The human toll of our broken individual health insurance market

In A Possibly Fatal Mistake, Nicholas Kristof recounts how a dysfunctional individual insurance market encourages people, including his freshman-year college roommate, Scott Androes, to gamble with their lives, while racking up huge medical bills paid for by everyone.

It is easy to blame Scott for not signing up for insurance when he could have, and he freely acknowledges the mistake.  However, both Scott and Nicholas gloss over the fact that getting covered in the individual insurance market is time-consuming and by no means assured, even for the healthy, as I learned first-hand.  Moreover, consider how Scott explains his decision:

I didn’t buy health insurance because I knew it would be really expensive in the individual policy market, because many of the people in this market are high risk. I would have bought insurance if there had been any kind of fair-risk pooling.

On January 1st, 2014 Obamacare will enable the individual insurance market to function properly by eliminating the adverse selection problem.  It will also discourage free-loading, the tendency for people to gamble more when others bear the financial cost if they happen to lose the bet.

Nicholas Kristof:

Already, Obamacare is slowly reducing the number of people without health insurance, as young adults can now stay on their parents’ plans. But the Census Bureau reported last month that 48.6 million Americans are still uninsured — a travesty in a wealthy country. The Urban Institute calculated in 2008 that some 27,000 Americans between the ages of 25 and 65 die prematurely each year because they don’t have health insurance. Another estimate is even higher.

You want to put a face on those numbers? Look at Scott’s picture. One American like him dies every 20 minutes for lack of health insurance.

Paul Krugman makes similar points in Death by Ideology.

Simply blaming 48.6 million people, Ayn Rand-style, for their irresponsibility makes no sense for four reasons:

1. It's not their fault the individual insurance market is unable to function properly.
2. Many of those 48.6 million people want to participate as customers in the individual insurance market, but can't due to its dysfunction. Thanks to Obamcare, they'll get the opportunity to be customers in 2014.
3. No first-world nation can blithely dismiss the deaths of 27,000 people annually as simply a lesson in personal responsibility.
4. Even if you blithely dismiss the human toll, you still have to consider the resulting huge medical bills which we all pay for