My Hobby Horse
Something I believe deeply... that makes me seem crazy!
So there I was, walking to the train station in downtown Helsinki in May of 2019. I happened to be in Finland on a work project and one of my favorite pastimes while there was observing the locals. This always made for interesting subjects to talk with my colleagues about. Of the things I noticed - there were a lot of metal heads in town, a higher than average number of tattoos and piercings, the New York Yankees baseball cap was the official hat of Finland, and there were a fair amount of American flags on clothing. One Saturday morning as I walked to the train station to head to work I saw something that was very odd. On that morning, I saw a girl who looked to be about 14, walking out of the train station with a hobby horse.
I’m not even sure how I was first introduced to hobby horses. It is a toy from an age that predates myself. Yet, when I saw it, I recognized it instantly. And it certainly was not the toy of a 14 year old girl.
We’re adults here, so I’m going to be honest…. I thought the girl may have some developmental issues. I also thought it was kind of messed up that her parents would allow her to leave the house with her hobby horse. This is the type of thing that can lead to bullying. It certainly seemed like an odd object to be hanging out in town with. But I didn’t think too much more about it…. until that evening.
When I returned to my hotel from work, I went down to the lobby for a couple of beers. What do I see checking into the hotel? A few more girls with hobby horses. This wasn’t an isolated incident, they were all over the place. As I walked around downtown the next morning I saw several girls, all in their early teens, walking around town with hobby horses. Confused by this, I decided to do some research. Hobby horsing is apparently a relatively new phenomenon in Finland amongst young teens. The New York Times actually profiled the hobby horse girls of Finland around the time I visited. It’s a thing. Go figure.
So, on the topic of hobby horses, let me hop on my hobby horse!
We need to abolish insurance!
This is one of my favorite topics for a couple of reasons… (a) almost NO ONE takes this standpoint, (b) it makes you kinda like a flat-earther, and (c) if you can break yourself of the individual benefits that insurance provides, it kinda sorta makes sense.
I’m positive that this is an issue that will not get any popular support during my lifetime, or maybe any lifetime, such are the “benefits” that insurance provides. It is very hard to convince others that a system by which they can potentially withdraw more benefit than resources inputted is a bad system. But such systems tend to force everyone to pay MORE over time. Let’s explore.
Insurance employs a system of hidden costs. If you hold an insurance policy, this is seen as a benefit of the system. If a service is required, as a policyholder you are only required to pay a certain amount of money (a deductible) before the insurance pays the remainder of the expense. The insurer is able to do so by collecting an annual sum of money (a premium) from all policyholders, most of whom will incur expenses that cost less than the deductible. This pool of money is then used to pay expenses incurred by the policyholders.
Our intrinsic sense of value and community see this to be a net good. The many pooling resources for the few to use in a time of need is desirable on a social level. But, the problem is this system hides the costs of services from the users of said services. They have no need to conserve resources when they have reached the point where community resources are being used for their personal benefit. The costs incurred for them at this point are, in essence, hidden. And when the costs are hidden from the consumer, there is no price sensitivity.
When a policyholder is in a position to get services for little to no cost, this sets up a whole host of poor incentives. The policyholder is incentivized to use as many services as they can until the clock resets and they must contribute to the pot again. From the policyholder standpoint, this makes complete logical sense. Why delay the purchase of services when you can receive them for a discount or free? Furthermore, if you are the seller of the services, you are incentivized to charge as much as possible for services and push for these services to be done when covered by insurance. You are much more likely to get someone to sign up for services when they will not have to pay for them themselves. And these two incentives will push insurance carriers to push for higher premiums, higher deductibles, and less services covered. Fun times!
What can be done?
There are no perfect solutions, sadly. Regardless of what systems are put in place, you will always end up with scenarios where people aren't covered, services are scarce, etc. But what system would be best able to control costs and assist those in need in most scenarios?
I'm not particularly religious, but I believe that community level tithing system would be best suited to this problem. Ideally a relatively small community could pool 10% of their earnings into a community pool managed by the community group. In this scenario I’m thinking of community as being similar to a church or neighborhood. Funds are then to be used when needed in an emergency by those in the community. Using more than one's fair share of resources from the pool would be frowned on by the community, thus members would be less likely to do so. This should make people using these resources more likely to find better values, even when they are using from the pool. And service providers would then be forced to compete based on cost of service.
I believe this to be true for a wide variety of insurance which tend to incentivize poor behavior. Community based solutions are more likely to place societal pressures on costs that would keep them more affordable over time. I’m sorry, but no one feels sorry for screwing over Aetna… If it was Aunt Edna they were screwing over, they might act differently.
Alternatively, we could shift from an insurance model for things such as health insurance to a health savings account based model. Have people shop around for the best service available with their own saved up funds. This removes the hidden costs and could be subsidized by employers in much the same way. All savings accounts could be tied to specific use cases. I think this is true for a wide variety of cases and not just healthcare, although that is one of the more obvious examples. It is why I prefer 401k savings accounts compared to Social Security.
This has been a very shallow dive into this topic. I was lazy this weekend and didn't start writing and fleshing out my thoughts on this until it was too late… Football action had already started. But if you are interested, this is a much better dive into the topic by El Gato Malo. Well worth the read.
Have a good week!