Health Cost

The issue about health care is the cost of it.  What we call insurance has morphed into something else.

Insurance is something you buy to protect yourself from a potential risk and you pay based on the likelihood of that risk occurring and the cost if it does.  So for example is your home is worth $100,000 and the risk of losing it to a fire is 1%, you would theoretically pay 1% of that $100,000 or $1000 to insure it (plus admin and profit).  As long as the number of people in similar circumstances buy insurance at the end of the day everyone is covered, claims are paid and the insurer makes some profit.

Now if you want to cover a house that has already burned down, it is no longer insurance.  If your house burns down and you can get it replaced by paying a premium of $1000, it would be a pretty sweet deal and you would have no reason to buy insurance before the loss occurred.

Obviously no one could make money selling you that coverage so it would be impossible to get.

Now in health insurance we cover things that are guaranteed to happen and now we cover pre-existing conditions.

So the issue is no longer one of risk, the risk is 100% but simply how do we provide this coverage at a reasonable price.  Well if you take those 100% risk people and add them to people who have no existing condition you can average out the cost.

Of course this makes healthy people pay more but allows those with catastrophic bills to pay something they can afford.

This is sort of what the Affordable Care Act did and why it mandated coverage, to force young healthy people to pay some of the cost of the ones already ill.  Now of course there was some chance that the young healthy people would switch ranks and end up on more or less even, but in this case is it better to have your house burn down to collect insurance or better to nor have it burn down?  I think we all prefer the latter even though it means we pay year after year with no return. 

Similarly, the best thing that can happen to young people is that they live a long healthy life, even if they then pay for almost nothing.