The latest version of the health care legislation has weakened the requirement that all Americans must have health insurance. Coupled with the inability under the proposed law for health insurance companies to deny coverage to people for poor health, this concession would mean that Americans could purchase insurance at any time and therefore would have little or no motivation to get health insurance while still healthy.
What Washington has failed to account for is that the very idea of insurance is based on the idea of spreading the costs between people who file a claim and those who do not. The cost of premiums is kept down precisely because some people will not die within the span of a term life insurance policy, or will not have a car accident, in the case of an auto insurance policy.
If we imagine a situation where the only people who bought life insurance were terminally ill, we can imagine that the price of that insurance would be through the roof. If you could buy auto insurance retroactively (i.e. after you had an accident), no one would buy auto insurance otherwise, and the price of auto insurance would be identical with the cost of the accident itself.
What Congress is proposing with its new bill is precisely this kind of situation: a health insurance plan that the healthy don’t need to pay for because they can purchase it as soon as their health goes bad. Given the nature of the insurance Capitol Hill is proposing, the health insurance companies have a valid complaint—the cost of health insurance in such a system will skyrocket because the cost of insuring someone who is healthy will not average out with the cost of insuring someone who has enormous medical expenses. The cost of insurance will only be an average of enormous medical bills, which will, in fact, discourage the healthy from buying in and paying the high premiums.
The system as it stands right now clearly needs a change. The healthy can get affordable health insurance but the sick are denied. Under the new law, however, no one will be able to get affordable health insurance because the healthy will not have any motivation to get it, and the sick will not be able to afford it. A third option needs to be proposed along the lines of the laws regarding car insurance. When it comes to car insurance all drivers are required to have insurance. Similarly all citizens should be required to carry health insurance. If they can not afford it, then the government should step in and provide it for them in a way that minimizes costs and creates personal accountability for the recipients of government help.