Economics and Insurance

This is a good stepping off point for a lesson in basic economics. Mr Obama's recent foray into the religious contraception business is a case in point. His compromise to "Make" the insurance companies pay for the coverage is disingenuous at best. Who does he think pays for the coverage? An insurance company's business is managing risk and assuring its policyholders that they will have enough money from premium collections to pay all the claims. To do that the actuaries determine the probability of various claims, their cost and determine premiums based on the exposure to the loss (claim) There is no free lunch, if the insurance company has to pay the claim then the policyholder has to pay the premium. The reason insurance premiums are as high as they are is because politicians continue to insist that people have a right to this treatment or that treatment and they shouldn't have to pay for it. Why is it that if I have fire insurance on my house I consider it protection but if I have health insurance I feel like I am getting cheated if I don't use it. Health insurance originally was invented to get around another government intervention, wage and price controls during WW2. Since the government did not allow wages to increase businesses offered health insurance to attract employees. Government intervention in the free market never works. Insurance was invented to mitigate risk. We have made it something it was never intended to be and in the process have driven up the costs of health care. We equate not having health insurance with not having health "care" and continue to insist that those who don't have health insurance are having their care paid for by everyone else. Please Mr. Liberal stop helping me.

And for the so called “trickle down” policies that caused the 2008 meltdown, we all know or should know by now that the Community Reinvestment Act of 1977 was the beginning of the problem. Over the years it morphed from a relatively hands-off law focused on process into one that focused on outcomes. Then in the 90s the Fed pushed interest rates down. This made refinancing more attractive, and created an investor demand for yield. Fannie and Freddie popularized low-income securitization. Home owners traded high interest credit card debt for low interest mortgage debt. Banks loosened lending standards to comply with the CRA. The housing boom which was fueled by the loose credit ground to a halt as it became clear that the economy was softening and would no longer support the price inflation that was caused by loose credit, no down payment and no-doc or lo-doc loans. To say that all this was caused by the Republicans is just laughable.