That’s what I’d like to say to Amanda Marcotte, writing in Slate’s Double X blog about the fact that insurance companies are now required to charge men and women the same rates for health insurance.
Here’s the key paragraph:
Under the ACA, the individual market is being set up to look like the kind of insurance that you get through an employer, as Jonathan Chait at New York Magazine explains. So whether you are using a health exchange or you get insured through your employer, the young “subsidize” the old and young men “subsidize” young women. That’s how insurance works. Which is why, if you look past the jokes about “bros,” it becomes quickly evident that what Roy isn’t arguing against here is the ACA so much as the very existence of insurance itself. If it’s wrong for older people or women to use more health care when everyone’s paying into the system, then it should be wrong whether you get your insurance through your job or the health care exchange. Having your boss arrange the paperwork doesn’t change the fact that some people need more health care.
Marcotte really, really seems not to understand insurance. She writes as if insurance means, “a large group of people paying into a system which reallocates benefits to those in need.” That’s a fair description of social welfare programs, in which we pay into the system with our taxes. That’s even reasonably correct for certain church and community groups. But that’s not insurance.
Insurance is about paying a premium to protect against some unknown risk, based on your own likelihood of facing that risk. Insurance companies collect information on individual characteristics to assess that risk in the underwriting process, and the means by which they manage to function as a business is that collectively only a small number of policies are collected on in a given time period, but, fundamentally, policyholder’s prices are not based on everyone’s risk, but on their own.
It’s true that an insurer cannot concretely identify all of one’s risks, but they collect the data that they can. Car insurance is based on how risky you are as a driver (based on age, sex, prior driving history) and, if your policy covers theft, the crime rate in your area. Life insurance is based, again, on age and sex, plus, for individual policies, health exams. Worker’s compensation insurance is based on the riskiness of the line of work.
Requiring young men to pay the same premiums as young women, or smoothing premium levels between the young and old is absolutely not insurance.
Yes, it’s true that employers don’t require their employees to pay premiums based on age or sex. But this is a business practice, to provide benefits at the same rate. It has nothing to do with the issue of what insurance is.
The point is that no one gets upset that men and women, and the old and young, pay different rates for life insurance. That Marcotte and her ilk reject true underwriting for health insurance means that what they actually support is a social welfare benefit funded through a hidden tax.
(She’s far from the only one: even Obama has labeled the requirement to cross-subsidize as “true insurance” if I remember correctly!)
Ad-Free & Subscriber Log-In