Comments on what insurance is and the cost of the uninsured

What is insurance?  Insurance is the pooling together of money by a group of people.  The money is then available to a member of the group if the member faces a costly event. The event (such as getting cancer) could strike anyone in the group and it is not knows beforehand which person the event will strike.  Usually the likelihood of a member of the group experiencing the event but is known to some degree.  Insurance is often handled through insurance companies, which create the pools of money from insurance premiums.

What happens if a person in our society develops a catastrophic illness and does not have health insurance? I believe our hospitals are required to treat the person.  Who pays?  I think the hospitals and doctors eat the cost when a person’s resources run out.  To cover the costs that they eat, hospitals and doctors have to charge persons who can pay more.  So, the cost of medical care includes having to pay the bills of those who do not have the resources to pay and who do not have insurance.  For persons who do pay, often insurance companies pay most of the bill.  It follows that insurance companies must charge higher premiums.  Insurance companies must cover the increase in the cost of the medical care due to those who cannot pay their bills.  So, requiring everyone to have health insurance simply means that hospitals and doctors are not eating the cost of the uninsured.  Since everyone is at risk and, for most illnesses, we do not know beforehand who will get ill, requiring everyone to have insurance makes sure that everyone pays their fair share.  (Likewise for injuries.)  And we know, often a person who gets ill without the resources to cover the bills ends up in bankruptcy, a tragedy.

Why subsidize low income persons?  If money could be made from insuring the poor, you can be sure someone would be doing it, that is a tenet of capitalism.  We have Medicaid for some of those with virtually no money and Medicare for the elderly.  Since, I assume, most of the uninsured are poor (ignoring those rich enough to be able to pay any medical costs) and unable to afford any insurance product out there, the uninsured poor need a subsidy.  I would think it is cheaper to have people pay what they can afford all during their lives for health insurance rather than have us all eat the costs when the uninsured that get ill.  You might think, what difference does it make if we pay higher insurance premiums, deductibles, and co-pays or if we pay higher taxes to subsidize insurance.  I think having the poor pay toward their care, as a group, assuming they pay part of the cost of their insurance over years, would mean that the poor would actually have put money toward their care if they get sick or injured.  I suspect the money paid overall to subsidize persons would be less than the costs that would be eaten by the doctors and hospitals if persons were not required to be insured, since most subsidized persons would be paying quite a bit over a lifetime.

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