Many Americans rely on their cars to start. No car no job, no rent or mortgage money, no food. A single mother of struggling to make ends meet in the suburbs than 100,000 miles on it, is probably the occasion of this coverage Would the economy, the maintenance of all types of repairs on his car to catch the last day it releases or 200,000 miles, whichever comes first. Especially if the insurance is valid regardless of whether it also changes the oil in the meantime.

So why not auto insurance companies writing such coverage, either directly or by using car dealer? And given the importance of reliable transportation, why does not the public call for such coverage? The answer is that auto insurers and the public that insurance can not know what a premium the insured can afford to be written, while allowing the insurer to remain solvent and a profit . As a society, we intuitively understand that the costs of care Verband met all the requirements of an old car mechanics, especially in the absence of regular maintenance insurable niet. But we are not the same opinion with regard to health insurance seem to have.

If we have the emotions of the disease which is obviously difficult to do, even for this author, and watch health insurance from an economic point of view there are few lessons from the automobile design verlichten kan, risk selection and evaluation of health insurance.

Car insurance comes in two forms: traditional insurance purchased from your agent or directly with an insurance and guarantees, which are purchased by car manufacturers and dealers. Both are risk transfer and sharing of equipment and I generally exist as insurance. Because the automobile liability insurance is not reflected in health insurance, auto insurance for classic, I will examine only collision and comprehensive insurance – insurance for the vehicle – and not responsibility.

Bumper to bumper cons

Here are some generally accepted principles of the car:

- Bad maintenance voids certain insurance. If a car owner never changed the oil, the powertrain of the vehicle expires. In fact, not only the oil should be changed, the change must be done by a certified and documented. Collision insurance does not reach cars running on a cliff.

- The best insurance is available for new models. Bumper to bumper warranties are offered only to new cars. When they leave the assembly line, cars have a low risk and relatively homogeneous, meeting the requirement of actuarial pricing of insurance. In addition, vehicle manufacturers generally have at least some coverage in the price of new cars to wrap a lasting relationship with the owner to promote.

- Insurance Limited is proposed for the old model of car. Increasingly limited insurance is proposed for the old model of car. The bumper to bumper warranty, powertrain warranty at some point, and gradually the amount of collision and comprehensive insurance reduces the market value of the car is based.

- Some cars are more eligible for insurance. Some older cars may qualify for additional coverage, either in the form of guarantees on used cars or high-impact and fully comprehensive insurance for classic cars. But this insurance is available only after a thorough examination of the car itself.

- No insurance is offered for normal wear. Wiper blades should be replaced, wear pads and bumpers Dings. These events are not insurable. To the extent that new car dealers, sometimes these costs, we understand intuitively that we pay for them in the cost of covering car and it’s not really insurance.

- Accidents are the only insurable event for older cars. Accidents are generally insurable, even for older cars, with few exceptions, is not maintenance.

- Insurance not return until a condition accident. Auto insurance is limited. If the damage exceeds the car at any age, the value of the car, the insurer pays only the value of the car. With the exception of classic cars, the value of the car in time. Thus, whereas accidents are insurable at any age of vehicle, the amount of accident insurance are becoming more limited.

- Insurance is a price risk. Insurance is based on the price risk of both car and driver. The auto insurer carefully considered both in setting rates.

- We pay for our own insurance. And with few exceptions, auto insurance are not deductible. Because of the fear of higher insurance premiums because of traffic and / or changes in our behavior based driving accidents, and sometimes we choose our cars on their insurability.

Each of the above principles is supported by sound actuarial theory. While most Americans can not describe the underlying actuarial theories, of course, most any of the above principles of auto insurance at the intuitive level. To be sure, as indispensable to our way of life are cars, no strong national movement and the moral indignation to these principles changes.

Unsustainable market

However, similar principles are routinely violated in health insurance. To illustrate this, let us return to the same S-mother in the first paragraph. She is busy at work, travel to and from work and drive their children to school and activities. She ends each day exhausted, sitting on the couch with fast food. She is overweight, physical inactivity, poor diet, and did not have time to go to the doctor over the years taken. After a simple injury will not heal weeks, it turns into an emergency room and learns she has type II diabetes, but diabetes is controllable, changing diet and exercise and proper maintenance of their condition requires time and effort, and it is never very successful implementation of necessary changes in life.

So, first aid is the first in a long list of health care associated with uncontrolled diabetes and other problems associated with obesity. She has individual or group insurance, insurance of their pay for each episode of care, not isolation from them a premium increase, and without paying more than their cost of participation is the healthiest medically insured calculated with precision. Your coverage will continue until she voluntarily changes insurance companies and / or employer or to take advantage of Medicare. When they met under the assurance that they can not even pay a premium. Your insurance does not decompose, even if the disease was caused by the negligence of her body and she loves her bad lifestyle is also known for the disease.

This car insurance would not only done. This scenario is the equivalent of a car guaranteed access to cheap car insurance, maintenance of all types of repairs, including damage has already expired on the day the car is so complete that there is no escape (death) or reaches 200.000 miles (Medicare), whether to change the oil (takes care of himself) in the interval.

As a society, we do not expect the passenger car market, but we expect the market for private health insurance. There is also a chorus of state and national interests that readers never ceases to further the principles of auto insurance.

The current health insurance market is not sustainable. Prices are still rising faster than inflation for decades. Each year, more health insurance than ever before and more people have no insurance at all. Most actuaries and others in the private insurance market does not want the national system of health insurance with the bureaucracy and one-size-fits-all benefits. But we try, a private insurance system, which we know very sustainable principles violated are necessary for the private insurance market.

Yes, health insurance is the sanctity of human life and is therefore different from auto insurance. But if we are in a lasting solution to the private insurance market, actuaries need to explain to the whole society, that society is understood in the sense that the grounds of the following principles:

- As sacred as health care, it is still an economic transaction, which may be covered by individuals and companies must be against other economic opportunities. It can not be unlimited. Sometimes, it is subject to other judgments. On any given day, for example, the mother in our scenario, their cars more than their health value.

- Insurance premiums must be paid by each individual and tied to controllable risk factors. This will be the best incentive to control risk factors.

- Although it is difficult, the line between abuse, neglect and ignorance, masturbation should not be insured, and we must draw the line somewhere.

- The private market can not provide unlimited health insurance self-directed.

- Care of routine and ongoing treatment for chronic diseases can be pre-funded, can even be subsidized, but they are not insurable events.

- The insurance can not expect that the human body in perfect condition. No amount of health care is to prevent any eventual death.

- Full, unrestricted, non-subsidized private insurance is not possible for people serious health risk.

- Private health insurance may be a limited market for Medicare non-subsidized, protection against accidents, and even individuals in poor health.

- People can not afford what and who can do themselves the option to purchase must be covered by the best. People have the opportunity to buy everything in life.

The discussion of these principles is lacking in most current debates about health insurance. If society can intuitively understand how these principles apply to health insurance, they should be able to understand the principles of the disease context. We must lead the debate.

This commentary is solely the opinions of the author. Whatever the official policy of the American Academy of Actuaries, but not necessarily the views of various officials of the Academy, members or employees.