Consider this hypothetical insurance pool of 100 individuals:
- 10 individuals are extremely high risk and constantly sick. expenses per year: $100,000,000, or $10,000,000 per person
- 20 individuals are moderately high risk and frequently sick. expenses per year: $20,000,000 per year, or $1,000,000 per person
- 40 individuals are medium risk and occasionally sick. expenses per year: $4,000,000 per year, or $100,000 per person
- 20 individuals are moderately low risk and rarely sick. expenses per year: $200,000 per year, or $10,000 per person
- 10 individuals are extremely low risk and never sick. expenses per year: $10,000 per year, or $1,000 per person
How does Obama's system of prohibited medical underwriting work?
The premiums paid into the system are equal for all individuals. This is contrasted with a normal insurance situation, where medical underwriting takes into account individuals' risk and adjusts the premium accordingly. Under Obama's plan: premium = THC / #individuals
$125,000,000 / 100 individuals = $1,250,000 premium per person
The extremely-sick individuals receive $10,000,000 in benefits each year, but only pay $1,250,000 in premiums.
The never-sick individuals receive $1,000 in benefits each year, but are forced to pay $1,250,000 in premiums.
Socialism is not fair. It is morally corrupt.
How do you force low-risk individuals to become part of this scheme? Mandates. No person in his right mind would subject himself to paying an enormous amount of money to get very little in return, unless of course the government held a threat of criminal penalty if he refuses to become a part of it.
Next time, I will address why this ponzi-type scheming has worked in the past with socialist programs such as Social Security and Medicare. And why these programs are now bankrupt.