A great article on health “insurance” is up here. Worth reading.
“If the insurance company is going to pay for things that are nearly certain to happen, they have to charge a big enough premium to pay for that and some extra to pay expenses. For a long time, this wasn’t noticeable, because companies were paying in those nice pre-tax discounted dollars, but it’s always been true. If you sell a life insurance policy for a hundred-year-old man with failing kidneys and pneumonia, the premium is going to be a little bit more than the face value of the policy; if you have to pay for the health care that is almost certain to be needed, every year, you’re going to have to charge a little more than that health care will cost.”
I work at a health “insurance” company and I can attest that the vast majority of people I work with have a hard time understanding these problems.