Milei’s insurance revolution: Private policies and agencies to eradicate public services

In Javier Milei’s ideal world, public services would be replaced by a private insurance system covering everything from healthcare and education to security and justice. The ultraliberal president — who once described himself as “the mole that destroys the state from within” — intends to begin Argentina’s journey toward that world with an “insurance revolution,” a package of reforms that, as he announced last Wednesday, his government is finishing drafting.

Besides regarding the state as “a criminal organization” and “worse than the mafia,” Milei argues that it functions as an “insurer of last resort.” His examples are straightforward: in old age, it provides a pension; in sickness, a public hospital.

“If we develop a private insurance market that is competitive, deep and comprehensive, the justification for state intervention disappears on its own,” he explained repeatedly in speeches and interviews over recent weeks.

The “insurance revolution” forms part of a broader package of measures with which Milei hopes to relaunch his administration. The president is seeking to regain political momentum and move beyond the prolonged crisis triggered by the corruption scandal involving his former chief of staff, Manuel Adorni, who resigned two weeks ago.

Against that backdrop, Milei has announced plans to send Congress a series of interrelated bills: measures designed to introduce a U.S.-style government shutdown mechanism when budget authorization expires; guarantee the central bank’s independence from political interference; and, among other things, expand and deregulate the insurance market.

The government has so far provided few details about the proposal itself, saying only that it is being drafted by Deregulation and State Transformation Minister Federico Sturzenegger.

Clues to Milei’s ambitions come instead from his public remarks and from a book the president has described as “wonderful” and recently distributed to his cabinet ministers: Chaos Theory, by U.S. economist Robert Murphy, a fellow devotee of the Austrian school of economics.

In Chaos Theory, originally published in 2002, Murphy argues that abolishing the state would not produce lawless chaos. Instead, he envisions a society in which voluntary institutions, private arbitration and contractual relationships would provide many of the services currently supplied by government. Instead, voluntary institutions would emerge to resolve everyday disputes peacefully and efficiently. According to Murphy, the market would prove not only more efficient but also fairer than state institutions.

Insurance companies would occupy a central place in this system, effectively serving as private guarantors of social and commercial relationships. By assessing risk and providing compensation when agreements break down, they would replace many of the protections now offered by public institutions. Individuals without insurance, meanwhile, would struggle to gain the trust of others and could find themselves excluded from large areas of economic and social life.

This vision is carried to its logical conclusion. The replacement of public institutions by private ones extends to the courts, which would be supplanted by arbitration agencies; prisons, which Murphy imagines as high-security private companies competing for inmates; and even the police and the military, whose functions would be assumed by private detectives and security firms.

Murphy takes the logic a step further by addressing the question of children. In his view, basic prohibitions against child abuse and neglect could be written into marriage contracts. In a society governed by market principles, he argues, parental rights would become transferable, giving rise to a fully functioning market in which rights over children could be bought and sold. Far from seeing this as troubling, Murphy contends that such a system could actually reduce child abuse, reasoning that negligent parents would be the most likely to surrender their children for adoption, while loving couples would be willing to pay more to raise them.

Underlying the anarcho-capitalist worldview shared by Murphy and Milei is the assumption that society is little more than a collection of individuals, unconstrained by historical or socio-economic factors, whose primary relationships are economic and contractual. Seeking to reassure the public, Milei told the Latam Economic Forum in late May that his proposal envisages “an orderly transition to the new system.” “It’s something that starts now, you begin to work on it, but it takes time. It’s not instantaneous,” he said.

‘Entirely theoretical and inapplicable’

The lack of detail about how such an “insurance revolution” could actually be implemented in Argentina has unsettled companies in the sector.

“No one has reliable information about what the government is preparing; it’s a huge unknown,” admits a source who works with two insurance trade associations and asked not to be named. “It’s not so easy to deregulate the insurance market. Not just anyone can begin offering policies; you need backing and solvency. And there has to be someone to ensure that commitments are fulfilled.”

Entrepreneurs are also unconvinced by Murphy’s book: “People who read the book Milei gave his ministers say it is absolutely theoretical and inapplicable; it’s the work of someone who has never run an insurance company.”

To analyze Milei’s still-abstract proposal, political scientist Oscar Oszlak suggests comparing it with global experience on the subject. “Nowhere have state services been massively replaced by private insurance,” he says. “The balance shows that, while in some specific areas the private sector can bring innovation or greater speed than states, in general what they tend to produce is social exclusion.”

“In pursuit of profit, private companies produce clear market segmentation, targeting the wealthy, the young or the healthy, widening social gaps,” explains Oszlak, an adjunct professor at the University of Buenos Aires, who has received an honorary doctorate from around 10 universities.

Cases with “some degree of success,” he details, “are those that, first, use mixed models, that is, public-private systems, and, second, are heavily regulated. When attempts were made to fully privatize essential services, failures were substantial.” Oszlak considers the idea of privatizing the courts “completely absurd.” And on prisons he notes: “If a prison is a private company, it has an incentive to maintain full occupancy. Even overcrowding, if possible. So it won’t be interested in rehabilitation policies for inmates, for example, or parole. Obviously, there the public goals and private profit motives conflict.”

Drawing on decades of research into public administration, Oszlak describes the Argentine state as “misshapen; it has too much of some things and too little of others: human resources, infrastructure, goods and services. It needs extensive planning and a thorough study of the public value of what it does.” But that, he says, requires a complex approach. “A microscope or magnifying glass seem much more appropriate instruments than a chainsaw,” he says in reference to Milei’s so-called chainsaw of cuts to the public sector. “The chainsaw produces disasters.”

Sign up for our weekly newsletter to get more English-language news coverage from EL PAÍS USA Edition