost” of the money you no longer have. What might that $15k have become via the miracle of compounded interest?

What investments might you have made?empty pockets pic

Speaking of investments – and incentives: If “safety” is what’s desired, as we’re constantly told;  if the object of this exercise is, in fact, to reduce the costs to “society” that result from accidents – wouldn’t it help if people knew there’d be a financial reward for not causing an accident?

As opposed to being punished even if they never have one?

Is it unreasonable to suggest that people would probably be more careful about their driving if they knew that for each year they managed to avoid bending a fender, there’d be that much more money in the bank?

Their bank?

Instead, the incentive is to be less careful.

After all, they’re going to take your money regardless. And to a very great extent, they take it for reasons having nothing at all to do with any costs imposed on “society” – the ultimate kick in the teeth. They’ll up your premiums based on demographic generalities; sex and age and marital status. They’ll use the excuse of traffic tickets which they know perfectly well are just that – an excuse to dun you. (It’s a fact that “speeders” tend be safer drivers, if the metric is who is more likely to cause an accident.)cost 5

Insurance Savings Account (ISAs) would be a step in the right direction. Or at least, they’d call a halt to the savage fleecing of the driving population by the insurance mafia. These greasers make you an offer you’re not allowed to refuse. And profit from it. Why there’s not more outrage, I have no idea. Brainwashing and political language has a lot to do with it. People compartmentalize. They watch The Godfather and recognize immediately that Don Corleone is a thug. But they see a TV ad with a friendly-looking Flo conversing with a cartoon lizard and don’t make the same connection. Even though it’s actually worse. Because the mafia is after all illegal – whereas the insurance mafia can legally make you an offer you can’t refuse.

Ideally, people would be free to choose to have – or not have – insurance. And be held accountable – and not. Most of all, in a free society, people would not to be punished before they cause any harm. But since America is no longer a free society, perhaps the best we can hope for is that people not be punished for profit.

ISAs would do that, at least.

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24 COMMENTS

  1. Yep, instead of the old system where you could buy a catastrophic plan (e.g. $20,000 deductible) with a cheap monthly nut (e.g. $300 for an entire family) backed by a HSA & your own savings now individuals are forced to pay 4-5x monthly (unsubsidized) for a full-coverage policy (but your out of pocket exposure is still $12,000+ over and above the monthly premium)

  2. Surety bonds.

    Provide alternate evidence to the state that you don’t need the insurance coverage to meet the liability requirements, and always pay for your vehicle in full, cash on the barrel.

    • Surety Bonds? Good idea in principle. But most (all?) states have already passed a ‘LAW’ that you must have insurance and allow for no exceptions.

      • There’s nothing that can force a Man or Woman to be part of a group or to join and pay a particular insurance, fee, bond etc., where no harm has been done. Besides, there’s no evidence the insurance will either deflect the incident it’s presumed to insure against or that the incident will occur at all, ever.

        Such laws a null and void and of no lawful force or effect. There’s also no evidence that such laws pertain to any Man or Woman, because statute law only speaks of “persons”.

      • Forgot something important – Nobody can be forced to contract, which is what those “laws” are attempting to do. Individuals have infinite right to contract or not.

  3. I came across this old Stratfor health care bulletin. Funny how those guys seem to know things before anyone else. Almost like they are shaping the future as part of some unholy alliance.

    Massachusetts to Pilot State Universal Health Care

    April 14, 2006 | 23:47 GMT
    Massachusetts Gov. Mitt Romney signed a bill this week that passed overwhelmingly in the state legislature requiring all but the smallest businesses to provide health insurance coverage for employees. Although Romney vetoed eight sections of the bill, lawmakers are expected to override his vetoes, maintaining a fine on businesses that fail to cover their employees. The state will also levy fines on any person who can afford coverage but does not purchase it.

    Supporters of the new program claim that the system will leave fewer than 1 percent of the state’s population without health insurance, but opponents within the state’s business community have expressed concern that the bill will impose an undue burden on them, particularly if federal assistance for this purpose is cut off. Romney’s foray into healthcare policy portends a new chapter in state and federal policy debate.

  4. When I was a youngun (good while back)I tried to strike out on my own and the insurance company(which wasnt on my side) wanted to charge me about a months wages for liability on an old Ford pickup,that was not anything I could have afforded,so finally I shopped around and got some seemingly affordable insurance with another company,finally had a loan and had to get a little comprehensive or whatever on a Pinto for pitys sake,a deer slammed into my front fender and I had to go through the Third degree to get a little money out of the ins company for repairs and had to get the insurance agent to approve the repairs before they would pay a small claim,finally found a decent agent finally and have had no problem everafter,so it does pay to shop around,even with denials I still think the Agent has something to do with the rates-Kevin

  5. Under cloverian thought people cannot be trusted to have savings never mind their support of a monetary system that punishes saving. Furthermore cloverians are motivated by passing responsibility and effort on to other people. Car insurance simply allows them to drive lazily and pass the buck on responsibility. So they are easily sold on this racket.

  6. Here you go: http://www.dmv.state.pa.us/insurance/self_insurance.shtml

    You just described what most businesses with large fleets do. Instead of buying insurance, they maintain an account with enough cash on hand to cover a loss. Most companies then contract with an insurance company to handle the logistics, but at a much greater discount (and no denying claims) because that’s what they’re getting paid to do.

    • I work for a large health insurance company, and a lot of large companies self-insure their employees’ health by maintaining an account with money to pay for employees’ health claims. They contract with us to not only administer the logistics, but also to provide what’s called “stop-loss” insurance to fill in the gap if, for whatever reason, say, a bad flu season, employees’ claims exceed a certain amount in the account.

      Interestingly, high deductible plans with Health Savings Accounts are one of our fastest growing and fastest selling products, in part because they’re much less expensive than traidtional plans.

      • The thing about ‘health savings accounts’ is that they are ‘use it or lose it’. If you didn’t spend it dear government confiscates it. This way in the end it takes in more money than if people had paid taxes on it.

        It’s the thought that people aren’t responsible enough to save on their own that drives these things.

        Anyway the end result is a win-win for government and its cartel. People either get a use-it-or-lose-it mentality and then buy products and services they don’t need or they forget about it and the government gets it.

        • The “use it or lose it” accounts are actually called Health REIMBURSEMENT Accounts, or HRAs. Funds in Health SAVINGS Accounts, or HSAs, can be carried over from year to year. When you retire, you can use the funds for just about anything.

          Both types are quite popular, according to where I stand.

          • So you’re inside the gates of the health insurance mafia?
            How do we rollback out of this obamacare fiasco, just for a fun thought experiment of course. Not because we loathe People In Glass Towers throwing thrones…

            2014 Form 1040 Back Page Lines 57-63:

            Other Taxes
            57 Self-employment tax. Attach Schedule SE . . . . . . . . . . . . . . . 57
            58 Unreported social security and Medicare tax from Form: a 4137 b 8919 . . 58
            59 Additional tax on IRAs, other qualified retirement plans, etc. Attach Form 5329 if required . . 59
            60 a Household employment taxes from Schedule H . . . . . . . . . . . . . . 60a
            b First-time homebuyer credit repayment. Attach Form 5405 if required . . . . . . . . 60b

            61 Health care: individual responsibility (see instructions) Full-year coverage . . . . . 61

            62 Taxes from: a Form 8959 b Form 8960 c Instructions; enter code(s) 62
            63 Add lines 56 through 62. This is your total tax . . . . . . . . . . . . . ▶ 63

            Two things Obamacare health insurance fatwa will do to your sphincter

            Individual Shared Enslavement Provisions
            http://www.irs.gov/Affordable-Care-Act/Individuals-and-Families/Individual-Shared-Responsibility-Provision

            Instructions for Line 61…
            http://www.irs.gov/pub/irs-pdf/i8965.pdf

          • Four huge problems with HSA. First, income-based tax incentives control use of the account rather than the actual terms of your high deductible insurance policy. Second, accounts are subjected to annual contribution limits that don’t coincide with your account balance and annual deductible. Third, annual withdraws are limited via severe tax penalties rather than limited by your deductible. Fourth, most Americans live paycheck to paycheck so the account is underfunded unless employers kick in to fund it. Forget about a pay raise because it just went directly into a government savings vehicle. Your high deductible insurance policy is purposely designed to make the HSA sound like a winner but Uncle Sam designed it to perform like a lemon for most Americans who can only afford the lower cost of a high deductible policy.

            An “affordable” policy with a $6000 calendar year deductible should require an HSA to match that reality rather than arbitrary income tax rules. But a $6k deductible actually needs an additional $500 per month for an entire year to cover some eventual medical incident that hopefully doesn’t extend into the next calendar year. Then you’d need to cough up $12k to pay for it, that should have been $1000 per month instead. Oops, can’t put anywhere near that much into your HSA in one year even if you could afford it.

        • I think you’re mixing up FSA and HSAs. FSA (Flexible Spending Accounts) are indeed “use it or lose it”. They’re great for people who can predict their yearly health costs. Like if you have allergy shots. Or are a parent with a small child (diapers are allowed under the plan). If you don’t spend it all by 12/31, the gov’t takes the remaining balance.

          HSA is truly a savings account. You keep the money and it builds up over time. You can can use the money for anything health related (I bought some glasses last year with mine). If you’re in a car wreck, your deductible could come from the account. When you retire, you can pay for some Medicare expenses through it. You can store the money almost anywhere – I have mine in a bank account earning 1.25% (which is pretty good for this day and age).

          HSA contribution limits for 2015 are $3350 for individuals, $6650 for families. The insurance plans have to have a deductible between $1300 and $6450 for individuals, and between $2600 and $12900 for families.

          HSAs get back to what insurance has traditionally been like – not for routine care, but for calamities like cancer, broken limbs, etc. So it becomes way more affordable and cost-efficient.

  7. “Instead, the incentive is to be less careful.”

    True that. Clover’s of the world don’t care to carry a float in their account to cover the damage they cause. The first thing they ask for are your insurance details, and the resulting look of incredulity when you don’t have any is priceless.

    Their motto: “I don’t care, it’s insured.”

    Society’s been conditioned to accept no fault of their own and defer blame for the prang to insurance.

    There’s no insurance whatsoever on my car and bikes. Naturally I’m careful at whatever speed I do, irrespective of limits. I got into a conversation over this issue with a friend some time ago where his only argument was “what if?”. He couldn’t prove at any point that “what if” would even occur, let alone when.

    Insurance is just another form of gambling, but the worst thing is the shift in personal responsibility.

  8. Right on about the “big glassy buildings” Eric! The tallest buildings here and most other cities are either banks or insurance companies, no surprise since their profits are guaranteed by the gunverment. Insurance is a racket, pay your premiums but if you ever make a claim they’ll drop you like a hot potato. I’ve been at my present address for over 40 year without ever filing a claim; during that time I’ve paid over $50,000 in premiums which has gone straight into the pockets of my insurance companies big shots. We had some roof/water damage a few years ago but didn’t file a claim since that would have either raised our rates to even more outrageous levels or been dropped completely. That same 50k in a savings vehicle would have been more than adequate for the few thousand we needed for repairs, but don’t hold your breath waiting for such a common sense idea to take hold, the whores who pass for our “representatives” are well paid to keep the status quo.

  9. What happens if I sign up for an ISA, and deposit my $500 into it, but then I’m in an accident with a $2000 claim (these numbers are made-up, of course). I pay my $1000 deductible ($500 out of pocket, $500 from the ISA balance). Where does that missing $1000 come from?

    With an HSA, you’re backed by a policy with a high deductible. You pay your initial $1200 or $5k towards your annual medical costs, and the insurance company does what it’s good at – spreading the risk of unexpected calamities among all their policyholders, by paying the remainder. Would an ISA operate similarly?

  10. HSA accounts are primarily for high deductible health care policies. So you essentially prepay your major medical catastrophe deductible before it happens, up to a point. The sticking point is a gap between the allowable annual withdrawal and your annual deductible. And only get sick early in a calendar year so you don’t get hit with a double deductible for essentially a single medical event.

    I see similar issues with all insurances. GEICO carried Warren Buffett towards becoming a billionaire.

  11. I have a friend who some call a cynic. He explains insurance this way: insurance companies hire agents to sell policies to people who will never file a claim. Then they hire adjusters to deny any claim that is filed.
    As for what that “$15,000” would be worth after 30 years? Thanks to the Federal Reserve, probably $10k, or maybe 5.

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