Does HHS Secretary Sebelius understand the concept of insurance?

Apparently not, according to Megan McCardle writing in the Daily Beast.

This is what Sebelius said about those of us who purchase health insurance plans that don't cover routine health issues:

At a White House briefing Tuesday, Health and Human Services Secretary Kathleen Sebelius said some of what passes for health insurance today is so skimpy it can't be compared to the comprehensive coverage available under the law. "Some of these folks have very high catastrophic plans that don't pay for anything unless you get hit by a bus," she said. "They're really mortgage protection, not health insurance."

McCardle sets her straight:

She said this in response to a report from the American Society of Actuaries arguing that premiums are going to rise by 32% when Obamacare kicks in, as coverage gets more generous and more sick people join the insurance market.  Sebelius' response is apparently that catastrophic insurance isn't really insurance at all--which is exactly backwards. Catastrophic coverage is "true insurance".  Coverage of routine, predictable services is not insurance at all; it's a spectacularly inefficient prepayment plan.

Now, it occurred to me that Sebelius might be thinking about the scam insurance that is all too often sold to naive, mostly lower-middle-class folks who labor in the service industry.  That stuff isn't insurance at all; it's a fraud, and the people who sell it will richly deserve any justice that is meted out to them in either this life or the next.  But that stuff doesn't protect your mortgage, either; they're almost-worthless discount plans or very-limited-coverage insurance sold by fly-by-night operations who tend to evaporate as soon as claims have to be paid.  So I don't think that's what she's talking about; I think she's talking about catastrophic plans.

Nor do I think that Sebelius is responding awkwardly to a report that the administration would like to wish away.  I think she's sincerely confused about the difference between insurance, and prepayment.  Which explains a lot about the new health law. 

People our age paying for contraception coverage is loony. We don't need it, nor want it. But this is what happens when government gets into the health insurance business. And when you have a Secretary of Health and Human Services who has no clue what insurance is really for, you end up with Obamacare and a boondoggle of immense proportions.

Apparently not, according to Megan McCardle writing in the Daily Beast.

This is what Sebelius said about those of us who purchase health insurance plans that don't cover routine health issues:

At a White House briefing Tuesday, Health and Human Services Secretary Kathleen Sebelius said some of what passes for health insurance today is so skimpy it can't be compared to the comprehensive coverage available under the law. "Some of these folks have very high catastrophic plans that don't pay for anything unless you get hit by a bus," she said. "They're really mortgage protection, not health insurance."

McCardle sets her straight:

She said this in response to a report from the American Society of Actuaries arguing that premiums are going to rise by 32% when Obamacare kicks in, as coverage gets more generous and more sick people join the insurance market.  Sebelius' response is apparently that catastrophic insurance isn't really insurance at all--which is exactly backwards. Catastrophic coverage is "true insurance".  Coverage of routine, predictable services is not insurance at all; it's a spectacularly inefficient prepayment plan.

Now, it occurred to me that Sebelius might be thinking about the scam insurance that is all too often sold to naive, mostly lower-middle-class folks who labor in the service industry.  That stuff isn't insurance at all; it's a fraud, and the people who sell it will richly deserve any justice that is meted out to them in either this life or the next.  But that stuff doesn't protect your mortgage, either; they're almost-worthless discount plans or very-limited-coverage insurance sold by fly-by-night operations who tend to evaporate as soon as claims have to be paid.  So I don't think that's what she's talking about; I think she's talking about catastrophic plans.

Nor do I think that Sebelius is responding awkwardly to a report that the administration would like to wish away.  I think she's sincerely confused about the difference between insurance, and prepayment.  Which explains a lot about the new health law. 

People our age paying for contraception coverage is loony. We don't need it, nor want it. But this is what happens when government gets into the health insurance business. And when you have a Secretary of Health and Human Services who has no clue what insurance is really for, you end up with Obamacare and a boondoggle of immense proportions.

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