Thursday, November 14, 2013

Liking it and keeping it

Some of my law professors were disciples of a fairly radical libertarian ideology. They genuinely believed that people are better off if government, including the courts, stays out as much as possible of the business of protecting people from the consequences of their economic decisions. For example, I recall one of my law professors strongly disapproving of the doctrine of unconscionability in contract law, which can sometimes be used to strike down contract provisions that are so one-sided and unfair that they shock the conscience. Behind this viewpoint is the theory that people are generally better off left to their own devices, and that the government should not step in and try to help people make better choices for themselves. So if for example, a consumer signs a loan agreement or installment contract that allows the seller to repossess their furniture or vehicle or appliance, and declares forfeit all of the payments they have made, just because they are late on the last payment, the idea is that those might just be the best credit terms that consumer could have gotten, and they are better off suffering the consequences of those kinds of draconian provisions, than having the courts or the government declaring such contracts illegal. Even if enforcement of such contracts actually causes a consumer to lose the item they already paid too much for, as well as all the payments they made for it.

Behind all the grandstanding and political posturing in reaction to insurance companies' cancellation of insurance policies that people thought they would be able to keep, lies this genuine philosophical dispute. To the extent that opponents of health care reform have legitimate beefs with the law, they can claim that they are upholding a proud libertarian tradition. On the other side stand those who want to help people make better choices.

On the surface, the law's defenders would appear to have the weaker argument because they are in fact interfering with contracts that people enter into freely and voluntarily. The argument only appears weak, however. Once people understand that the insurance policies we are talking about, that people supposedly "like," are actually something of a scam, they are not so quick to defend these contracts. These policies might be cheap, but they turn out to be almost worthless if you actually get sick. They provide people only with the illusion of coverage. If people fully understood the limitations of these kinds of policies, they might even decide they are overpriced considering what they pay out in benefits. They might decide they are better off with no coverage at all, rather than phony coverage.

Those who stand up for the rights of people to hold onto the benefits of contracts that don't actually provide much in the way of benefits, are the same people who stand up for peoples' right to work for poverty-level wages; they are the same people who stand up for peoples' rights to eat tainted food, or drink polluted water. In other words, people taking the libertarian position are standing up for the rights of people to be ripped off. In other, other words, when the president promised that if you like your insurance, you can keep it, he probably assumed that just as no one likes drinking poison, no one really likes insurance policies that turn out to be worthless if you ever need to make a claim.

The president fixed a political problem today, by allowing insurance companies to continue offering these ripoff policies for another year. But he stayed true to the principles behind the ACA by imposing this catch. If the insurance companies want to keep selling crappy policies, they at least have to spell out for people just how lousy these contracts actually are. That seems only fair, and it should satisfy those who have genuine attachment to the libertarian ideal as well as those who support the Affordable Care Act's goals of helping people obtain health insurance that will actually provide some benefits if they get sick or injured.

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