Category Archives: Insurance Definition
Self-Insured Retention vs. Deductible: Key Differences
When navigating insurance policies, two terms frequently arise: self-insured retention (SIR) and deductible. While both require the policyholder to bear some financial responsibility, they function differently in risk management and claims handling. Understanding these distinctions is crucial for businesses and individuals seeking optimal coverage.
What Is a Deductible?
A deductible is the amount a policyholder must pay out of pocket before the insurance company begins covering expenses. For example, with a ,000 deductible on an auto insurance policy, the insured pays the first ,000 of a claim, and the insurer covers the rest (up to policy limits).
What Is Self-Insured Retention (SIR)?
Self-insured retention (SIR) is a pre-agreed amount the policyholder must pay for a loss before the insurer steps in. Unlike a deductible, the insured handles claims directly up to the SIR limit, including negotiations and payouts. The insurer only intervenes for amounts exceeding the SIR.
Key Differences Between SIR and Deductibles
Feature | Deductible | Self-Insured Retention (SIR) |
Claims Handling | Insurer manages claims from the outset. | Policyholder handles claims until SIR is met. |
Financial Responsibility | Insured pays deductible; insurer covers the rest. | Insured pays all costs up to SIR, then insurer takes over. |
Risk Control | Less control for the policyholder. | Greater autonomy in claims management. |
Common Usage | Personal insurance (auto, home). | Commercial/liability policies (e.g., large corporations). |
Which One Is Right for You?
Deductibles are simpler and better suited for individuals or small businesses seeking predictable costs. SIRs appeal to larger organizations with the resources to manage claims and absorb higher upfront costs in exchange for lower premiums.
Consult an insurance professional to determine the best structure for your risk tolerance and financial capacity.
Insurance Grace Period Laws by State When it comes to insurance payments, missing a due date doesn’t always mean immediate cancellation
Most states require insurers to provide a grace period—a set amount of time after a missed payment during which coverage remains active. However, grace period laws vary by state and insurance type (health, auto, life, etc.). Below is an overview of key regulations across the U.S.
What Is an Insurance Grace Period?
A grace period is a buffer (typically 10–31 days) that allows policyholders to make late payments without losing coverage. If payment is made within this window, the policy continues uninterrupted. If not, the insurer may cancel the policy.
Grace Periods by Insurance Type
Marketplace plans have a 90-day grace period for enrollees receiving premium subsidies.
Typically 30 days (varies by insurer).
Rules differ by state; some allow 30–90 days.
– Most states mandate a 10–30 day grace period before cancellation.
– Some insurers offer flexibility, but driving without coverage risks fines or license suspension.
– Usually 30–31 days for term/whole life policies.
– After the grace period, the policy may lapse unless reinstated.
State-by-State Grace Period Laws
While federal laws govern some aspects (e.g., ACA health plans), state laws further define grace periods:
| State | Health Insurance | Auto Insurance | Life Insurance |
|—————|——————|—————-|—————-|
| California| 90 days (ACA) | 10 days | 30 days |
| Texas | 30 days | 10 days | 31 days |
| New York | 90 days (ACA) | 15 days | 30 days |
| Florida | 30 days | 10 days | 31 days |
| Illinois | 90 days (ACA) | 12 days | 30 days |
(*Note: Always verify with your insurer or state DOI, as policies may change.*)
Key Considerations
Insurers may charge penalties for delayed payments.
Some states permit insurers to cancel coverage retroactively if payment isn’t received.
After a lapse, you may need to reapply or pay overdue premiums plus fees.
How to Avoid a Lapse in Coverage
1. Set up automatic payments.
2. Mark payment due dates on your calendar.
3. Contact your insurer immediately if you anticipate a delay.
Final Thoughts
Grace periods offer critical protection, but relying on them frequently can risk termination. Review your policy terms and state laws to ensure compliance. For state-specific details, consult your Department of Insurance (DOI) or legal advisor.
Would you like a deeper dive into a particular state’s regulations? Let us know in the comments!
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*Disclaimer: This article is for informational purposes only and does not constitute legal advice.*
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Coinsurance 80/20 Rule Explained Simply
When navigating health insurance policies, terms like *coinsurance* can be confusing. One common coinsurance arrangement is the 80/20 rule, which determines how medical costs are shared between you and your insurer. Understanding this rule can help you budget for healthcare expenses and avoid unexpected bills.
What Is Coinsurance?
Coinsurance is the percentage of medical costs you pay after meeting your deductible. Unlike a copay (a fixed fee per service), coinsurance is a percentage split between you and your insurance company.
How the 80/20 Rule Works
Under an 80/20 coinsurance plan:
of covered medical expenses.
out of pocket.
Example Scenario:
Suppose you have a ,000 medical bill after meeting your deductible.
0 (80% of ,000)
0 (20% of ,000)
This split continues until you reach your out-of-pocket maximum, after which the insurer covers 100% of eligible costs.
Key Considerations
Coinsurance only applies *after* you’ve met your annual deductible.
The 80/20 split typically applies to in-network providers. Out-of-network care may have higher coinsurance (e.g., 50/50).
Once you hit this limit, your insurer covers all remaining eligible expenses for the year.
Why the 80/20 Split?
This structure balances cost-sharing:
(since you share costs).
(thanks to the out-of-pocket cap).
Final Thoughts
The 80/20 coinsurance rule simplifies cost-sharing between you and your insurer. Always review your policy details, including deductibles and network restrictions, to avoid surprises. By understanding how coinsurance works, you can make informed healthcare decisions and manage expenses effectively.
Would you like further clarification on how coinsurance interacts with copays or deductibles? Let us know in the comments!
*(Word count: ~300)*
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Note: This article is for informational purposes only and does not constitute financial or medical advice. Consult your insurance provider for policy-specific details.
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Insurance Options for High-Risk Investment Portfolios
For investors chasing alpha through alternative assets, venture capital, or leveraged positions, insurance isn’t just about protection—it’s a strategic risk management tool. This guide explores 7 specialized insurance solutions to safeguard high-risk portfolios while maintaining growth potential.
Why High-Risk Portfolios Demand Unique Insurance
The 2023 BlackRock Alternative Investors Survey reveals 68% of hedge funds now allocate over 15% of assets to uninsured alternative investments. Yet market shocks like the 2022 crypto collapse and Evergrande crisis exposed critical gaps in traditional coverage.
High-risk portfolios face unique vulnerabilities:
- Liquidity traps in private equity/venture capital
- Regulatory domino effects (e.g., SEC’s 2023 private fund reforms)
- Concentration risks exceeding standard policy limits
- Cybersecurity threats targeting digital assets
7 Insurance Solutions for Aggressive Investors
1. Portfolio Protection Insurance (PPI)
Best for: Hedge funds, family offices
- Combines parametric triggers with traditional coverage
- Covers losses from:
- Black swan events (e.g., pandemics, geopolitical shocks)
- Sudden liquidity crunches (30+ day redemption freezes)
- Example: A London-based quant fund used PPI to recover 22% of losses during the 2023 banking crisis.
2. Professional Liability/E&O Insurance
Best for: Active traders, fund managers
- Protects against:
- Algorithmic trading errors ($2.1B industry losses in 2023)
- Breach of fiduciary duty claims
- Key feature: Covers both traditional and crypto assets
- 2024 Trend: “Dynamic limits” adjusting to portfolio volatility
3. Director & Officer (D&O) Insurance
Best for: PE-backed companies, SPACs
- Critical given rising shareholder lawsuits (up 41% YoY in Q1 2024)
- Enhanced coverage includes:
- ESG-related litigation
- Cybersecurity disclosure failures
- Case Study: A biotech startup avoided bankruptcy using D&O insurance to settle investor claims over delayed FDA trials.
4. Key Person Insurance for VC Portfolios
Best for: Venture capital firms
- Protects against founder/executive mortality/disability
- Valuation-based coverage (typically 2-3x annual revenue)
- Emerging Model: “Talent replacement insurance” funding interim leadership costs
5. Cryptocurrency Custody Insurance
Best for: Digital asset investors
- Addresses cold storage risks and exchange defaults
- Leading providers (Coinbase, Ledger) now offer:
- Smart contract failure coverage
- Quantum computing breach protection
- 2024 Stats: 61% of institutional crypto holders require $50M+ coverage
6. Political Risk Insurance (PRI)
Best for: Emerging market investors
- Covers:
- Expropriation of foreign assets
- Currency inconvertibility
- Contract repudiation
- Hot Zones: Southeast Asia mining projects, African infrastructure deals
7. Cyber Insurance for Algorithmic Traders
Best for: HFT firms, crypto exchanges
- Beyond data breaches:
- Algorithm hijacking ($450M average claim in 2023)
- NFT portfolio theft
- Ransomware targeting trading bots
- Must-have: Real-time threat monitoring integration
Strategic Integration with Investment Decisions
A. Risk-Transfer Cost Analysis
Insurance Type | Typical Cost | Optimal Portfolio Allocation |
---|---|---|
PPI | 1.2-3.8% of AUM | >20% in illiquid assets |
Crypto Custody | 5K−5K−15K/month | >15% in digital assets |
Source: 2024 Goldman Sachs Insurance Advisory Report
B. When to Insure vs. Self-Insure
- Insure if:
- Portfolio concentration >30% in single asset
- Using >4x leverage
- Holding politically exposed assets
- Self-insure if:
- Liquid reserves cover 6x maximum deductible
- Diversification across 8+ uncorrelated assets
The Ifs and VATs of Taxation in Macedonia – Should VAT be Applied in Macedonia?
The Ifs and VATs of Taxation in Macedonia – Should VAT be Applied in Macedonia?
To be justified, taxes should satisfy a few conditions:
Above all, they should encourage economic activity by providing incentives to save and to invest. Savings – transformed into investments- enhance productivity and growth of the economy as a whole.
A tax should be simple – to administer and to comply with. It should be “fair” (progressive, in professional lingo) – although no one seems to agree on what this means.
At best, it should replace other taxes, whose compliance with the above conditions is less rigorous. In this case it will, usually, lead to budget cuts and reduce the overall tax burden.
The most well known tax is the income tax. However, it fails to satisfy even one of the conditions above listed.
To start with, it is staggeringly complicated. The IRS code in the USA sprawls over more than 8,000 pages and 500 forms. This single feature makes it expensive to enforce.
Estimates are that 100 billion USD are spent annually (by both government and taxpayers) to comply with the tax, to administer it and to enforce it.
Income tax is all for consumption and against savings: it taxes income spent on consumption only once – but does so twice with income earmarked for savings (by taxing the interest on it).
Income taxes discriminate against business expenses related to the acquisition of capital assets. These cannot be deducted that same fiscal year. Rather, they have to be depreciated over an “accounting life” which is supposed to reflect the useful life of the asset. This is not the case with almost all other business expenses (labour, to name the biggest) which are deductible in full the same fiscal year expended in.
Income taxes encourage debt financing over equity financing. After all, retained earnings are taxed – while interest expenses are deductible.
We can safely say that income taxes in their current form were somewhat responsible to an increase in consumer credits and in the national debt (as manifested in the budget deficits). They also had a hand in the freefall in the saving rate in the USA (from 3.6% in the 80s to 2.1% in the 90s). And money evading the tax authorities globalised itself using means as diverse as off-shore banking and computer networking. This made taxing sophisticated, big money close to impossible.
No wonder that taxes levied on consumption rather than on income came to be regarded as an interesting alternative.
Consumption taxes are levied at the Point of Sale (POS). They are a mixed lot:
We all get in touch with Excise Taxes. These are imposed on products which are considered to be bad both for the consumer and for society. These products bring about negative externalities: smoke and lung cancer, in the case of tobacco, for instance. So, when tobacco or alcohol are thus taxed – the idea is to modify and reform our behaviour which is deemed to be damaging to society as a whole. About 7% of tax revenues in the USA come from this source – and double that in other countries.
Sales taxes have a more modest calling: to raise revenues by taxing the finished product in the retail level. Unfortunately, so many authorities have the right to impose them – that they vary greatly from one location to another. This adds to the confusion of the taxpayer (and of the retailer) and makes the tax more expensive to collect than it should have been.
Moreover, it distorts business decisions: businesses would tend to locate in places with lower sales taxes.
Sales taxes have a malignant effect on the pricing of finished goods. First, no tax credit is allowed (sales taxes paid on inputs cannot be deducted from the sales tax payable by the retailer). Secondly, the tax tends to cascade, increase the prices of goods (taxable and not, alike), affect investments in capital goods (which are not exempt). It adversely affects exports and domestic goods which compete with imports.
In short: sales taxes tend to impede growth and prevent the optimization of economic resources. Compare this with the VAT (Value Added Taxes): simple, cheap to collect, contain no implicit taxes on inputs. VAT renders the pricing structure of goods transparent. This transparency encourages economic efficiency.
VAT is used in 80 countries worldwide and in 22 out of 24 OECD countries, with the exception of the federal ones: the USA and Australia.
There are three types of VAT. They are very different from each other and the only thing common to them all is the tax base: the value added by the taxpayer.
Economic theory defines Value Added as the sum of all the wages, interest paid on capital, rents paid on property and profits. In the Addition VAT method, these four components are taxed directly. The State of Michigan in the USA uses this method since 1976. Experience shows that this method yields more predictable tax revenues and is less susceptible to business or industry cycles.
The Subtraction method, employed in Japan and a few much smaller countries, is admittedly the simplest. It taxes the difference between a taxpayer’s sales and its taxed inputs. However, it becomes very complicated when the country has a few VAT rates, because the inputs have to be separated according to the various rates.
Thus, the most widely accepted system is the Credit Invoice. Businesses become unpaid tax collectors. They are responsible to get tax receipts from their suppliers (inputs). They will be credited with the VAT amounts on the receipts that they have collected, so they have a major incentive to do so. They will periodically pay the tax authorities the difference between the VAT on their sales and the VAT on their inputs, as evidenced by the receipts that they have collected. If the difference is negative – they will receive a rebate (in certain countries, directly to their bank account).
This is a breathtakingly simple concept of tax collection, which also distributes the costs of administering the tax amongst millions of businesses. In the fiscal year (FY) 1977/8 in the UK – the tax productivity (cost per 1 dollar collected) was 2%. This means that the government paid 2 cents to collect 1 dollar. But businesses paid the remaining 10 cents.
If introduced in the USA, VAT will cost only 3 billion USD (with 30,000 tax officials employed in a separate administration). To collect 1 dollar of income tax costs 0.56% in the USA. But, to collect VAT in Norway costs 0.32%, in Belgium – 1.09% and, on average, 0.68%. In short, VAT does not cost much more than income taxes to collect.
Yet, what is true for government is not necessarily so for their subjects.
The compliance cost for a business in the USA is . It is -282 in other countries.
Small businesses suffer disproportionately more than their bigger brethren. It cost them 1.94% of VAT revenue in FY 1986/7 in the UK. Rather more than big firms (0.003%!).
Compliance costs are 40 times higher for small businesses, on average. This figure masks a larger difference in retail and basic industries (80 times more), in wholesale (60 times more) and in manufacturing and utilities (45 times more).
It was inevitable to think about exempting small business from paying VAT.
If 16 out of 24 million businesses were exempted – the costs of collecting VAT will go down by 33% – while the revenues will decline by only 3%. KPMG claims that businesses with less than ,000 annual turnover (18 out of 24 million) exempted in the USA, revenues would have declined by 1.5%. About 70% of the tax are paid by 10% of the businesses in the UK. For 69% of the businesses there (with turnover of less than 100,000 USD annually) the costs of collection exceed 60% of the revenues. For 96% of the businesses (with less than 1 million USD a year) – the costs exceed 50%. Only in the case of 30,000 companies – are the costs less than 20%. These figures do not include compliance costs (=costs borne by businesses which comply with the tax law).
No wonder that small businesses borrow money to pay that VAT bills. Many of them – though exempt – register voluntarily, to get an endless stream of rebates. This is a major handicap for the tax system and reduces its productivity considerably. In a desperate effort to cope with this law-abiding flood, tax authorities have resorted to longer periods of reporting (instead of monthly). Some of them (in the UK, for one) allow annual VAT reports.
Part of the problem is political. There is little disagreement between economists that VAT is a tax preferable to income taxes. But this statement comes with caveats: the tax must have one rate, universally applied, without sector exemptions. This is the ideal VAT.
The world being less than ideal – and populated by politicians – VATs do not come this way. They contain many rates and exemptions for categories of goods and services.
This mutilated version is called the differentiated VAT.
An ideal VAT is economically neutral – though not equitable. This means that the tax does not affect economic decisions in ways that it shouldn’t. On the other hand, its burden is not equally distributed between the haves and have nots.
VAT taxes value added in each stage of the production process. It does so by levying a tax on goods and services – but what is really taxed are the means of production, labour and capital. Ultimately, shareholders of the taxpaying businesses pay the price – but most of them try to move it on to the consumer, which is where the inequity begins. A rich consumer will pay the same tax as his poorer counterpart – but the tax will constitute a smaller part of his income. This is the best definition yet found for regressivity.
On the face of it – and for a very long time – VAT served as a prime example of regressive, unfair taxation.
For a very long time, that is until the development and propagation of the Life Cycle Theories. The main idea in all these theories was that consumption was not based on annual, current income only. Rather, it took into consideration future flows of income (income expectations). People tended to be constant in their level of spending (in different periods in their lives) – even as their annual income vacillated. With the exception of millionaires and billionaires, people spent most of their income in their lifetime.
VAT was, therefore, a just and equal tax. If income equalled consumption in the long run, VAT was a form of income tax, levied incrementally, with every purchase. It reflected a taxpayer’s ability to pay (=to consume). It was a wealth tax. As such, it necessitated the reduction in other taxes. Taxing money spent on consumption was taxing money already taxed once (as income). This was classic double taxation – a situation which had to be remedied.
But, in any case, VAT was a proportional tax when related to a lifetime’s income – rather than a regressive tax when compared to annual income. Because consumption was a parameter more stable than income – VAT made for a more stable and predictable tax.
Still, old convictions die hard. To appease social lobbies everywhere, politicians came up with solutions which were unanimously rejected by economists.
The most prevalent was exempting a basket of “poor people’s goods” from VAT.
This gave rise to a series of intricate questions:
If food, for instance, was exempted (and it always is) – was this not a subsidy given to rich people as well? Don’t rich people eat?
Moreover, who will decide what is or isn’t food? Is caviar food? What about health food? It was obviously going to be very hard to reach social consensus.
If tax on these products were zeroed – taxes on other products would have had to go up to maintain the same revenue. And so they did. In most countries VAT is levied on less than 45% of the GDP – and is reckoned to be twice as high as it should be.
Some sought to correct this situation by subjecting services to VAT but this proved onerous and impossible to implement in certain sectors of the economy (banking and insurance, to name two).
Others suggested to dedicate VAT generated revenues to progressivity enhancing programs. But this would have entailed the imposition of additional taxes to cover the shortfall.
It is universally thought, that the best method to “compensate” the poor for their regressive plight is to directly transfer money to them from the budget or to give them vouchers (or tax credits) which they can use to get discounts in education, medical treatment, etc. These measures will, at least, not distort economic decisions. And we, the less lucky taxpayers, will know how much we are paying for – and to whom.
This is one of the budgetary items which increase with the introduction of VAT. Research shows that there is a strong correlation between the introduction of VAT and growth in government spending. Admittedly, it is difficult to tell which led to what. Still, certain groups in the population feel that it is their natural right to be compensated for every income reducing measure – by virtue of the fact that they don’t have enough of it.
But VAT is known to have some socially desirable results, as well.
To start with, VAT is a renowned fighter of the Black Economy. This illegitimate branch of economic activity consists of three elements:
The non official sales of legal goods (produced within the tax system)
The sales of illegal goods (which never were within the tax system)
The consumption of money not declared or disclosed to the tax authorities VAT lays its heavy paws on all three activities.
VAT is self enforced. As we said, VAT offers a powerful (money) incentive not to collaborate in tax scams. Every tax receipt means money begotten from the tax authorities.
VAT is incremental. To completely evade paying VAT on a product would require the collaboration of dozens of businesses, suppliers and manufacturers. It is much more plausible to cheat the income tax authorities. VAT is levied on each and every phase of the production cycle – it is possible to avoid it in some of these phases, but never in all of them. VAT is an all-pervasive tax.
VAT is levied on consumption. It is indifferent to the source of the money used to pay for it. Thus, it is as easily applied to “black”, undeclared, money – as it is to completely legal funds.
Surely, there are incentives to avoid and to evade it. If the amount of inputs in a product is very low, the VAT on the sale will be very burdensome. A business non-registered with the VAT authorities will have a sizeable price advantage over his registered competitor.
With a differential VAT system, it is easy to declare the false sale of zero-rated goods or services to linked entities or to falsify the inputs, or both. Even computers (which compare the ratio of sales to inputs) cannot detect anything suspicious in such a scheme.
Yet, these are rare occurrences, easily detectable by cross examining information derived from several databases. All in all, VAT is the ultimate, inevitable tax.
Moreover, it is virtuous. By making consumption more expensive, it would tend to divert capital into investments and savings. At least, this is what our intuition tells us.
Research begs to differ. It demonstrates the resilience of consumers, who maintain their consumption levels in the face of mounting price pressures. They even reduce savings to do so. We say that their consumption is rigid, inelastic. Also, people do not save because it “pays better” to save than to consume. They don’t save because the relative return on savings is higher on savings than on consumption. They save because they are goal oriented. They want to buy something: a car, a house, higher education for their children.
When the yield increases – they will need to save less money to get to the same target in the prescribed period of time. We could say that, to some extent, savings display negative elasticity.
Markets balance themselves through a series of intricate feedback loops and “true models” of economic activity. Take an increase in savings generated by the introduction of VAT: it is bound to be short lived. Why? because the equilibrium will be restored.
Increased savings will increase the amount of capital available and reduce the yields on this capital. A reduction in yield would, in turn, reduce the savings rate.
Moreover, narrow (differentiated, non-ideal) based VATs lead to higher rates of VAT (to generate the same revenue). This reduces the incentives to work and the amount of income available for savings.
In a very thorough research, Ken Militzer found no connection between the introduction of VAT and an increase in the rate of saving in 22 OECD countries since 1965 (VAT was first introduced in France in 1954). He also found no connection between VAT and changes in corporate (profit) and income taxes.
In Europe VAT replaced various turnover taxes so its impact on anything was fairly insignificant. It had no influence on inflation, as well. VAT apparently has two conflicting influences: it raises the general price level through a one time “price shock”, on one hand. On the other hand, it contracts the economy by providing a disincentive to consume. If VAT does influence inflation – its impact will be echoed and amplified through wage indexation and the linking of transfer payments to the Consumer Price Index (CPI). In this case, maybe its effects should be sterilized from the calculations of the CPI.
But research was able to demonstrate only the potentially dangerous contracting, deflationary (stagflationary, to be exact) influences of this tax. The recommendation is surprising: the Central Bank is advised to increase the money supply to accommodate the reverberations of the introduction of this tax.
Finally, VAT is a “border adjustment” tax (under the GATT and WTO charters).
This means that VAT is rebated to the exporter and imposed on the importer.
Prima facie, this should encourage exports – and equally discourage imports.
Surprisingly, this time the intuition is right – albeit for a limited period of time.
Despite a raging debate in economic literature, it seems safe to say the following:
VAT increases the profits of exporters and producers of import substitutes.
VAT increases the investments in the trade sector.
VAT increases exports and decreases imports.
These advantages are, ultimately, partially offset by the movement of exchange rates.
If certain sectors are not taxed – investment will flow to that sector and badly affect the trade sector and the competitiveness of the country in world markets.
With its burgeoning black market, under-developed export industries, huge shortfall in tax revenues – Macedonia urgently needs VAT.
It will do well to learn from the experience of others and introduce a VAT which is as ideal as socially permissible and politically possible.
The draft law that I have seen is a copy – almost verbatim – of laws in the European Union and is riddled with exemption to various goods, services and sectors.
VAT is a good idea – but it seems to be starting on the wrong footing in Macedonia.
Euthanasia and the Right to Die
Euthanasia and the Right to Die
I. Definitions of Types of Euthanasia
Euthanasia, whether in a medical setting (hospital, clinic, hospice) or not (at home) is often erroneously described as “mercy killing”. Most forms of euthanasia are, indeed, motivated by (some say: misplaced) mercy. Not so others. In Greek, “eu” means both “well” and “easy” and “Thanatos” is death.
Euthanasia is the intentional premature termination of another person’s life either by direct intervention (active euthanasia) or by withholding life-prolonging measures and resources (passive euthanasia), either at the express or implied request of that person (voluntary euthanasia), or in the absence of such approval (non-voluntary euthanasia). Involuntary euthanasia – where the individual wishes to go on living – is an euphemism for murder.
To my mind, passive euthanasia is immoral. The abrupt withdrawal of medical treatment, feeding, and hydration results in a slow and (potentially) torturous death. It took Terri Schiavo 13 days to die, when her tubes were withdrawn in the last two weeks of March 2005. Since it is impossible to conclusively prove that patients in PVS (Persistent Vegetative State) do not suffer pain, it is morally wrong to subject them to such potential gratuitous suffering. Even animals should be treated better. Moreover, passive euthanasia allows us to evade personal responsibility for the patient’s death. In active euthanasia, the relationship between the act (of administering a lethal medication, for instance) and its consequences is direct and unambiguous.
As the philosopher John Finnis notes, to qualify as euthanasia, the termination of life has to be the main and intended aim of the act or omission that lead to it. If the loss of life is incidental (a side effect), the agent is still morally responsible but to describe his actions and omissions as euthanasia would be misleading. Volntariness (accepting the foreseen but unintended consequences of one’s actions and omissions) should be distinguished from intention.
Still, this sophistry obscures the main issue:
If the sanctity of life is a supreme and overriding value (“basic good”), it ought to surely preclude and proscribe all acts and omissions which may shorten it, even when the shortening of life is a mere deleterious side effect.
But this is not the case. The sanctity and value of life compete with a host of other equally potent moral demands. Even the most devout pro-life ethicist accepts that certain medical decisions – for instance, to administer strong analgesics – inevitably truncate the patient’s life. Yet, this is considered moral because the resulting euthanasia is not the main intention of the pain-relieving doctor.
Moreover, the apparent dilemma between the two values (reduce suffering or preserve life) is non-existent.
There are four possible situations. Imagine a patient writhing with insufferable pain.
1. The patient’s life is not at risk if she is not medicated with painkillers (she risks dying if she is medicated)
2. The patient’s life is not at risk either way, medicated or not
3. The patient’s life is at risk either way, medicated or not
4. The patient’s life is at risk if she is not medicated with painkillers
In all four cases, the decisions our doctor has to make are ethically clear cut. He should administer pain-alleviating drugs, except when the patient risks dying (in 1 above). The (possible) shortening of the patient’s life (which is guesswork, at best) is immaterial.
Conclusions:
It is easy to distinguish euthanasia from all other forms of termination of life. Voluntary active euthanasia is morally defensible, at least in principle (see below). Not so other types of euthanasia.
II. Who is or Should Be Subject to Euthanasia? The Problem of Dualism vs. Reductionism
With the exception of radical animal rights activists, most philosophers and laymen consider people – human beings – to be entitled to “special treatment”, to be in possession of unique rights (and commensurate obligations), and to be capable of feats unparalleled in other species.
Thus, opponents of euthanasia universally oppose the killing of “persons”. As the (pro-euthanasia) philosopher John Harris puts it:
” … concern for their welfare, respect for their wishes, respect for the intrinsic value of their lives and respect for their interests.”
Ronald Dworkin emphasizes the investments – made by nature, the person involved, and others – which euthanasia wastes. But he also draws attention to the person’s “critical interests” – the interests whose satisfaction makes life better to live. The manner of one’s own death may be such a critical interest. Hence, one should have the right to choose how one dies because the “right kind” of death (e.g., painless, quick, dignified) reflects on one’s entire life, affirms and improves it.
But who is a person? What makes us human? Many things, most of which are irrelevant to our discussion.
Broadly speaking, though, there are two schools of thought:
(i) That we are rendered human by the very event of our conception (egg meets sperm), or, at the latest, our birth; or
(ii) That we are considered human only when we act and think as conscious humans do.
The proponents of the first case (i) claim that merely possessing a human body (or the potential to come to possess such a body) is enough to qualify us as “persons”. There is no distinction between mind and abode – thought, feelings, and actions are merely manifestations of one underlying unity. The fact that some of these manifestations have yet to materialize (in the case of an embryo) or are mere potentials (in the case of a comatose patient) does not detract from our essential, incontrovertible, and indivisible humanity. We may be immature or damaged persons – but we are persons all the same (and always will be persons).
Though considered “religious” and “spiritual”, this notion is actually a form of reductionism. The mind, “soul”, and “spirit” are mere expressions of one unity, grounded in our “hardware” – in our bodies.
Those who argue the second case (ii) postulate that it is possible to have a human body which does not host a person. People in Persistent Vegetative States, for instance – or fetuses, for that matter – are human but also non-persons. This is because they do not yet – or are unable to – exercise their faculties. Personhood is complexity. When the latter ceases, so does the former. Personhood is acquired and is an extensive parameter, a total, defining state of being. One is either awake or asleep, either dead or alive, either in a state of personhood or not
The latter approach involves fine distinctions between potential, capacity, and skill. A human body (or fertilized egg) have the potential to think, write poetry, feel pain, and value life. At the right phase of somatic development, this potential becomes capacity and, once it is competently exercised – it is a skill.
Embryos and comatose people may have the potential to do and think – but, in the absence of capacities and skills, they are not full-fledged persons. Indeed, in all important respects, they are already dead.
Taken to its logical conclusion, this definition of a person also excludes newborn infants, the severely retarded, the hopelessly quadriplegic, and the catatonic. “Who is a person” becomes a matter of culturally-bound and medically-informed judgment which may be influenced by both ignorance and fashion and, thus, be arbitrary and immoral.
Imagine a computer infected by a computer virus which cannot be quarantined, deleted, or fixed. The virus disables the host and renders it “dead”. Is it still a computer? If someone broke into my house and stole it, can I file an insurance claim? If a colleague destroys it, can I sue her for the damages? The answer is yes. A computer is a computer for as long as it exists physically and a cure is bound to be found even against the most trenchant virus.
Conclusions:
The definition of personhood must rely on objective, determinate and determinable criteria. The anti-euthanasia camp relies on bodily existence as one such criterion. The pro-euthanasia faction has yet to reciprocate.
III. Euthanasia and Suicide
Self-sacrifice, avoidable martyrdom, engaging in life risking activities, refusal to prolong one’s life through medical treatment, euthanasia, overdosing, and self-destruction that is the result of coercion – are all closely related to suicide. They all involve a deliberately self-inflicted death.
But while suicide is chiefly intended to terminate a life – the other acts are aimed at perpetuating, strengthening, and defending values or other people. Many – not only religious people – are appalled by the choice implied in suicide – of death over life. They feel that it demeans life and abnegates its meaning.
Life’s meaning – the outcome of active selection by the individual – is either external (such as “God’s plan”) or internal, the outcome of an arbitrary frame of reference, such as having a career goal. Our life is rendered meaningful only by integrating into an eternal thing, process, design, or being. Suicide makes life trivial because the act is not natural – not part of the eternal framework, the undying process, the timeless cycle of birth and death. Suicide is a break with eternity.
Henry Sidgwick said that only conscious (i.e., intelligent) beings can appreciate values and meanings. So, life is significant to conscious, intelligent, though finite, beings – because it is a part of some eternal goal, plan, process, thing, design, or being. Suicide flies in the face of Sidgwick’s dictum. It is a statement by an intelligent and conscious being about the meaninglessness of life.
If suicide is a statement, than society, in this case, is against the freedom of expression. In the case of suicide, free speech dissonantly clashes with the sanctity of a meaningful life. To rid itself of the anxiety brought on by this conflict, society cast suicide as a depraved or even criminal act and its perpetrators are much castigated.
The suicide violates not only the social contract but, many will add, covenants with God or nature. St. Thomas Aquinas wrote in the “Summa Theologiae” that – since organisms strive to survive – suicide is an unnatural act. Moreover, it adversely affects the community and violates the property rights of God, the imputed owner of one’s spirit. Christianity regards the immortal soul as a gift and, in Jewish writings, it is a deposit. Suicide amounts to the abuse or misuse of God’s possessions, temporarily lodged in a corporeal mansion.
This paternalism was propagated, centuries later, by Sir William Blackstone, the codifier of British Law. Suicide – being self-murder – is a grave felony, which the state has a right to prevent and to punish for. In certain countries this still is the case. In Israel, for instance, a soldier is considered to be “military property” and an attempted suicide is severely punished as “the corruption of an army chattel”.
Paternalism, a malignant mutation of benevolence, is about objectifying people and treating them as possessions. Even fully-informed and consenting adults are not granted full, unmitigated autonomy, freedom, and privacy. This tends to breed “victimless crimes”. The “culprits” – gamblers, homosexuals, communists, suicides, drug addicts, alcoholics, prostitutes – are “protected from themselves” by an intrusive nanny state.
The possession of a right by a person imposes on others a corresponding obligation not to act to frustrate its exercise. Suicide is often the choice of a mentally and legally competent adult. Life is such a basic and deep set phenomenon that even the incompetents – the mentally retarded or mentally insane or minors – can fully gauge its significance and make “informed” decisions, in my view.
The paternalists claim counterfactually that no competent adult “in his right mind” will ever decide to commit suicide. They cite the cases of suicides who survived and felt very happy that they have – as a compelling reason to intervene. But we all make irreversible decisions for which, sometimes, we are sorry. It gives no one the right to interfere.
Paternalism is a slippery slope. Should the state be allowed to prevent the birth of a genetically defective child or forbid his parents to marry in the first place? Should unhealthy adults be forced to abstain from smoking, or steer clear from alcohol? Should they be coerced to exercise?
Suicide is subject to a double moral standard. People are permitted – nay, encouraged – to sacrifice their life only in certain, socially sanctioned, ways. To die on the battlefield or in defense of one’s religion is commendable. This hypocrisy reveals how power structures – the state, institutional religion, political parties, national movements – aim to monopolize the lives of citizens and adherents to do with as they see fit. Suicide threatens this monopoly. Hence the taboo.
Does one have a right to take one’s life?
The answer is: it depends. Certain cultures and societies encourage suicide. Both Japanese kamikaze and Jewish martyrs were extolled for their suicidal actions. Certain professions are knowingly life-threatening – soldiers, firemen, policemen. Certain industries – like the manufacture of armaments, cigarettes, and alcohol – boost overall mortality rates.
In general, suicide is commended when it serves social ends, enhances the cohesion of the group, upholds its values, multiplies its wealth, or defends it from external and internal threats. Social structures and human collectives – empires, countries, firms, bands, institutions – often commit suicide. This is considered to be a healthy process.
More about suicide, the meaning of life, and related considerations – HERE.
Back to our central dilemma:
Is it morally justified to commit suicide in order to avoid certain, forthcoming, unavoidable, and unrelenting torture, pain, or coma?
Is it morally justified to ask others to help you to commit suicide (for instance, if you are incapacitated)?
Imagine a society that venerates life-with-dignity by making euthanasia mandatory (Trollope’s Britannula in “The Fixed Period”) – would it then and there be morally justified to refuse to commit suicide or to help in it?
Conclusions:
Though legal in many countries, suicide is still frowned upon, except when it amounts to socially-sanctioned self-sacrifice.
Assisted suicide is both condemned and illegal in most parts of the world. This is logically inconsistent but reflects society’s fear of a “slippery slope” which may lead from assisted suicide to murder.
IV. Euthanasia and Murder
Imagine killing someone before we have ascertained her preferences as to the manner of her death and whether she wants to die at all. This constitutes murder even if, after the fact, we can prove conclusively that the victim wanted to die.
Is murder, therefore, merely the act of taking life, regardless of circumstances – or is it the nature of the interpersonal interaction that counts? If the latter, the victim’s will counts – if the former, it is irrelevant.
V. Euthanasia, the Value of Life, and the Right to Life
Few philosophers, legislators, and laymen support non-voluntary or involuntary euthanasia. These types of “mercy” killing are associated with the most heinous crimes against humanity committed by the Nazi regime on both its own people and other nations. They are and were also an integral part of every program of active eugenics.
The arguments against killing someone who hasn’t expressed a wish to die (let alone someone who has expressed a desire to go on living) revolve around the right to life. People are assumed to value their life, cherish it, and protect it. Euthanasia – especially the non-voluntary forms – amounts to depriving someone (as well as their nearest and dearest) of something they value.
The right to life – at least as far as human beings are concerned – is a rarely questioned fundamental moral principle. In Western cultures, it is assumed to be inalienable and indivisible (i.e., monolithic). Yet, it is neither. Even if we accept the axiomatic – and therefore arbitrary – source of this right, we are still faced with intractable dilemmas. All said, the right to life may be nothing more than a cultural construct, dependent on social mores, historical contexts, and exegetic systems.
Rights – whether moral or legal – impose obligations or duties on third parties towards the right-holder. One has a right AGAINST other people and thus can prescribe to them certain obligatory behaviors and proscribe certain acts or omissions. Rights and duties are two sides of the same Janus-like ethical coin.
This duality confuses people. They often erroneously identify rights with their attendant duties or obligations, with the morally decent, or even with the morally permissible. One’s rights inform other people how they MUST behave towards one – not how they SHOULD or OUGHT to act morally. Moral behavior is not dependent on the existence of a right. Obligations are.
To complicate matters further, many apparently simple and straightforward rights are amalgams of more basic moral or legal principles. To treat such rights as unities is to mistreat them.
Take the right to life. It is a compendium of no less than eight distinct rights: the right to be brought to life, the right to be born, the right to have one’s life maintained, the right not to be killed, the right to have one’s life saved, the right to save one’s life (wrongly reduced to the right to self-defence), the right to terminate one’s life, and the right to have one’s life terminated.
None of these rights is self-evident, or unambiguous, or universal, or immutable, or automatically applicable. It is safe to say, therefore, that these rights are not primary as hitherto believed – but derivative.
Go HERE to learn more about the Right to Life.
Of the eight strands comprising the right to life, we are concerned with a mere two.
The Right to Have One’s Life Maintained
This leads to a more general quandary. To what extent can one use other people’s bodies, their property, their time, their resources and to deprive them of pleasure, comfort, material possessions, income, or any other thing – in order to maintain one’s life?
Even if it were possible in reality, it is indefensible to maintain that I have a right to sustain, improve, or prolong my life at another’s expense. I cannot demand – though I can morally expect – even a trivial and minimal sacrifice from another in order to prolong my life. I have no right to do so.
Of course, the existence of an implicit, let alone explicit, contract between myself and another party would change the picture. The right to demand sacrifices commensurate with the provisions of the contract would then crystallize and create corresponding duties and obligations.
No embryo has a right to sustain its life, maintain, or prolong it at its mother’s expense. This is true regardless of how insignificant the sacrifice required of her is.
Yet, by knowingly and intentionally conceiving the embryo, the mother can be said to have signed a contract with it. The contract causes the right of the embryo to demand such sacrifices from his mother to crystallize. It also creates corresponding duties and obligations of the mother towards her embryo.
We often find ourselves in a situation where we do not have a given right against other individuals – but we do possess this very same right against society. Society owes us what no constituent-individual does.
Thus, we all have a right to sustain our lives, maintain, prolong, or even improve them at society’s expense – no matter how major and significant the resources required. Public hospitals, state pension schemes, and police forces may be needed in order to fulfill society’s obligations to prolong, maintain, and improve our lives – but fulfill them it must.
Still, each one of us can sign a contract with society – implicitly or explicitly – and abrogate this right. One can volunteer to join the army. Such an act constitutes a contract in which the individual assumes the duty or obligation to give up his or her life.
The Right not to be Killed
It is commonly agreed that every person has the right not to be killed unjustly. Admittedly, what is just and what is unjust is determined by an ethical calculus or a social contract – both constantly in flux.
Still, even if we assume an Archimedean immutable point of moral reference – does A’s right not to be killed mean that third parties are to refrain from enforcing the rights of other people against A? What if the only way to right wrongs committed by A against others – was to kill A? The moral obligation to right wrongs is about restoring the rights of the wronged.
If the continued existence of A is predicated on the repeated and continuous violation of the rights of others – and these other people object to it – then A must be killed if that is the only way to right the wrong and re-assert the rights of A’s victims.
The Right to have One’s Life Saved
There is no such right because there is no moral obligation or duty to save a life. That people believe otherwise demonstrates the muddle between the morally commendable, desirable, and decent (“ought”, “should”) and the morally obligatory, the result of other people’s rights (“must”). In some countries, the obligation to save a life is codified in the law of the land. But legal rights and obligations do not always correspond to moral rights and obligations, or give rise to them.
VI. Euthanasia and Personal Autonomy
The right to have one’s life terminated at will (euthanasia), is subject to social, ethical, and legal strictures. In some countries – such as the Netherlands – it is legal (and socially acceptable) to have one’s life terminated with the help of third parties given a sufficient deterioration in the quality of life and given the imminence of death. One has to be of sound mind and will one’s death knowingly, intentionally, repeatedly, and forcefully.
Should we have a right to die (given hopeless medical circumstances)? When our wish to end it all conflicts with society’s (admittedly, paternalistic) judgment of what is right and what is good for us and for others – what should prevail?
One the one hand, as Patrick Henry put it, “give me liberty or give me death”. A life without personal autonomy and without the freedom to make unpopular and non-conformist decisions is, arguably, not worth living at all!
As Dworkin states:
“Making someone die in a way that others approve, but he believes a horrifying contradiction of his life, is a devastating, odious form of tyranny”.
Still, even the victim’s express wishes may prove to be transient and circumstantial (due to depression, misinformation, or clouded judgment). Can we regard them as immutable and invariable? Moreover, what if the circumstances prove everyone – the victim included – wrong? What if a cure to the victim’s disease is found ten minutes after the euthanasia?
Conclusions:
Personal autonomy is an important value in conflict with other, equally important values. Hence the debate about euthanasia. The problem is intractable and insoluble. No moral calculus (itself based implicitly or explicitly on a hierarchy of values) can tell us which value overrides another and what are the true basic goods.
VII. Euthanasia and Society
It is commonly accepted that where two equally potent values clash, society steps in as an arbiter. The right to material welfare (food, shelter, basic possessions) often conflicts with the right to own private property and to benefit from it. Society strikes a fine balance by, on the one hand, taking from the rich and giving to the poor (through redistributive taxation) and, on the other hand, prohibiting and punishing theft and looting.
Euthanasia involves a few such finely-balanced values: the sanctity of life vs. personal autonomy, the welfare of the many vs. the welfare of the individual, the relief of pain vs. the prolongation and preservation of life.
Why can’t society step in as arbiter in these cases as well?
Moreover, what if a person is rendered incapable of expressing his preferences with regards to the manner and timing of his death – should society step in (through the agency of his family or through the courts or legislature) and make the decision for him?
In a variety of legal situations, parents, court-appointed guardians, custodians, and conservators act for, on behalf of, and in lieu of underage children, the physically and mentally challenged and the disabled. Why not here?
We must distinguish between four situations:
1. The patient foresaw the circumstances and provided an advance directive (living will), asking explicitly for his life to be terminated when certain conditions are met.
2. The patient did not provide an advanced directive but expressed his preference clearly before he was incapacitated. The risk here is that self-interested family members may lie.
3. The patient did not provide an advance directive and did not express his preference aloud – but the decision to terminate his life is commensurate with both his character and with other decisions he made.
4. There is no indication, however indirect, that the patient wishes or would have wished to die had he been capable of expression but the patient is no longer a “person” and, therefore, has no interests to respect, observe, and protect. Moreover, the patient is a burden to himself, to his nearest and dearest, and to society at large. Euthanasia is the right, just, and most efficient thing to do.
Conclusions:
Society can (and often does) legalize euthanasia in the first case and, subject to rigorous fact checking, in the second and third cases. To prevent economically-motivated murder disguised as euthanasia, non-voluntary and involuntary euthanasia (as set in the forth case above) should be banned outright.
VIII. Slippery Slope Arguments
Issues in the Calculus of Rights – The Hierarchy of Rights
The right to life supersedes – in Western moral and legal systems – all other rights. It overrules the right to one’s body, to comfort, to the avoidance of pain, or to ownership of property. Given such lack of equivocation, the amount of dilemmas and controversies surrounding the right to life is, therefore, surprising.
When there is a clash between equally potent rights – for instance, the conflicting rights to life of two people – we can decide among them randomly (by flipping a coin, or casting dice). Alternatively, we can add and subtract rights in a somewhat macabre arithmetic.
Thus, if the continued life of an embryo or a fetus threatens the mother’s life – that is, assuming, controversially, that both of them have an equal right to life – we can decide to kill the fetus. By adding to the mother’s right to life her right to her own body we outweigh the fetus’ right to life.
The Difference between Killing and Letting Die
Counterintuitively, there is a moral gulf between killing (taking a life) and letting die (not saving a life). The right not to be killed is undisputed. There is no right to have one’s own life saved. Where there is a right – and only where there is one – there is an obligation. Thus, while there is an obligation not to kill – there is no obligation to save a life.
Anti-euthanasia ethicists fear that allowing one kind of euthanasia – even under the strictest and explicit conditions – will open the floodgates. The value of life will be depreciated and made subordinate to considerations of economic efficacy and personal convenience. Murders, disguised as acts of euthanasia, will proliferate and none of us will be safe once we reach old age or become disabled.
Years of legally-sanctioned euthanasia in the Netherlands, parts of Australia, and a state or two in the United States (living wills have been accepted and complied with throughout the Western world for a well over a decade now) tend to fly in the face of such fears. Doctors did not regard these shifts in public opinion and legislative climate as a blanket license to kill their charges. Family members proved to be far less bloodthirsty and avaricious than feared.
Conclusions:
As long as non-voluntary and involuntary types of euthanasia are treated as felonies, it seems safe to allow patients to exercise their personal autonomy and grant them the right to die. Legalizing the institution of “advance directive” will go a long way towards regulating the field – as would a new code of medical ethics that will recognize and embrace reality: doctors, patients, and family members collude in their millions to commit numerous acts and omissions of euthanasia every day. It is their way of restoring dignity to the shattered lives and bodies of loved ones.