- The risk was always on the consumer, that's how insurance works. For common major ailments (breast cancer, heart attacks etc.) those are already factored in and does not change the actuarial calculations in any way.
- As far as splitting insurance coverage being an option - That's not possible, not anymore anyways. Obamacare takes care of that. If the insurance co's can't do it for pre-existing conditions (aka the insured had the condition already) there is no way they will be able to do it for this.
Also, considering:
- Insurance is already mandatory
- ACA (The Affordable Care Act) does away with pre-existing conditions and gender discrimination so these factors will no longer affect the cost of your insurance on or off the marketplace.
- You can’t be denied health coverage based on health status.
- You can’t be dropped from coverage when you are sick.
- All new plans sold on or off the marketplace must include a wide range of new benefits including wellness visits and preventative tests and treatments at no additional out-of-pocket cost
The only real result of knowing that you may be of higher risk of the lurgy, results in you using these preventative treatments, thus reducing the future costs of illness if you actually mitigate the risk/avoid the lurgy all together.
And the endgame would be that there is a higher probability that everyone wins.
Assuming the ACA is not going anywhere this can only reduce costs in the long term for both the insured and the insurers.
You don't need the insurers to drop coverage, deny insurance based upon health status, or do any form of discrimination. The system still breaks if the consumers, the healthcare insurance buyers, know more.
If there are two healthcare plans on the market, one that covers the lurgy, and one that doesn't, then buyers with knowledge of their own health prospects will flock to the one that covers them best. The lurgy-covering plan will have to raise prices to remain viable.
And so those with the lurgy genes get penalised despite the insurers being completely regulated and without them breaking any of the rules that you have listed.
Doesn't this just mean the eventual death of health insurance completely?
Insurance needs 1) a large pool of coverage, where the combined average costs will cover the peak extremes. It also needs 2) variability: you have to have people with lower-than-average costs to balance out the higher-than-average costs. If everyone has average costs then once again, you've lost the uncertainty and any benefit of insurance.
To get 1), you could enforce insurance on people. To get 2), you have to ensure insurance products aren't ultra-specific. Neither of these are popular!
You are certainly free to advocate for your government to initiate a wealth transfer. Perhaps you will also consider a variety of ways of conducting this wealth transfer. (On that note, our current approach of "make young people buy more expensive insurance or get fined to pay for it" is a dubious one, and quite regressive.)
Insurance is designed to restructure uncertainty: it replaces a tiny risk of needing HUGE AMOUNTS OF MONEY with a 100% risk of paying a small amount of money. If the long-term health outcomes are known, as he proposed, then there is NO UNCERTAINTY about it. You either need the huge amounts of money to pay for care, or you need no money. All else being equal, the same amount of money is needed, and less money is spent on the overhead of running an insurance company and paying off the capitalists in charge of it.
Now, if you'd like to argue that society has a duty to assist someone who needs this care by transferring wealth to them to cover cost of the healthcare procedures they need, that's a perfectly legitimate thing to argue. It's also another matter.
Even in a situation with no uncertainty, you can still have forms of personal health insurance, e.g. you have a system where everyone is enroled, everyone pays and everyone gets the same cover. The collective benefits of insurance still apply, even if one individual's outcomes and costs are known. Whether this system counts as 'healthcare insurance' or it is now a 'national health service' just depends on how you want to name it...
> insurance costs come closer to the expected costs of treatment.
In general, insurance costs are above the expected cost of treatment (this is essential, or insurance would be unprofitable). As such, insurance costs coming closer to the expected cost of treatment is a good thing.
If I know for sure that I will need treatment (assuming my insurer has the same information), I shouldn't seek to buy insurance.
Insurance is designed as a cover for risk - the only reason I can buy insurance at a rate cheaper than the treatment itself because of the possibility that I won't need the treatment, and the insurance company will keep the money.
I think we're confusing terms here. Insurance policy costs are always below the cost of payout. Otherwise, why buy them? My house insurance costs less than my house, my car insurance costs less than my car, and so on.
Sure, insurance cost x probability must be above the expected payouts. I am referring to the insurance prices that people pay, not the insurer's expected costs.
In any case, I still don't agree with your point.
If everyone knows what's going to happen in the future, there's no insurance industry beyond pre-payment stamp collecting. I don't see that as necessarily a bad thing.
Thinking about how to prevent such a potential inequality seems essential to me.
Here's a hypothetical example: Say there's a horrific genetic condition (let's call it 'The Lurgy') that would involve lots of expensive treatment if you developed it. Now, a cheap genetic test kit comes along that can give an accurate prediction of whether or not you are likely to eventually suffer from the lurgy. What happens?
The first effect is that more people test themselves, and go out to buy quality healthcare plans if they see that they are going to get the lurgy. These people might not have otherwise bought the insurance. Result: the insurers suddenly get a much higher % of lurgy sufferers. Their costs rise, and this pushes the insurance price up. This exacerbates the problem: Non-lurgy people are less likely to buy the insurance. Worst case, the cost of insurance comes close to the general cost of treatment, meaning that the insurance is useless.
BUT: The obvious counter to this is that the insurance companies can adjust their range. They can split their insurance offerings up into two products: One that covers the lurgy, and one that doesn't. People are free to buy either. Naturally, the lurgy-inclusive policy is much more expensive. Suddenly the risk is back on to the consumers. They don't have to declare their genetic tests, and the insurers can't force them. But now they can't afford not to take the genetic test and buy the appropriate insurance (and in so doing, effectively 'declare' their genetic test results - after all, you'd buy the cheaper insurance if you could)
So the endgame is that everyone suffers. You can imagine a world where there are genetic tests for all kinds of disorders and combinations of insurance coverage that cater for all. But now the insurance pools are smaller, the uncertainty of costs is reduced, and so the insurance costs come closer to the expected costs of treatment. i.e. insurance costs are high, the insurers still profit, and the benefit to the consumer is vastly reduced.