“If you need a liver transplant (half a million bucks?), your premiums do not cover that, right? You are not paying 41,666 a month in premiums.”
Your ignorance is showing. Your premium covers your RISK of a liver transplant, not the certainty of it nor the costs of the liver transplants of the whole country. YOUR average annual risk of liver disease is going to be a part of your insurance premium, NOT the average annual risk of liver disease for a 58-year-old alcoholic with HepC. Apparently that’s a difficult concept for you. Insurance cannot function properly if we require insurance plans to follow a national average risk profile versus tailored risk profiles based in individual factors. You obviously have no understanding of what the words “actuarial risk” mean.
“You even say it yourself, the average cost. As in, spread over a population...” Like many individuals you don’t even understand what the word “average” means. I’d be curious what you think “average life expectancy” means. But back to the topic at hand, we’re discussing individual average risk based on key lifestyle factors and key coverage options, not whole-population average risk factors for the entire country for all medical interventions — I repeat emphatically, insurance does not and cannot function like you think it does.
Insurance plans, the coverage options and the premiums involved, simply cannot be based on a single national average like you keep implying; the total costs would be so astronomical as to make insurance completely unfeasible. Insurance rates and the costs of coverage options can be calculated based on key individual risk factors, sorting individuals with specific behaviors and health profiles into similar categories that can be accurately analyzed for cost — and this is what is done.
By insuring a number of individuals with specific risk profiles we can get the “pooled risk” you discuss, by smoothing the influence of random chance happenings across multiple individuals with similar behavior patterns and profiles. Hence your insurance premium is influenced by whether or not you are a smoker or a non-smoker for example, because the average health risks facing a smoker are considerably higher than in a non-smoker with similar characteristics. The health risks facing a non-smoker are lower than either the national population average or the health risks of smokers, and hence non-smokers cost less to insure and can pay lower premiums. This is beneficial for both the insurance company and the non-smoker, as the non-smoker gets too pool his risk with other non-smokers while the insurance company gets to charge a low (but sufficient) premium on this group’s common risk patterns while still making a profit.
Insurance does not spread risk across the whole of the national population as you seem to think, that’s a mind-numbingly absurd assertion. Insurance works because it distributes risk across classes of individuals based on key health risk factors. Trying to turn insurance into a social good, using a national pool of risk rather than risk profiles based on key characteristics, would price the public out of insurance — period.
It is VERY important that you begin to understand these key facts, as liberals have been trying to muck with the clean functioning of insurance for decades in order to bring about a soft-approach to a single-payer healthcare system. For example, in some states it is unlawful to charge higher premiums to homosexuals, despite the massively increased health risks that particular demographic faces. What that means is non-homosexuals must then pay higher premiums in order to cover the costs of insuring homosexuals. Likewise, trying to force everyone in the nation to cover the insurance costs of everyone else would be a catastrophe, it would drastically raise the cost of insurance to the point that neither you nor most other people could reasonably afford it.
The cost of an INDIVIDUAL premium necessary to cover a national risk profile would be in the range of $13,000 with current national healthcare expenditures. The cost of a family insurance plan based on a national risk profile would be in excess of $32,000 a year based on 2013 national population and average family size.
Again, please please PLEASE understand this simple fact — your insurance premium is not based on the NATIONAL risk pool, it is based on a categorical risk pool. Your premium is based on the costs of ensuring YOUR type of person, not the national average. A LOT of actuarial science goes into carefully and accurately constructing insurance plans that tailor actual premiums to actual costs for CLASSES of individuals, not the nation as a whole. This is why insurance companies employ armies of actuaries, to disentangle national trends into individual factors and smaller profiles — this allows your insurance company to make a profit from insuring you AND offer you a premium you can actually afford.
Forcing insurance companies to cover everyone’s health care costs, rather than certain types of costs for certain types of individuals, is not possible. Period.
Where did I say national pool, I mentioned groups, but never once suggested that the pool was the entire nation. If that is the basis of your argument with me, you are arguing against a suggestion I never made.