Health insurance in America has become a complex albatross, yet other forms of insurance, like car insurance, are easy to understand and are completely affordable. What makes health insurance different from these other forms of insurance?
Answer: health insurance has morphed into a boondoggle covering more and more aspects of American life, while these other forms of insurance do not.
The Hoover Institution’s Lanhee Chen explains in PragerU’s latest video that the whole point of insurance is to provide “protection against unforeseen, sometimes catastrophic, events.”
“People buy homeowners insurance, for example, to protect themselves from the financial loss incurred in the event of a fire, a flood or theft,” said Chen. “Because millions of people are paying into the insurance pool, the pool has enough money to cover the unlucky person whose house does burn down.”
Chen added that individuals who are at a higher risk of being stricken by an unfortunate event are charged more since insurance is based on assessing risk.
Health insurers, however, are not allowed to charge higher premiums to those who are a higher risk as a result of Obamacare. Insurers also cover every little health expense, from routine checkups to minor illnesses. This would be the equivalent of car insurance covering “routine maintenance like oil changes, replacing brake pads or tire erosion.”
Obamacare has also mandated that all insurance plans cover 10 “essential” health benefits regardless if people need those conditions covered or not.
The solution then is to allow insurers to offer any plan they want and be able to charge individuals based on the risk they present. This can still be accomplished while ensuring that those with pre-existing conditions can obtain their necessary care.