Tuesday, August 25, 2015

Benefits for Freedom

(c) Copyright 2015 Despair.com
Today, many people are signing up for lots of government benefits.  And our leaders in Washington, both those on Capitol Hill and in the White House, keep lining up bills to protect us from threats that are both real and imagined, and along with each protection comes a list of things that ordinary Americans can no longer do without breaking the law.

I call this exchange of government benefits for our freedoms, Esau's Bargain.  This is based on an event that is described in The Old Testament.
Esau Selling His Birthright by Matthias Stom, 17th Century
 ... Esau came from the field, and he was faint: And Esau said to Jacob, Feed me, I pray thee, with that same red pottage; for I am faint... 
     And Jacob said, Sell me this day thy birthright. 
     And Esau said, Behold, I am at the point to die: and what profit shall this birthright do to me?    And Jacob said, Swear to me this day; and he sware unto him: and he sold his birthright unto Jacob. 
    Then Jacob gave Esau bread and pottage of lentiles; and he did eat and drink, and rose up, and went his way: thus Esau despised his birthright.
Genesis 25:29-34

Later on, when Isaac, Esau and Jacob's dad, wanted to give his son's a blessing all this came back on Esau and he got pretty angry about it.  So angry, that Jacob had to leave home for quite a few years before his brother Esau cooled down about it.

So, what Esau despised when he was hungry, he valued later on.  But, then it was too late.  The deal was done, and he could not reclaim his birthright.

Today, we are giving up our birthright as Americans, the freedoms we enjoy under the Constitution, in exchange of a big bowl of government sponsored benefits soup, just like Esau did.  And as each freedom is taken, we are not likely to be able to get it back, just like Esau.

I could point to all the body searches we now go through just to take a flight today, but as intrusive as that is, it won't be going away anytime soon.  Since Esau didn't ask to borrow Jacob's sword, let's look at the bowl of soup instead.

Obamacare - quaintly called The Affordable Care Act is one of the biggest exchanges of benefits for freedom in the history of our country - so far.

A few years ago, if you were young and healthy and didn't feel the need to buy health insurance, that was your choice.  Starting this year, the government will be getting reports from all the insurance companies listing who are their customers.  The IRS will cross-check those lists with tax returns.  If they find a taxpayer who doesn't have health insurance, they will impose a fine on that taxpayer.

Last year, the fine was pretty trivial and it was only levied on those who didn't have insurance and told the government the truth.  This year, the fine gets a lot more severe, and Uncle Obama has a way to see if you are lying.

A few years ago, if you didn't need or want maternity insurance - which was generally only purchased by folks who were planning to have a baby, you didn't have to get it.  Considering the fact that a huge segment of our population today is made up of Baby Boomers, thousands of whom reach retirement age each day, there are a lot of folks who aren't going to have any more babies.  And yet, we all get to pay for Maternity Coverage, because those are the rules imposed on us by our people in Washington.

To be very blunt, the whole case for health insurance is totally messed up.  I would use stronger language, but I try not to use foul language.

The first problem with health insurance is that most people totally misuse it. And, that makes the costs for insurance to shoot through the roof.

Insurance companies are better than the best professional gamblers.  They hire super mathematicians called actuaries to sit around all day and calculate the odds for and against them having to pay a claim for any given condition, disease or event.  If the actuaries do their job right, and they do, the insurance company takes in more money in premiums than they pay out in claims.  A little known fact is that those insurance companies then invest the difference between what they pay out and what they take in and they make money on their money.  That is how they stay in business.

Ordinary people have totally screwed up health insurance, because instead of using it as a safety net against some really big, bad event, they have used it like a Christmas Club.

You may (or may not) remember the Christmas Club your bank or credit union used to offer.  The idea is simple.  In January, you figure out how much you are going to spend at Christmas and then each month you deposit one twelfth of that amount into a special savings account.  Then, when Christmas time comes, you close out your special Christmas Club account and spend your money.

This is what people have unwittingly been doing with their health insurance.

Remember what I told you about what actuaries do?  If the bank were using actuaries to see what money they could make on Christmas Club accounts the actuaries would tell the bank that the odds that the Christmas Club accounts will survive beyond a year are something only slightly higher than zero.  This means that the bank cannot afford to put that money into a loan to some customer unless the loan will be repaid before the Christmas Club account is cashed out.

Let's go back to Maternity Coverage again.

People who buy Maternity Coverage are usually planning to have a baby.  Actuaries know this, so the odds the insurance company will have to pay a claim to someone who takes out the coverage is pretty close to 100%.  It is only reduced by the probabilities (which the actuaries will calculate) that a person cannot have a baby, or dies before they have a baby.

What this means to the insurance company is that they have to charge more in premiums than they believe they will have to pay out in Maternity  Coverage claims.  So, what you get when you buy Maternity Coverage is a Christmas Club, with a surcharge (because the insurance company still has to pay it's people and make some profit, even after they pay out your claim).  With this Christmas Club, you pay in for about a year and at the end of that time, if all goes according to your plan, you get to come home from the hospital with a baby and without a big hospital bill to go along with it.

Of course, instead of paying the surcharge to the insurance company, you could have found out what it would cost for the doctor and hospital for a delivery, divided that figure up by at least 9 months, and then opened a savings account where you deposited that money each month.

Then, in about a year, you could come home from the hospital with a new baby and no big hospital bill, because you had the money to pay in cash (and it is less than what the insurance company would have been forced to charge you).

But, what if something goes terribly wrong?  THAT IS WHAT INSURANCE IS FOR!

At the same time that you are putting aside money each month, you should also be buying a Major Medical insurance policy.  These policies will pay your medical bills if something unexpected happens.

Those crafty actuaries calculate the odds that something will go wrong, and tell the insurance company how much they need to get to hedge their bets.  And they are betting that nothing major will go wrong - and most of the time they are right.  Because they are right most of the time, the insurance company makes money and can keep offering major medical insurance policies.

I could show you how this same thing applies to dental insurance and vision plans as it does to Maternity Coverage.  But, the chances are if you haven't gotten my point by now, you won't.

And here is point #1 - the whole scare about the spiraling costs of health insurance is a manufactured crisis that has its origins in people being ignorant about how they use their health insurance.  Yet, this was one of the main drivers the folks in power used to convince folks that forced insurance (socialized medicine) was a good idea.  Never mind the fact that it pretty much stinks everywhere it has been implemented.  Its only fans tend to be the politicians who put it in place and the bureaucrats who make their livings running it.  Even the doctors and nurses hate it.

Point #2 - those in power want more power.  Some of them want it because they think they are so much smarter than everyone else that they have an obligation to protect us from our own foolish actions.  They take away our freedom of choice for our own good.  Unfortunately, that has several really bad consequences.
A) People who are temporarily saved from the consequences of their own actions begin to believe that there are no consequences for bad choices, and so they make more bad choices.
B) People who get power by helping others avoid the consequences of their actions get reinforcement that they are doing something good when they look at all the bad consequences they have helped people avoid.
C) Bad consequences are eventually going to happen, no matter what.  And the natural law called the Conservation of Energy says that for every action there is an equal and opposite reaction - this ensures that when the bad consequences finally do happen, they will be really big, because they will contain the built up energy from all the consequences from bad choices that were temporarily avoided by some government program.  And when that stuff finally hits the fan the people who have been trained to make poor choices are going to blame the people in power for the pain they are feeling for the consequences of their actions and they are going to be very hurt, very angry, and a whole lot of people.
And when "C" finally happens, there will very likely literally be blood in the streets, only it will be on a scale that will make the riots in LA and Ferguson look like a Sunday picnic.

It is because I want to avoid that really bad pile of consequences that I am urging people now to make good choices and choose to defend our constitutional rights in every way we can and on every front.  Don't surrender your freedom for a bowl of government benefits soup.

By the way, if you think I am making all this insurance crap up, I'm not.  I have spent many years working in the insurance business.  Or, if you don't believe me, call up your insurance agent and ask him if I am giving you the straight scoop.  If he's honest, s/he will tell you what I just did.

Tom Sheppard is a business consultant and coach to small business owners and individuals. He is a recognized author with dozens of titles in business and fiction to his credit. One of his endeavors is to help those who want to see their own book in print. He does this through his trademarked Book Whispering Process (TM). The author is not an official spokesperson for any organization or person mentioned herein. 

The author is not an official spokesperson for any organization or person mentioned herein.

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