I am opposed to taking money from non-drinkers, non-smokers, and the insured to subsidize those who drink, smoke, or are not insured.  However, subsidizing this bad behavior is just what we do:  we pay for the police to deal with the problems of alcohol, we pay the higher costs of health care to cover the costs of alcohol AND tobacco (in direct taxes for medicare and medicaid AND in increased private insurance rates due to the government refusing to pay doctors and hospitals the true cost of the services — which means they increase the price for everyone else to cover the losses), and increased auto insurance rates due to drunk and uninsured drivers.  (Did you know “uninsured motorist” protection only covers medical expenses due to being hit by an uninsured driver?  If they destroy your car you are out of luck UNLESS you’ve been paying for comprehensive and collision all along, which costs more!)

So here’s my solution:  Large insurance companies bid on creating a fund to cover the costs– sometimes called EXTERNALITIES — and ALL costs of drinking, smoking, and uninsured driving will be paid out of the externalities fund quarterly.

So let’s say Farmers Insurance wins the contract for administering one of these funds for the next five years.  They will take claims on the fund for the next three months, then levy a fee on that activity over the next quarter that will pay those claims.  Any shortfalls on the fund will be rolled over into the next quarter and prioritized; any surpluses will lower the assessment for the next quarter.  Farmers might keep 1.5% of what is PAID OUT as an administrative fee — the specific percentage of profit withheld by the company is part of the bidding process.  Farmers sets up a website where people or insurance companies who have a claim on the fund enter their information and amount of damages, then pays it out once the fees have been remitted.

On alcohol, the fund gets money through a per millileter of alcohol in the drink sold.  Law enforcement can bill for hours and money spent on testing, arrests, paperwork, incarceration, court time, etc. for handling DUIs.  Cities and individuals can put in claims for property damaged by drunk drivers (assuming they have police reports and an estimate provided by claims representatives from the fund agent).  Auto insurance companies can put in for claims paid out for medical and life insurance claims due to accidents deemed by law enforcement to be caused by alcohol.  Health insurance companies can submit for reimbursement for treatment of cirrhosis of the liver secondary to long-term alcohol abuse.

Treatment and education WILL NOT be paid for by the fund.  Effective treatments can be paid for by the health insurance companies, but should not be paid for by the fund as often such “good programs” are a colossal waste of money.  The only way DRINKERS will support the program is if it is not used as a way of moralizing and chiding them for their choice of recreation.  Sure, drinking is harmful — and especially so when done to excess — but the amount of money “do gooders” can spend doing “good” with other people’s  money, without delivering any measurable results, is staggering — and should be offensive to us because of its unfairness.

The fund WILL NOT be used to augment the general fund, i.e. it is NOT a “cash cow” to be milked whenever the government needs money.  Government will NEVER have enough money, and their continued raising of the rates will only undermine support of the program by those who pay into it — support which will be critical to maintaining compliance.

To address smoking, Arizona would get rid of its idiotic, proposition-enacted tobacco tax and create an externalities fund for tobacco-related damages.  These are mostly just going to be administration fees — paying someone to go out and ensure that cigarettes sold are carrying the tax — and health care costs from treating emphysema, COPD, and lung cancer.  Second hand smoke claims must be documented with health records or employment records showing living in a house with a smoker or working in a bar or other space that had smokers.  The fund rate would be levied per gram of tobacco.

To address uninsured drivers,  we must repeal the “welfare for tow companies” act that allows uninsured vehicles to be towed and impounded for 30 days when all the impound fees go to the tow company — not a dime paid to people whose property has been damaged, or to law enforcement, who spend their time waiting for the tow truck to arrive at the scene of the accident or citation.  I say the vehicle is still automatically towed, but can be sprung automatically if the uninsured driver pays the assessed fee online via Paypal or credit card PLUS the cost of the tow —  this could be done with a valid code given to the payer upon receipt of the payment of the fee by the fund.  After ten days, if the vehicle is not picked up, the vehicle is seized by the fund agent and auctioned, the tow company being paid a reasonable fee for the tow and ten-day impound.  All proceeds of the sale go to the fund to pay for damages done by uninsured drivers.  Any insurance company or private individual who has had damages caused by an uninsured motorist can put in to be reimbursed by the fund, as long as they have an estimate provided by an adjuster from the fund agent company.  The fund would get its money from the fee paid by drivers to spring their cars from impound or from cars abandoned in impound by their owners.

I believe this kind of system will end the transfer of money from responsible, law-abiding citizens to those who engage in irresponsible or damaging behavior,  and let those who engage in this behavior see the TRUE cost of their choices so they can make rational decisions.  Can we overcome the objections of the entrenched interests who benefit from the current ineffective system in which some get rich at the expense of others?  Only if we educate, persuade, and work at changing it.

I welcome your comments and ideas!

One Response to “Idea #2 — Externalities fees”