Why Do Cars Have Better Insurance Than People?

With our recent auto insurance renewal came the standard paperwork, including the “Auto Body Repair Consumer Bill of Rights” required by California.  If you are in an accident and your car is damaged, by state law, a consumer can select any auto body repair shop and “the insurance company shall not require the repairs to be done at a specific…shop.”  But if you are in an accident and you are damaged, you can be required to use doctors in either your preferred provider or health maintenance plan.  You are unlikely to “be informed about where to report suspected fraud,” nor are you going to get an estimate for the costs of fixing you.  Sure, you’re thinking, people are a lot more complicated than cars, and that is undoubtedly true.  But it is also interesting that you have more consumer rights to get your car fixed than you do your body.

This simple example illustrates a profoundly important truth about the health care marketplace—it mostly doesn’t exist.  My employer, Stanford, decides on what insurance options I can choose.  And I am lucky—many employers don’t offer any choice at all.  Once I have selected a health plan, in my case, HealthNet, and a physician group, Brown and Toland, then you get to select your primary care physician.  The dirty little secret in the San Francisco Bay Area is that most of the best primary care doctors don’t accept new patients (mine stopped more than 20 years ago) and many of the best specialists, particularly the orthopedic surgeons, accept few, if any, insurance plans.  And then you are confined to seeing the doctors in your physician group or in your health plan’s network.  Choice is fundamental to the working of markets, and some would say choice is a fundamental consumer right—it certainly is for auto body repair.  But choice is pretty much nonexistent in health care. 

The preceding discussion doesn’t even consider the situation facing those on public assistance, where the payment rates are so low that few doctors or hospitals want to see them, or even Medicare, where increasingly the same situation holds.  Now you might be asking, how can it be that a price is set that doesn’t result in an equilibrium, market-clearing solution?  The answer:  prices are set for about half the population directly through legislative fiat, a process not typically covered in standard economics treatments of markets. 

The fact is that the health care marketplace isn’t and hasn’t been a true market for decades.  Consumer rights, including the rights to seek legal redress, are limited by Federal preemption under ERISA, something that doesn’t affect your rights in getting your car fixed and holding your insurance company responsible for honoring their contract. 

So the next time you’re in a car accident, you better hope you fare better than the car.  That’s because the car has a lot more rights and protections than you do.


  1. Larus Maxwell says

    I agree with your post. We haven’t had a free market in health care in a very long time. The tendency toward fewer and less qualified available doctors (ones which accept new patients) is a disturbing trend. In a conversation with a Canadian friend she related how doctors interview potential patients and required references from existing patients before accepting new patients. Imagine taking your car to the shop and being required to provide references before they will work on it. Disturbing times ahead in our health care I fear.

    I wonder if what we are seeing may be due in part, to the fact that car repair shops don’t have a long standing and powerful lobby/union (a.k.a. the American Medical Association)?

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