Ignoring risk

Here we go again:

The health insurance industry offered Tuesday for the first time to curb its controversial practice of charging higher premiums to people with a history of medical problems.

Isn’t that nice of the insurers? They seem to be willing to insure even the least healthy of us, at no extra cost. Risk won’t be a factor. That is, of course, great news for those who have serious health problems. It’s magic, isn’t it? Unhealthy people won’t pay any more for their health care than the healthiest of us. Something for nothing?

Does this sound familiar? It should. Remember the federal government forcing mortgage lenders to ignore risk? Remember how they pushed lenders to give mortgages to people who couldn’t afford them? Remember how many of those people found themselves in foreclosure, changing the whole real estate market?

Ignoring risk resulted in families walking away from their homes because they couldn’t pay the mortgage and couldn’t sell for as much as they owed. Ignoring risk resulted in lenders going bankrupt, along with builders, developers, and many people who were related to that industry.

Ignoring risk is as patently stupid as walking blindfolded across a busy freeway, hoping that you won’t get hit.

Many who read about what the insurers are being pushed into doing will first think about all those poor souls with serious medical conditions who will now be able to get insurance at the same rates as healthy people. Even those who are uninsurable now will have access to inexpensive insurance. For those people, it’s GREAT news. Many readers will not think any further than that, and applaud the idea.

Let’s think about some facts. Insurers need to at least break even financially to stay in business (unless they get a bailout at taxpayer expense). If they take on unhealthy people at the same premiums as healthy people, their expenses will rise… a lot. Their only choice will be to raise the premiums… not on those people causing the expense, but on everyone.

One other inevitable result of ignoring risk will be that we will all have less incentive to stay healthy. Unhealthy habits won’t cost us financially.

Socialistic do-gooders have been pushing for many years for health insurers to take on high-risk patients. It appears that they’re winning, just as they did with mortgage lenders. But there is no free lunch. If unhealthy people pay no more in premiums than healthy people, then we’ll all pay equally, and we’ll all pay much more… that is socialism.

We will all become less healthy, and we will all pay even more than the outrageous levels being paid now. We will have the pleasure of knowing that everyone else is also in the same, sinking, boat. That is socialism indeed.