NARAL Misses the Point on Health Insurance

Twitter can be a wonderful thing. The 140-character limit can force someone who is thinking clearly to say something clearly, concisely, even pithily.

This is not one of those times.

WOW. The #GOP’s reason to object to insurance covering prenatal care? “Why should men pay for it?” Watch: #Trumpcare #ProtectOurCare pic.twitter.com/Q55nG1Un8j

— NARAL (@NARAL) March 9, 2017

I happened on this tweet via a Facebook posting that said (paraphrasing):

Illinois rep John Shimkus just said “Why should men pay for prenatal care?” Men do half of the baby-making! These people just don’t care! Yes, I’m mad!

There are a lot of ways this, and NARAL’s tweet, might be criticized, but I think there’s a core assumption here:

Health insurance always means healthy people paying for sick people’s care.

This is wrong, but I think the people who imagine it’s right are behind a lot of the current debate about Obamacare and many of the proposals to replace Obamacare. So let’s consider the main point: should men — all men — pay for prenatal care, presumably through their health insurance?

Real insurance works like this: it’s a bet, where you bet that some expensive thing will happen, and someone else takes the other side of the bet. (I described this in much greater length in one of my first columns for PJ Media, nine years ago last Tuesday: “Today’s Health Insurance Ain’t Insurance.”) The other side of the bet is taken by your insurance company, which basically computes the cost of the insurance, the premium, using one of those equations that explain everything, the risk equation. Where P is the probability of an expensive thing happening, and H is the cost (the hazard) of that expensive thing, then the risk R = P × H. So, basically, if you’re betting on something that might happen one time in 100, and promising to pay $100 if it happens, and you’re betting with enough people, then for each bet, you’re risking one dollar. As an insurance company (or as a bookie, which is all insurance companies really are, even if they have fancy buildings and expensive glossy color brochures) you want to make sure that you ask for a little bit more than one dollar for accepting the bet so you can pay your costs.

But now, say you’re a single guy in his 60s: the chances of needing to pay for your own prenatal care are exactly 0.0. So, what’s the appropriate premium for prenatal care? Well, for any value of H, the product of P×H is 0.

And that’s the point: insurance companies charge a premium to insure you against things that might actually happen. If you’re a sexually active man, or a fertile woman, you might choose to buy prenatal care insurance because the expense of prenatal care might happen, and the insurance company could assign a premium. But if you’re insisting that every man should buy prenatal care insurance and setting a price for it greater than R=P×H, then it’s no longer insurance at all. It’s a tax—whether you’re paying it to an insurance company or the government.