That's not an externality. The person starving to death is the same person who didn't buy insurance.
What you're getting at is that there is a reason people buy insurance anyway -- the peace of mind that that won't happen to you, as I mentioned. Because a million dollars in claims money even if you have to multiply it by the only 2% probability of that happening is worth more to you than the $20,000 in guaranteed premiums you'll have to pay over your life, because if the claim actually happens you need the money more. The value of the same dollar is higher to you then, which you can predict from the beginning and account for.
But that value still has to be balanced against the losses to administration and fraud, and balanced against what you need the money for today. If losing $100/month to premiums causes you to starve now, it doesn't matter that there is a 2% chance that you starve in ten years from now. If the majority of insurance claims are fraudulent, the higher value of the money in case you have a legitimate claim may no longer exceed the losses from buying the insurance.
It's possible that buying insurance makes sense. It's possible that it doesn't. But people should be able to make that choice for themselves instead of having it imposed on them.
> That's not an externality. The person starving to death is the same person who didn't buy insurance.
It is an externality. Maybe you don't mind having the streets of your town full of homeless people, but I do. In fact, I mind it very much. When someone ends up on the street, that makes my life less pleasant even though I'm not the one who was uninsured.
That's the kind of thinking that leads to old policies like New York City rounding up all the homeless and putting them on a bus with a mandatory one way ticket to Pennsylvania.
The person taking the brunt of the hardship is clearly the person suffering it and not the person with the misfortune of having to observe them, and they also have the best incentive to take steps to prevent that from happening. Forcing choices on them doesn't fix it. Maybe it makes it so you don't have to look at them, but if the net result is sufficiently worse that they wouldn't have chosen it given the choice, you're not actually helping them, you're just making the suffering less visible.
> Of course that is true. That doesn't mean that the cost imposed on others is zero.
It's never zero. But you're making it out to be a significant cost relative to the effect on the person making the decision. Having a way to internalize the cost of others' displeasure at being aware of their possible misfortune wouldn't materially affect their decision one way or the other, because it's so much smaller a factor than the possible misfortune to begin with.
For an individual, yes. For society as a whole, no. If you have one homeless person on the street who is seen by 1000 passers-by, their discomfort on an individual basis has to only be 0.1% as much as the homeless person's in order for the aggregate cost to be the same. This is just the tragedy of the commons in another form.
It's still true even with that kind of multiplier. Would you rather see a homeless person a thousand times, or be a homeless person? It's no comparison.
But you're making a fine argument for charity. If a thousand people don't want to see a person go homeless, it doesn't take much from each of them to make it so they don't have to.
That's the wrong analogy. The correct one is: would you rather be one poor person living amongst 1000 wealthy people, or one rich person living amongst 1000 poor ones?
And if 1000 is not a big enough number to make you think twice, then make it 10,000. Or 100,000. (The number of homeless in the U.S. is considerably larger than that BTW.)
> And if 1000 is not a big enough number to make you think twice, then make it 10,000. Or 100,000. (The number of homeless in the U.S. is considerably larger than that BTW.)
You're comparing the entire US homeless population to one person. The actual ratio is less than one in five hundred.
It would be a harsh society indeed that didn't protect against some poor choices. You got injured and your insurance lapsed because you forgot to pay it/did not realize you should have it/didn't have the money/got ripped off/made a bad decision/the check was lost in the mail? Starve and die? I've traveled in countries that can be like that and its not a happy place to live. Medieval you might say.
The point you're making is that "starving" is an exaggeration. Which is true -- we have many charities and need-based assistance programs that have nothing to do with employers or insurance, so people don't typically starve in the US and the worst case from not having insurance is actually less bad than the exaggeration of the other poster.
Only if you ignore externalities, like uninsured permanently disabled people begging on the streets or starving to death.