NCPA - National Center for Policy Analysis

Car-Care Crisis?

September 16, 2015

The U.S. healthcare's third-party payer system has created a national crisis where we are spending more than ever while failing to ensure access for our citizens. The health insurance system abets this crisis by adding administrative costs, regulatory compliance burdens, and bureaucratic interference. Many consumers are caught unwittingly in this vicious cycle fed by employer-provided benefits which further insulate healthcare consumers from the real costs of medical care, says senior fellow John R. Graham of the National Center for Policy Analysis.

There are interesting similarities between healthcare insurance and car insurance, and perhaps a few lessons one can learn from the other.

  • Per-person spending on healthcare in 2014 was $9,176. According to the American Automobile Association (AAA), the cost of operating an average sedan for one year is $8,876.
  • Americans traveled 253 million miles by road last year. There are 239 million Americans aged 18-84 years.
  • Both cars and people tend, on average, to go many years on basic maintenance, requiring major repairs relatively infrequently.

But there are key differences as well.

  • Accordingto AAA, the average annual car insurance premium is $1,032, or about 12% of the cost of operating a vehicle for one year.
  • In 2014, of the $9,176 spent per capita for health care, only $1,082 was covered by directly by consumers.

We do not expect our car insurance companies to provide us access to an oil change, nor would we purchase expensive insurance to cover every conceivable expense we might ever incur as car owners, yet, that is exactly how health insurance is modeled. Obamacare only doubles-down on this fatal flaw.

"Obamacare was a significant tightening of [the government's] grip, but it won't be the last as long as we accept that insurance should control access to health care."

Source:  John R. Graham, "Why There's No Car-Care Crisis," Real Clear Policy, September 11, 2015.


Browse more articles on Health Issues