Choice And Risk

Ace makes a great point on one of the many problems in the health care bill:

On Fox & Friends, they offered another good talking point: Currently 90% of all Americans are covered by insurance. Obama’s vaunted plan will cover, theoretically, another 7%.

So: We’re destroying the entire system to move from 90% to 97% coverage? And that 7%, of course, includes a lot of young people who think they don’t need health insurance because they’re young and healthy (and, in fact, they’re right, according to the statistics; even more right when you consider that each young person is forced to pay way too much for health care, as he subsidizes older customers).

I’m one of those people.  I don’t have health insurance now, and I haven’t ever carried it when I wasn’t working a W-2 job, because I’m generally healthy and don’t particularly want to subsidize people who are more likely to require medical care. It’s possible, of course, I could regret this decision due to circumstances beyond my control, but I’d prefer to put that money into investments and play the odds by making an effort to stay healthy via exercise and supplements and generally engaging in low-risk behavior.

Let’s take a closer look at the numbers on that.  The sum of the time I’ve been without insurance is  about four years. I think the average premium for health care insurance for someone in my position has been around $300/month over the last four years (I’ll use the last four years for simplicity, although the period I wasn’t covered is actually spread over a longer period).  That’s about $3,600 a year (we’ll conservatively ignore deductibles, too, which reduce the benefit).  In that period I had essentially no medical costs, so at the moment I’m ahead about $16,000 if we discount at 7%.

So in answer to the inevitable “But what if you get sick or need medical care tomorrow?”  —  as long as it costs less than $16,000, I’ll still be ahead.  That’s not a sure thing, but the odds are in my favor, and the amount I’ve saved gets bigger every year.  (If I didn’t have that money available, of course, the benefit of insurance would be somewhat greater as I might face a situation in which I could not afford necessary care or could be forced to declare bankruptcy, but then that’s the benefit of saving.)

Of course, the reason we pay for insurance is to avoid having to take this gamble, but the price they’re asking is too high. The benefit of being insured is not commensurate with the cost for someone young and healthy and low-risk if they have to subsidize others.  Now, if someone came along with a policy priced for people who are young and healthy and low-risk, I would take it, because it would be a lot cheaper, but I’m not sure that’s even legal.

Here’s where things gets both scary and infuriating.  Under the health-care proposal currently being considered, I won’t have this choice anymore.  It will essentially be illegal to not carry health insurance, and I will be fined thousands of dollars a year if I continue to do what I’m currently doing.   And the really galling part of this is I’m one of those “uninsured” people they claim to be helping.