Forcing insurance companies to take all comers, and to charge all customers similar fees can accomplish only one thing: to force some health insurance customers (primarily the young and healthy) to subsidize other health insurance customers (the elderly and the sick). That's not insurance -- that’s welfare.

The overall effect of eliminating health insurance discrimination is to drive up the costs of health insurance. As the Wall Street Journal points out, states that currently prevent insurance discrimination through community rating and guaranteed issue rules have the most expensive individual insurance markets in the country. "In 2007, the average annual premium in New Jersey was $5,326 for singles and in New York $12,254 for a family, versus the national average of $2,613 and $5,799, respectively."

...If we can painlessly ban health insurance discrimination, then why don't we end all discrimination for all forms of insurance? Why should we have to buy car insurance before we get in an accident? Why should Geico be able to drop Robert Downey, Jr. after his fifteenth DUI? Why should a three-pack-a-day smoker have to pay more for life insurance than Michael Phelps?

Insurance is inherently discriminatory. An insurance company cannot function without assessing risk, charging greater fees for greater risks, and refusing to provide "insurance" to those for whom the outcome in question is certain. It is by carefully assessing risk and discriminating accordingly that insurance companies enable us to protect ourselves against some of life's unknowns. That is a crucial benefit, and those who provide it should not be smeared, but thanked.

Labels: Analysis, Insurance

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