Why Poor Health?
by Art Bowen

Regarding Warren Coats' "Healthcare and Pension Risks," it is not hard to understand why today's system of employer-provided healthcare came about.

All risk health insurance, even just for one's own family is EXPENSIVE. When I sold health insurance briefly in the 60's, I would pitch "all risk" health insurance to a young couple who needed it. They could see that they needed it, but when they found out how much it cost, they said, "No thanks, I cant afford it". At least in those days you had a choice.

Employers started offering all risk health insurance as a benefit, because the premiums charged the employer on behalf of the young couple were MUCH lower. Why? Because the actuarial health risks of employed people were MUCH less than for the population at large.

People seem to gloss over the actuarial realities in talking about the modern day form of "health insurance," which covers the bad risks of the population at large (i.e. everyone) and puts the burden on payers who are working. If it was not affordable for a young couple to provide coverage for themselves only, how is it possibly going to be affordable for them to pay for themselves plus some unknown number of other people who "can't" pay, for one reason or another?

What was a fairly easy sell for me was real major medical (in modern terms, that would mean $25k or $50k deductible; or at least some large amount). That was cheap because the vast majority of people who participated never collected anything. It was great for family planning, because the risk of medical catastrophe was removed. Normal medical expenses could be budgeted like anything else.

Isn't it a strange thing that we find ourselves moving away from this today instead of toward it?

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