I meant the premium for a specific person is not related to their expected loss.
For example, if you carelessly drive and get into car collisions where you are at fault, your premiums go up, because your expected loss goes up.
In health “insurance”, it does not matter what you do, because your premiums are not based on your expected health costs. Hence it is more akin to a tax (or subsidy).
You're really not understanding this. That's got nothing to do with the insurance model. That's just a regulatory thing. All those choices do is change the specific population that gets insured in a single pool, such that their specific computed premiums are different. But for ANY such population, the total premiums paid == the total loss outflow + a reasonable profit. And you can tell that's true because the accounting for those companies appears in their SEC filings.
In practice, car insurers are allowed to partition their customers this way because it's felt to be "fair" and because it encourages safe driving. Trying to partition health insurance customers like that feels "unfair", and has minimal net benefit as health expenses aren't as controllable-by-the-subscriber as car accidents are. So we pass laws about how the partitioning gets done.
But again, "insurance" as a business model (and mathematical model) works EXACTLY THE SAME WAY. The only difference is how you draw the lines around who gets insured at what rate.
> All those choices do is change the specific population that gets insured in a single pool, such that their specific computed premiums are different. But for ANY such population, the total premiums paid == the total loss outflow + a reasonable profit. And you can tell that's true because the accounting for those companies appears in their SEC filings.
I do not dispute this. As I wrote in a sibling comment:
>Insurance and tax/wealth redistribution is a spectrum.
For example, if you carelessly drive and get into car collisions where you are at fault, your premiums go up, because your expected loss goes up.
In health “insurance”, it does not matter what you do, because your premiums are not based on your expected health costs. Hence it is more akin to a tax (or subsidy).