AlmostShrewLike

Imagine we mandated everyone have car insurance that covers new tires, oil changes, and wiper fluid. People would use more of those services. Sure, some people driving on dangerously bald tires would finally get new ones. You might even prevent the occasional crash. But you’d also get people wanting brand-new, top-of-the-line tires every few months. Why not? It’s free. So you’d need to create a bureaucracy to determine when people were allowed to get new tires and what kind they could have. Auto shops would have to expand the amount of documentation required to justify new tires for their customers. Because more people are getting tires than need them, and because you’ve added layers of bureaucracy, the cost of new tires goes up. Which means the cost of insurance to pay for those new tires also goes up. Consumers wouldn’t see that cost increase when they get the tires, but they would when they pay their premiums. So they demand subsidies. Car insurance is just too expensive for the average family. The subsidies blunt the cost of premiums for families but do nothing to control the actual cost of new tires. In fact, they inflate it further. Car insurance companies respond by creating more rules limiting how often people can get tires. Auto shops hire more people to navigate those rules. Wait times for tires increase. So now tires cost more in both time and money. People who truly need tires have to wait in line with people who just want new ones because they qualify. The auto shops that thrive are the ones best at navigating regulations, not the ones that provide the best tires at the best price. More resources are misallocated. Insurance costs climb further. More people demand subsidies. Soon people scoff at the idea of paying cash for tires. How could the average American afford that? We don’t even know the cash price. Some auto shops quote $200,000 for a set of tires, but most won’t even post their prices anymore. Why would they? They have multiple contracts with insurance companies and don’t even sell directly to consumers anymore. Prices continue to rise because nobody actually sees them. More subsidies are demanded. Prices keep climbing. But people don’t actually have access to tires. What they do have is access to a very expensive car insurance product that covers tires. So, do you see why subsidizing health insurance doesn’t actually increase access to healthcare?