Insurance mandates are expensive, inefficient, and violate our freedom

Change is in the air. Sure, flowers are starting to bloom. But I’m referring to the government.

In Washington, DC, it seems we finally have an administration that is taking bold steps to redirect our federal government back towards the smaller, limited form the founders envisioned. While many may not like the manner in which these changes are being carried out, change is definitely in the air.

But with all the campaign promises that President Trump has been seeking to fulfill, there’s one Republican campaign promise that we have not yet seen come to fruition. Unfortunately, it’s been a Republican campaign promise for 15 years. Repealing the “Affordable” Care Act is long overdue.

While it is my hope that the North Carolina congressional delegation and our two senators will make a strong push to repeal the “Affordable” Care Act, unfortunately, North Carolina Insurance Commissioner Mike Causey seems to be advocating for a similar disastrous North Carolina mandate.

First and foremost, anytime there is a “mandate” on the people, I am principally opposed. To require a citizen to do something is the antithesis of freedom. And, if North Carolina really wants to be First in Freedom, that principle dictates that we allow our citizens to make their own choices. No mandates.

There is no doubt that Hurricane Helene was an absolutely devastating storm. Thankfully, the legislature had been building up a rainy-day fund for years, so our state is more equipped to respond to that storm than it would have otherwise been. Despite our state being the most financially prepared in decades, that storm was so large that the needs dwarf our preparedness.

Unfortunately, NC Insurance Commissioner Mike Causey seems to think that mandating flood insurance is something the legislature should now consider. While I’m sure his intentions are noble, a mandate is the opposite of freedom, and it will have unintended consequences.

When President Obama rammed the Affordable Care Act through Congress, one could argue that he too had noble intentions. But that law just celebrated its 15^th anniversary, and I’m not convinced anyone other than the insurance companies commemorated the occasion.

As a self-employed individual, I have to obtain my own health insurance for me and my family. Prior to the ACA’s passage, my wife and I decided to change our health insurance coverage to a high deductible plan. The reality is that we do not need help paying for a doctor’s visit. We do not need help paying for a small medical bill. We really only need help in the event of a catastrophic medical crisis. Ultimately, this is exactly what insurance is for.

A firm understanding of the principles of insurance will help.

The only time you should consider obtaining insurance — of any type — is when the probability of an event is low but the economic impact would be high. Any other combination and the economics will not work out.

For example, the probability of your home burning down is low. But the economic cost of that event is high. As a result, you can obtain homeowner’s insurance at a reasonable cost. The insurance company charges a modest premium to thousands of homeowners knowing that they will pay out very few claims.

Conversely, if you live in a flood plain, the probability of experiencing a flood is high. The economic impact of that flood can also be high. However, in order for the insurance company to remain profitable — and they must be profitable otherwise they will go out of business — they must charge a high premium since the likelihood of having to pay a claim is also high.

This is why insurance companies historically rarely sold flood insurance — it was simply not profitable as the only people who bought flood insurance are the ones who live in a flood plain. As a result, FEMA set up the National Flood Insurance Program in the 1960s. Up until a few years ago, most flood insurance policies were effectively sold by the federal government. Thankfully, the free market has solved the problem and today we do have private flood insurance for those so inclined.

While Hurricane Helene was absolutely devastating to western North Carolina, no reasonable individual could have expected the mountains to flood like they did. I may be mistaken, but I believe the last time that happened, Noah was piloting his ship. As a result, why should we mandate residents living on top of a mountain buy flood insurance?

Government mandates have unintended consequences. When my wife and I switched to a high-deductible health insurance policy before the ACA was passed, we increased our deductible dramatically — all the way up to $10,000. That was the highest deductible we could find, and we believed our cash reserves would allow us to pay any medical bills below that threshold.

As a result of this change, our premium went down to about $234 per month. (I still remember the number, as I remember it fondly.) Today, that same health insurance policy is now $1,946 per month. Obama’s noble effort has me and my family completely wasting $20,544 per year. And that’s just this year. How much have I wasted over the last 15 years? I shudder at the thought.

If Causey and the North Carolina General Assembly mandates flood insurance for everyone, it will benefit a few but will be nothing but a waste of money for everyone else.

It is my hope that Sens. Tillis or Budd or one of our freshmen House members will introduce legislation to finally repeal the Affordable Care Act. The law has always been broken, and it has cost Americans thousands in wasted money. It was never affordable.

Likewise, it is my hope that freedom reigns in North Carolina and Commissioner Causey realizes that mandating another insurance policy is the antithesis of economic liberty.