Letter: Costs of health care for uninsured get transferred to everyone else

Insurance is pooling of risks, and premiums must be equal to or greater than claims plus overhead. (the Affordable Care Act limited overhead to 15 percent). Businesses which consistently operate at a loss may close down unprofitable parts (ERs, long-term-care policies).

Insurance works only if there is a sufficiently diverse risk pool. Prior to the ACA, premiums were kept reasonable because insurance companies were allowed to exclude anyone with a higher risk, rate them up, or cancel them if they presented too many claims. It’s easy to keep premiums low if you cover only healthy individuals. If the experience rate goes up, more healthy people opt out.

Without preventative care, uninsured people will continue to show up in emergency rooms, which are required to treat them. Costs don’t disappear — they just get transferred to the general populace in increased medical bills, insurance premiums and taxes to cover uncompensated care.

The real elephant in the room is the cost of medical care per se! There are many causes driving the rapid increase of medical care — prohibitive drug costs, consolidation, tort law, patent law, overuse, advertising, demand for the latest innovations, and paperwork. Changes in these areas will reduce costs.

This story was originally published March 24, 2017 at 4:22 AM with the headline "Letter: Costs of health care for uninsured get transferred to everyone else."