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Health care is not an insurance

March 14, 2017

Why covering healthcare costs through insurance does not work.

If we picture a situation where a Tornado might hit my house, very few houses will actually be hit — it’s mostly unpredictable except for some zones with high risk. So we form a pool of a million people who put in a reasonable amount of money to cover the Thousand of homes that will be hit. That’s how Insurance works.

On the other hand Healthcare is not like this at all. People with poor health and illnesses and known existing conditions by analogy would be a group of homes that would be marked with a certainty to be hit by a tornado. We could not really form a risk pool unless we came right out and said we’re going to tax every other homeowner at much higher than their risk, to pay for the houses we know were going to be hit. So healthcare insurance for 24 million people to include people with known conditions cannot come from an insurance pool. For some people who are healthy and young to pay for the high-risk group is no different than a specialized tax on young people who are healthy.

Alternatively to say people should just buy insurance at market price from their income is not workable when Insurance can be 20, 30 or 40% of a person’s income who earns minimum wage. A real solution is to put aside funds from taxpayer money and expect that’s some HealthCare coverage at a reasonable level is provided to everyone irrespective of income. It would be a form of Charity Hospital System where anyone could go in and with a little or no paperwork could get good world class Healthcare. World class Healthcare would not be the high-end, high costs care with every type of procedure, every type of treatment that people now receive.

Experts continue to push the idea that this is some type of insurance with a shared risk. It is not. We can accept that some people have lifestyles that contribute to poor health. We cannot really put them into an assigned risk category and expect them to pay more. The cost is too high now and it’s not like if I give up a pack of cigarettes a day I could pay for healthcare.

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