Putting the ‘Insurance’ Back in Health Insurance

Insurance was not invented to cover small, everyday expenses like office visits or medications.  Does car insurance cover oil changes?  No.  Insurance is for high-cost items such as a car accident or house fire.  No one buys their homeowner’s insurance hoping to use it.  True medical insurance covers catastrophic costs from serious injury or illness.  People have been submerged in this culture of pre-paid health care for so long that they don’t know that there are other options, ones that result in people being smart with their purchases because they are using their own money.

Putting the ‘Insurance’ Back in Health Insurance

We understand that it would make no sense to buy auto insurance after we’ve already crashed our car. We appreciate that it would be strange to buy homeowner’s insurance after our house has already burned down. And yet, when it comes to health coverage, many of us think that it makes perfect sense to wait until we’re sick to buy health insurance. If we really want to make health insurance affordable and accessible to everyone, we need to go back to basics, and understand all of the government-induced distortions that have made health insurance look nothing like actual insurance.

The point of insurance, of course, is to pool the risks of a group of people as a mechanism for protecting against uncertain financial loss. If 100 people pool their risks together and the home of one of them burns down costing $100,000, each person ends up paying around $1,000: a hundred thousand divided by 100, plus the overhead costs associated with administering the scheme.

But there’s a twist.  Click Here to read the full article.


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