the problem here is that you are using a market to address a classic market failure: adverse selection. I do not have the answer, but three obvious ones are (1) a (truly) catastrophic fund everyone pays into, (2) government program or (3) private charity. Each has its flaws.
I’d support allowing insurance companies to comingle funds for individuals, but the government won’t allow it.
Adverse selection is not a market failure, it is a market calculation. In a product, it is referred to as COGS - cost of goods sold. It is part of the calculation of expense involved in a product or service. Calculating the expense of offering a service that covers pre-existing conditions is based on the balance of employee welfare, employee retention, etc.
Actually, private catastrophic insurance (with a deductible like in the olden days) and medical savings accounts that can roll year to year with a very large cap.
One of the reasons we find ourselves in the mess we’re in today is that many people have *health insurance* that covers things they really could afford to pay for (doctors visits would be cheaper if people were paying for them out of pocket). We don’t really have health insurance. We have plans that pick up some of your health costs. It’s not the same thing.
Failure, you say?