I know this goes against current popular belief, but there are very good reasons to have no health insurance.

I know, we have grown used to everyone having health insurance, and the primary method of payment for every health related expense to be through insurance. In fact we have come to be so used to this model that we see the cost of health care and prescriptions in terms of the co-payments instead of the actual cost. But that does not mean it is the best model.

Right now, most people carry health insurance because it is partly paid by their employer, and to forgo it means giving up part of their salary without receiving anything in return. As the amount they pay is deducted pre-tax and their employer pays a large percentage, they get more in benefit than it costs. But if they had to pay for their own insurance, as many current proposals will force Americans who are not insured by their employer, it makes less sense.

For example, let us suppose you are young, health and have a good job. You manage to save money and so have a small nest egg should a minor health crisis occur. You have no regular prescriptions, no health problems, need no regular therapies, and only see a doctor for yearly checkups, or twice yearly, whatever the current suggestion might be.

For such an individual, current health insurance, covering checkups, prescriptions and the rest makes no sense. think about it. An insurer knows people will likely use two check ups per year, and then have some additional expenses. So they must charge at least the cost of those visits, plus a premium for the risk adjusted likelihood of those possible future problems (well, distributed among the many insured int he same risk pool). If you plan to use your insurance only for those two visits, buying your insurance will cost you more than paying for checkups out of pocket, so it makes no sense.

It would make sense for such low risk individuals to buy a small policy to cover the risk of catastrophic health problems, to cover them in case they have a problem that would eat up all their savings. The cost for a young, healthy individual would likely be small, and would protect against catastrophe.

The problem is the law prevents that. The many states and the federal government, in their infinite wisdom have repeatedly intervened and told insurance companies that if they provide health insurance they must cover this or that, be it "well care" or pregnancy or something else. Thanks to these well meaning laws, individuals are unable to buy tailored insurance to cover a small range of conditions (at least in most markets). And so the young healthy individual I described is unable to take the rational move of buying catastrophic coverage and paying out of pocket for the rest. He must buy either a comprehensive policy or nothing at all.

And it is about to get worse.

Thanks to the many proposals making their way through congress,t he government is about to try to mandate that every individual must carry health insurance or face punitive fines. I am sure the poor will be granted some sort of subsidy, so for them it is a matter of indifference, being just a pretext for another hand out. But for those who must carry their own weight, this will mandate buying much more insurance than they want or need, cutting off the option of paying out of pocket.

Then again, this option is not really viable even today. As I said, the states already mandate coverage as do some federal interventions, to tailored coverage is not an option, making rational planning for health expenses difficult or impossible. More significant, because the insurance companies bear so much of the brunt of costs, price competition is unknown, leaving medical prices excessively high. In addition, as providers are used to billing at an inflated price, accepting what the insurers will pay and then forgiving most of the rest, prices for those choosing to pay their own way tend to be absurd. Better doctors will often adjust billing for those paying cash, but the entire billing process is of dubious legality, and, even with discounts and forgiveness, the high prices caused by a lack of price competition tend to make care much more expensive for those paying out of pocket.

Making all this more troubling is the fact that the government is trying to rpesent the result of all this state and federal meddling as the failure of the free market, and suggesting still more government intervention as the remedy. It is akin to eating a blend of fresh and spoiled food, vomiting and claiming that the remedy must be even more putrefied food, as surely it was the bit of fresh food you had that was making you sick.

POSTSCRIPT

I have written countless posts on this topic, as elaborated in "Medical Reform, An Overview". To save readers the trouble of wading through that very lengthy article, I suggest starting with "High Cost of Medical Care", " Government Efficiency" and "Clarification of My Argument for a Free Market in Medicine", as they are the closest to the present article in their focus.