Insurance is managing risk, nothing more.
When an outside party dumps an inordinate amount of risk into the equation, and then demands the same coverage, management becomes an extinct species.
True—but the risk (once known and put into statistical data)can be managed by the appropriate premiums.
In my burning barn example, for instance, suppose the burning barn was worth 100,000 to replace and it is known that it will be a total loss, then the appropriate ‘insurance’ premium would be $100,000 plus administrative expenses.
Obviously, the owner of the barn wouldn’t agree to paying more that it was worth and would reject the ‘insurance policy’. In effect this happens all the time when folks ask for an insurance quote on high risk ventures.
One of the highest risk occupations for life insurance is crop dusters who crash and die with alarming regularity. There are old crop dusters and bold crop dusters, but there are no old, bold crop dusters. Yet Actuarial data produces a risk premium for that occupation that is far higher than the normal premium.
However—if the farmer’s neighbors can be forced to come up with the $100,000 plus the administration fees-—then he would think this is a great public service for poor barn owners and he would sign up before the embers cooled.
If we get more people with pre-existing health problems into the system than young healthy people who can pay enough to take care of the higher risk (the farmers neighbors)then the Obamacare program will go into an increasing spiral of higher premiums and fewer young people who won’t want to pay.
And all of this is unnecessary since folks with pre-existing conditions go to all sorts of government and hospital programs for those who can’t pay their own way. We should have tweaked this system.