Thursday, March 29, 2012

Why Burial Insurance is not the same as Health Insurance

The right wing of the Supreme Court tried to make the case that a mandate for health insurance is no more necessary than a mandate for burial insurance.  There are a lot of ways of tackling that claim, but a key issue I haven't seen acknowledged is the skewed cost distribution of health care.  With health care the most expensive 5% of individuals account for almost 50% of total spending.  What would happen if burials had the same cost distribution?

As of 2007 the average death cost $6,310 in funeral expenses*. If the same distribution that we see in health care applied to burials we'd have 5% of the population getting $63,000 funerals while everyone else's cost $3,300.  And neither you, your next of kin nor the state would have any say in who got which funeral, it would be as random and arbitrary as people's health needs.  Think about how that would impact families, think about how it would screw up government budgets as they had to fund funerals for the poor or uninsured.

In effect burial spending is nothing like health care spending, and if it was alike we'd have the same conversations about how to pay for it.

*Total revenue for Funeral Services (NAICS Code 8122) divided by number of deaths.

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