Insurance

The cost of Obamacare is increasing much faster than inflation. The news suggests the reason is dropping the subsidies provided during Covid but there are other reasons. First is the guaranteed coverage regardless of preexisting conditions. This means the sick and older people will sign up while healthy younger people will not. When you can wait to get health insurance after you get sick this defeats the purpose of insurance which is based on risk sharing. This flaw was recognized early on and those who refused to sign up had to pay a penalty called the individual mandate but this was later discontinued. Second is the community rating rule which forbids charging older people more than younger people. Insurance by its very nature, is based on mortality and morbidity and Obamacare negates this principal. Third is mandated coverage. Obamacare must cover certain so-called essential benefits. This means that a young single man must have coverage for child birth. When examined closely it seems that this is not health insurance but just a government benefit. It is like buying life insurance after you have a serious illness or buying home owners insurance after a fire. Insurance by definition is based on a form of discrimination legally defined as separating people into different risk pools based on their risk profiles to set premiums. The cost of a same size life insurance policy at age 20 is $12 per month and at age 40 it is $34 per month. The cost for women is less than for men. A young person can develop a serious health problem and sign up for Obamacare and he is covered on the first of the next month. Even Medicare requires that people sign up in advance.