With ‘Fatal Conceit,’ Speaker Paul Ryan Fails Insurance 101

It appears Speaker Paul Ryan (R-WI) is deeply disturbed that insurance premiums paid by healthy people help offset the insurance costs of people who are sick. But that is exactly how health insurance works. In fact, it’s how all insurance works. It’s called spreading the risk. In any insurance pot, there is a minority segment who are higher risk, and these higher risk individuals rightfully pay higher premiums. But in addition to those high-risk premiums, the low-risk majority chips-in to cover the greater cost outlay to insure the high-risk minority.

Young or old, anyone can get sick, and when they do, they rely on this diverse insurance pot to cover medical costs. But the young get sick less than the old, which means young people draw on this insurance pot much less than old people. Young people are paying into an insurance pot that is mostly being used by the old. And when those young grow old, a new generation of young will do the same. That is how you build a robust insurance system.

So it is perplexing that Paul Ryan, who is supposedly an expert, would say, “The fatal conceit of Obamacare,” is that “young and healthy people are going to go into the market and pay for the older, sicker people.” Well, yes, of course! That’s insurance 101, which Ryan calls a “death spiral.”

The person heading the Republican effort to repeal and replace Obamacare does not have a fundamental understanding of how insurance works. But we probably should have already known this, since Ryan is an advocate for so-called “high-risk pools.” “Let’s fund risk pools at the state level to subsidize their coverage, so that (people with pre-existing conditions) can get affordable coverage,” said Ryan at Georgetown University. If you embrace the idea of high-risk pools, separating the sick from the healthy, you have already tipped your hand. That speech at Georgetown was not the first time Ryan embraced high-risk pools, he has talked about it for years, so it should come as a shock to no one to hear his latest insurance 101 fail. And besides, I already told you Republicans do not believe in universal health care coverage, which likely means there is a scarcity of non-ideological pragmatism among the GOP ranks.

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