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> But if you take away 50% from everybody, the assumption has to be that everybody wants to buy all the same things in the exact same amount and quality. Not r

> But if you take away 50% from everybody, the assumption has to be that everybody wants to buy all the same things in the exact same amount and quality. Not really. It's a matter of risk pooling and public good. In health insurance, for example, it's understandable for a healthy person to pay a premium higher than the value of the services he actually receives. In exchange, if he suddenly gets in a car accident, an expensive procedure may be affordable. Additionally, his disabled neighbor may be able to afford his otherwise extremely expensive care. This sort of scheme only works effectively when everyone participates, especially the healthy, low-cost folks, who bring down the cost for everyone else. The same or similar concepts apply in unemployment insurance. Someone with a stable job may not feel he needs unemployment insurance, but paying into the system makes the system possible. If only the unemployed and underemployed paid for unemployment insurance, we wouldn't have such a thing. With education, things are a little different. There are some people who will never have children to benefit from paying for public education, but these people indirectly benefit from living in an educated society. I don't have children, but I'm more than happy to contribute to public education, since I value literacy not only in myself but in others. Arts (e.g., your TV, symphony, and museum examples) are basically an extension of education, though I suspect some people would probably argue against me there. Infrastructure in rural areas is expensive, but in my experience, at least, those rural areas are often poorer than the more urban areas. Your options seem to be (a) cut those people off from society, (b) subsidize their infrastructure, or (c) pay them to move elsewhere. I think (b) is the most reasonable option. In the end, the people in the most need generally have the least to offer, so the people with the most to offer either have to subsidize, or the least have to go starving. Universal, progressive taxation seems like a very reasonable way to accomplish the goals of a civilized society.

sopooneo 15y ago
I don't know if what I am saying contradicts you, but health insurance certainly can serve a rational purpose even if everyone that bought it was young and healthy. You premium simply needs to cover the average cost per subscriber plus some profit for the provider. It can (and possible should) also function the way you describe with the lower cost subscriber subsidizing the cost of the higher cost subscribers. But that is not an inherent part of insurance.
- georgefox 15y ago
  Agreed, that's a huge part of health insurance, and that's why I would never consider dropping coverage. But in practice, wouldn't health insurance almost have to subsidize the expenses of high-cost folks at the expense of low-cost folks? Actuarially, you'd have to manage to get exactly the average cost from each subscriber (plus an equal or proportional amount of profit) in order for that not to happen. Now I'm assuming you're strictly talking about health insurance (though the same concept applies to homeowner's insurance, etc.), but isn't subsidizing high-risk/high-cost subscribers inherent in some forms of insurance? Take a pension, for example. Some people will live much longer than expected; some will die a year after they retire. The only way to account for this, other than periodically adjusting each retiree's income based on how unhealthy they are, is to pay for the pension of one ancient retiree with the funds from one who died young.

sopooneo 15y ago

I don't know if what I am saying contradicts you, but health insurance certainly can serve a rational purpose even if everyone that bought it was young and healthy. You premium simply needs to cover the average cost per subscriber plus some profit for the provider. It can (and possible should) also function the way you describe with the lower cost subscriber subsidizing the cost of the higher cost subscribers. But that is not an inherent part of insurance.

georgefox 15y ago
Agreed, that's a huge part of health insurance, and that's why I would never consider dropping coverage. But in practice, wouldn't health insurance almost have to subsidize the expenses of high-cost folks at the expense of low-cost folks? Actuarially, you'd have to manage to get exactly the average cost from each subscriber (plus an equal or proportional amount of profit) in order for that not to happen. Now I'm assuming you're strictly talking about health insurance (though the same concept applies to homeowner's insurance, etc.), but isn't subsidizing high-risk/high-cost subscribers inherent in some forms of insurance? Take a pension, for example. Some people will live much longer than expected; some will die a year after they retire. The only way to account for this, other than periodically adjusting each retiree's income based on how unhealthy they are, is to pay for the pension of one ancient retiree with the funds from one who died young.