Insurance just isn’t the right model

If there is a one percent chance of any one car being stolen in Somerville, but nobody knows which car it is, the insurance market is good. But if an insurer can know in advance which car will be stolen, they won’t insure it. And if you wait until your car has already been stolen to buy insurance for it, you are committing insurance fraud.

This week I am buying health insurance. Health insurance makes sense if you have 100 people, each with an equal, but low, chance of having a heart attack or getting hit by a car and needing expensive care. But it makes very little sense to sell accident insurance to someone who just got hit by a car.

Nonetheless, that’s just what I’m doing. Because it’s health insurance that I am buying through my employer, I can get insured against chronic conditions I have already developed.

People who don’t have employers with health plans can’t get affordable coverage, and that’s horrible. Insurers, meanwhile, are stuck with freeloaders like me, which is unfortunate for them but deeply satisfying for everyone else. And until we fix the entire model, we seem to be stuck with this kind of situation where nobody is happy.