Obama must not believe that insurance companies act in their own self-interest

From the NYT:

Mr. Obama said that the compromise would take the Catholic institutions out of the equation by relieving them from either paying for coverage for contraceptives or providing any referral to their employees for the coverage. Instead, insurance companies would be required to pay for the contraceptives, and to arrange it. The insurers will agree, the White House said, because it is more expensive for them to pay for pregnancies than to pay for contraceptives.

If “the insurers will agree,” what is the point of the law? Wouldn’t they already be giving out free contraceptives if doing so reduced their costs? The Obama administration is saying: we are forcing insurers to take action X. They will happily oblige, because it is in their best interest anyway. This is paternalism, but it is an especially weird form of paternalism where the party being condescended to is actually said to fully understand the benefit of acting in accordance with the will of the paternalistic party. So the implication is that the party being condescended to (the insurance companies) are being completely irrational, since they refuse to act in (what they correctly understand to be) their own best interest unless forced to. Or am I missing something?

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2 Responses to Obama must not believe that insurance companies act in their own self-interest

  1. Morgan says:

    What if the new policy protects insurance companies from lawsuits when they cover a controversial item that most people want? In that case, Obama might indeed be helping insurance companies by providing them with cover from lawsuits. I can imagine a world in which insurance companies believe they would make a profit (all fees for legal services being equal) by including coverage for contraceptives in standard-issue policies, but refrain from doing so because the Catholic church and perhaps other rich entities stand ready to unleash the legal beagles. If this is what’s going on, Obama isn’t condescending to insurance companies and implying that they are “completely irrational.”

  2. Leroy Dush says:

    Insurance is the equitable transfer of the risk of a loss, from one entity to another in exchange for payment. It is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. An insurer, or insurance carrier, is a company selling the insurance; the insured, or policyholder, is the person or entity buying the insurance policy. The amount of money to be charged for a certain amount of insurance coverage is called the premium. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice.:;:;


    Kind regards

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