| I’m repeating myself, but you are wrong in at least two ways. Health insurance in the US is not conducted in any way like the over simplified, text book example you provide. There exists no real world example of health insurance that functions as you describe. There is the obvious problem that there is nowhere near that level of precision in anticipating the given level of risk for any individual getting a certain disease, especially as most populations are fairly heterogeneous when it comes to health risk profile. The insurance companies use statistical tools to estimate the average risk of insuring a pool of people with some element of similarity, like a pre existing conditions. This is a far cry from being able to evaluate the risk profile of a given individual. The complaints people have about being rejected for coverage based on a pre-exsisting condition, when they think that condition doesn’t really make them that risky reflect the imprecision of the actual tools. This is also illustrated by these blanket denials: insurance companies are rejecting populations that the feel cannot be adequately evaluated for risk. There is another aspect of such complaints (about blanket denial of coverage) which come from the issue that some people simply do have a health condition that they cannot cover the expected cost of. This is a societal issue, and different socities deal with it differently. It inevitably involves some sharp elbows between the various interests involved. In the US, for historical reasons, a big method of covering the costs of those who can’t afford the full premium was through the patchwork system of employee health plans, complementing government run plans like social security, Medicare, Medicade, local government programs, and charitable programs. As imperfect as the system is, it remains the case that the health care coverage of high risk individuals, meaning those who can’t cover the full cost of a risk based premium, relies on what is known as “health insurance.” |
This doesn’t matter at all, on account of the way variances from independent RVs add up. Look up the Bates distribution as an example. Variance over mean goes down as the square root of the number of independent RVs (insurees). That’s like half the point of insurance.
> was through the patchwork system of employee health plans,
These were the result of highly nonlinear tax policy during WWII, not the reasons you’re claiming.