Philadelphia Reflections

As far as Medicare is concerned, Part A (hospital) is entirely paid for out of the general fund, derived from everybody's taxes -- to the individual, it is essentially free. Medicare Part B, paying doctors, is 75% subsidized by taxes, so it is a no-brainer to sign up. Part D is not a bargain for me, because I have one of those sweetheart deals from a University. However, for an ordinary citizen it comes close to breaking even, and should be regarded as a budgeting device for an age period in life when you probably do want to smooth out your expenses.

There is an age, beyond which an insurance company will not sell term insurance. That means you have to accept the rather low returns on permanent coverage. Somehow, it seems to me you ought to be doing your own investing toward that eventuality, possibly with term insurance in the early years, to get started.

Alan,

Thank you for your comment.

You are right that I have not mentioned a number of types of insurance. I feel badly about this and hope to fill in the gaps as time goes on.

In the situation you describe, might not life insurance help? If the surviving, non-participant spouse prefers an annuity to a lump sum, such an option could be arranged.

Cheers,
George 4

Very good article. For insurance you don't mention insurance to protect loss of income from a pension when the major pension owner dies. e.g. I expect to receive a sizable pension and when I die my wife only gets 50% of it. This would be a significant hardship if I die young

The McCarran Act was part of the long fall-out from the Roosevelt court-packing uproar. The Court had held that the Constitution limited federal involvement to interstate commerce, as "commerce between the several states". It reversed itself when FDR threatened to keep adding more Justices until he had a majority that would get rid of the interstate commerce limitation, Within six weeks of the decision, Congress responded to insurance lobbyists by saying that no federal regulatory agency was to interfere in the business of insurance. All of the states then passed laws regulating insurance, so the effect was to single out this one industry and shift its regulation to the state level. That was clearly the idea of the founding fathers -- for all commerce, except commerce between the several states. The resulting experience with insurance regulation at a state level has been very unsavory, perhaps because all of the corruption was focused on a single industry. In 1973, ERISA was passed because big corporations were driven crazy by the multitude of regulators for pension plans. As an afterthought, the health insurance benefit was tacked onto the ERISA bill, essentially saying everything we said about pensions also applies to health insurance. I don't know about life insurance as a company benefit, but I wouldn't be surprised if it got included in some way. The overall consequence of all this has been gridlock, and the wide-spread assertion that this mess is not amendable because everybody is scared they will lose some particular loophole that has been created by accident. However, if anyone wants to do something useful, the place to begin is with McCarran Fergusson.

Well, I'm not one to advocate Federal regulation but the fractured state of insurance in America serves only the interests of Boss Tweed; not the consumer.

As for Princess Diana, I don't know where things stand; those sorts of people occupy a different dimension from me.

I'm about half way through and have to go. My first suggestion is you allude to the McCarran Fergusson Act that reversed the Supreme Court decision that the business of insurance could have federal regulation, especially antitrust regulation. And second, I wonder how the litigation about Princess Di turned out; there was a chauffeur, but he was acting as an agent for billionaires in the back seat.