In The Future, Socialism Will Advance Through "Insurance"

I forget who said that. I think it's insightful and correct.

There are two functions of real insurance: hedging against a risk and risk-sharing for those risks we choose to share.

One in ten thousand people might suffer rectal cancer. It probably makes sense for most people, on a voluntary basis, to decide (voluntarily) to pay in a little money for insurance so that if they suffer such a catastrophic and expensive illness, they'll be covered.

If they're one of the lucky ones -- well, they're out a little bit of money, but they are one of the lucky ones.

Insurance makes sense in this situation, for most people, as most people would like to reduce the impact of serious risks that strike like lightning. They are unpredictable, and when they hit, they require major changes in lifestyle. Most people -- especially with children, who must be planned for whether their parents are sick or healthy, alive for dead -- are willing to pay a little into an insurance pool to manage this risk.

On the other hand there are things which are not risks: Cost of housing. Food costs. Voluntary contraception costs. These are not risks, as the "odds" such costs will be incurred is 100%, and hence cannot be "insured" against.

Do you want to eat? You're going to have to budget for food. No one can insure you against the possibility you might need food.

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