The Equal Protection Affordable Omnibus Insurance Act

Charles N. Steele
 
Issue CCXLIII - April 7, 2010
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Here’s an interesting idea.  It’s been noted that when a person suffers catastrophic loss and bankruptcy, it inflicts great harm not just on him or her, but on many others: family members, friends, neighbors, business partners, employers, co-workers, merchants with whom s/he does business.  In fact, all of society ultimately suffers to some extent.  But until now, there’s been no good way to avoid this damage.  Only those able to afford insurance have been able to protect themselves, and then only for those selected perils their insurance covers, e.g., fire insurance, flood insurance, etc.  Consider just a few examples of the many risks each American confronts daily, and how these can lead to economic catastrophe for the person inflicted, which then speads to those around him or her:
 
         Farmers: crop failure from adverse weather, pests, fire, etc.
         Doctors: losses from frivolous malpractice suits
         Businessmen: lost sales from general economic downturns that are no fault of their own
         Employees: job losses from economic downturns and business failures
         Homeowners: fire, flood, and storms
         Renters: losses from theft, foreclosures on landlords
         Drivers: collisions with uninsured motorists, deer, etc.
         Married couples going through messy divorce: losing everything to unscrupulous divorce attorneys
         Individuals convicted of felonies such as murder: losses from prison sentences that interfere with holding a steady job
 
The list goes on.  In each case, the resulting losses inflict great harm not only on the immediate victims, but on others.
 
Enter H.R. 40110, the Equal Protection Affordable Omnibus Insurance Act of 2010.  This visionary proposal would provide for general insurance that would protect every American against catastrophic loss and possible bankruptcy.  Under the proposal, each citizen would be able to purchase a mandatory insurance policy against losses stemming from any cause.  These policies would be sold by private insurers, but would meet government standards for coverage, indemnities, and premiums.  Americans unable to afford the insurance would have their premiums subsidized.  The insurance would be required to satisfy the following conditions:
 
1.      It would make the insured whole in the event of any loss.  For example, if a chronic gambler has a streak of bad luck, his/her losses would be repaid.
2.      It would not discriminate on the basis of pre-existing conditions.  For example, a homeowner should not be required to pay more simply because his/her house has already burned down.
3.      It would meet the criterion of equality.  Those who have a share of the national wealth greater than the average would not be allowed to insure that increment of wealth beyond the average.  Those with less than the average would be restored to the average level of wealth in event of a loss.
4.      It would be budget-neutral.  Premiums would be set so as to make the program actuarially sound.  Individual premiums would be determined according to one’s share of the national wealth on the basis that the larger one’s share of wealth is, the greater one’s share of overall premium would be.
 
Point 4 is particularly important.  It also guarantees that if a person should have unusually good fortune and his or her income increase, this increase will be reflected in increased premiums and thus shared fairly with all.  Hence this insurance also protects the rest of us from unequal distribution of wealth in the event that one of our neighbors is luckier or more successful than we are.
 
This proposal, if enacted, will end the unfairness of wealth inequality stemming from the differing circumstances with which each person is confronted.  After all, if the role of government isn’t to protect us from the vicissitudes of life, what is its role?  The Equal Protection Affordable Omnibus Insurance Act – an idea whose time has come.
 
Editor's note: The author seems to have left it as an exercise for the reader to determine whether this is the latest clever idea to emanate from Washington, or simply some sort of April Fools post.  Admittedly, these days the distinction is not always obvious.


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