Listening to Rush today. He is brilliant on politics but not as good on economics.
He was advocating self-insurance for small businesses and individuals, in response to the Obamacare fiasco. He mentioned as an example that he had decided to self-insure a building (I think his home near a Florida beach) in response to his property insurer’s insistence on an extremely high deductible. He also said that he self-insures for medical costs.
Two problems with his analysis. One, property insurance covers buildings and building contents, so liability is easily estimated and is capped at replacement cost. Unlike with medical care there is no possibility of very large, unplanned expenses. Two, Rush is personally wealthy and can afford to pay any medical expenses out of pocket. For these reasons his argument has limited applicability for most people, who buy health insurance precisely because they would be unable to pay an outlier medical bill without experiencing significant hardship. The same point applies to many small businesses as well. These groups thus need real insurance to cover outlier medical expenses. A self-insurance quick-fix would be inadequate.