>>Real insurance is a hedge against extraordinary and unlikely expenses - like a house fire or catastrophic illness.
>>Using insurance to cover day to day expenses like a normal doctor visit guarantees high and rising costs.

Agreed. I don't know why literally everybody I meet in the US calls it insurance. It's like insuring your house against routine maintenance.

But there is a problem with allowing people to opt out of some coverage to hold down cost. Continuing your house insurance theme (and admittedly simplistic:)

- Say there's a town on land with rolling slopes down to a river.
- The people on the desirable river frontage are at risk of occasional flood, so they want flood insurance.
- Further up the slope, they declare that "gravity is my friend" and decline flood insurance, to hold down their own costs.
- This means the people on the river frontage have to cover the full underwritten flood risk. Premiums are steep.
- Meanwhile up on the slopes there's risk of soil erosion and slips. Householders want to insure against this.
- Down on the river, the granite steppes have no real risk of slips, so with premiums already sky high because of flood risk, riversiders decline erosion and slip insurance.
- Now the premiums on the hill are driven up to cover their own risk.
- My question is: how much have the householders saved by refusing to share others' risk?
- Consider the consequences of sharing risk evenly:
- Many (most?) policyholders will end up with similar premiums, except with no exclusions.
- Administration is substantially reduced which saving the prevailing law forces the insurer to pass back to policyholders. This was an ACA provision and the rarity of its occurrence confirms accuracy of underwriting when there's an incentive (and that many insurers made a loss, but lets not wreck the metaphor!)
- The only people who should feel aggrieved are those on the rises with minimal flood or slip risk- the young and healthy in the case of healthcare.
- Which is where the metaphor starts to fail all by itself. In fact, the surpluses from the young ought to be invested against their own distant future costs- since morbidity is a predictable event unlike a house fire.
- Lack of any such previous preparation justifies insurers to keep doing it, maximizing dividends and simply increasing premiums to match cost inflation. After all, the major risks of their "insurance" turn back into a taxpayer burden once the policyholder reaches 65 - and wouldn't you know it, the single payer for seniors also hasn't prepared for the future, instead building up a bumper $47T deficit to be presented for payment by today's school kids.

For the ACA to have worked, they needed young low-risk people to take policies. Yes, their surpluses would be used to pay for others' care- just as your premiums help pay if your neighbor has a fire. The problem is that healthy people could and did refuse to take insurance with few consequences. Who can blame them if they'd figured out various other time bombs already left for them. So riversiders were left to shoulder their own risk. Prices rise and the "death spiral" has begun.

IMHO there are 3 mindset changes to de-dramatize healthcare funding so you can start to look at why US care is so expensive despite still leaving out millions of people:

1) One way or another, everybody who earns a crust has to pay into a scheme with comprehensive cover.
2) Rather than resenting the premium unless consumption exceeds contribution, making no claims this year ought to be cause for celebration- as it is for fire insurance.

Sounds simple, but the scenario of the Obama Administration forcing Little Sisters of the Poor to offer contraception coverage in their policies, shows how difficult it can be to require blanket coverage. One good cause to allow exclusions quickly snowballs, with Mormon and Muslim communities then protesting contribution to alcohol-related illness and soon we're back to square one.

And a third mindset change, for your enjoyment:

3) Would the 20% insurer profit allowed under the ACA be better invested instead to try to make a dent in future liabilities?