The Young and Healthy don’t buy Health Insurance because they make up only 3% of All Patients

Posted by PITHOCRATES - January 22nd, 2012

Week in Review

A couple of statistics can explain all that is wrong with our health insurance (see Most Health Care Costs Incurred by Few Americans by U.S. Agency for Healthcare Research and Quality Release posted 1/11/2012 on WCTV.tv).

More than 40 percent of patients were age 65 or older, while those age 18 to 29 made up just 3 percent.

Health insurance is different than, say, car insurance.  Car insurance is expensive.  But it has remained a whole lot more affordable than health care insurance.  Why?  What’s the difference between the two?  Anyone can have their car stolen.  Or have an accident.  But when it comes to patients in our health care system more than 40% are age 65 and older.  While those healthy and young (ages 18-29) are patients only 3% of the time.  Big problem.  Because a lot of people age 18-29 think rationally and say that’s a lot of money for what?  I never go to the doctor.

And herein lies the fatal flaw of health care insurance.  Insurance operates by having everyone contribute a little to pay large claims to those few who suffer an unfortunate event.  That’s how insurance works.  Not everyone suffers an unfortunate event.  So if everyone pays a little the few who do suffer an unfortunate event get help when they need it.  That’s risk management.  Spreading the risk over numerous policy holders for a small fee.  But that’s not happening in health care.  Because it’s not insurance.  It’s a cost transfer.  The industry is set up to transfer the cost of the health care consumers to those not consuming health care services.  And when those who are not consuming health care services opt out of the system that creates a serious funding problem.

This is the problem whenever you have other people pay for you.  And why Obamacare has a mandate for the young and healthy to buy insurance.  So Obamacare can transfer the cost of the health care consumers to those not consuming health care services.  The young and healthy.

This is a broken model.  It won’t work.  And it will only lead to higher costs and rationing.  Because the population is aging.  Which means those consuming health care services are growing at a rate greater than those paying for them.

You can thank FDR for this mess.  And his maximum wage limit during the Great Depression.  His attempt to stimulate the economy by keeping wages low so businesses would hire more people.  Businesses couldn’t attract better workers by offering them more wages.  So they offered them benefits instead.  And the health care crisis was born.

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