Risk selection is a very driver of prices in health insurance. If you can spread the risk between healthy and sick people, the price goes down. If you can't, the price goes up.
Secondly, having a population that has no health insurance means less prevention, i.e. worse health problems down the road, again driving the costs up
See, this is what I don't get. I'm fairly inexperienced with this stuff, but it's starting to become relevant in my life. Despite my new employer offering insurance, I'm staying on my parents' until I'm 26 (this was part of their policy even before Obamacare).
However, this is the question I've been asking ... why do I even need health insurance? Why can't the money I pay in the form of premiums just be used to pay for my health care? The answer: well, it can be really expensive, so this way the cost is shared. But why is it expensive? Why don't I ask how much something is versus whether my insurance will cover it?
Again, like I said, I don't have a lot of experience, so go easy on me. But I think my questions are valid.
This is a great deal for you. $55 is no big deal and now if your house burns down you don't suffer a tremendous financial loss.
Similarly there is a really low chance you'll get cancer next year. But if you do it could cost a ton (millions of dollars possibly) to treat. So insurance is a good deal for this too.
Now, in the US 2 other things get lopped on to health insurance that make things a bit more complicated:
1) For a lot of people health insurance covers cheap and predictable expenses like an annual checkup. There are a lot of people that think using insurance for this is a bad idea. But some people think it's a good idea. It's complicated.
2) Health insurance (especially after Obamacare) can be a form of social insurance where healthy and/or rich people pay more than they otherwise would so that unhealthy and/or poor people pay less. This reduces economic inequality. There is a lot of political disagreement about whether this is a good idea.
Did this help? I've glossed over a ton of details but maybe it's enough to get started.
I'm mostly with you in that I don't necessarily think this is a great idea, but that's the general thinking.
1. Though there is less evidence than you might think that this actually works.
Also, skipping your annual health check ups is bad for your insurance company in the long run, so this, at least, they have a huge incentive to make sure you go.
Most people are interested in health care and not health insurance, meaning, we know we are going to use the doctor for something...it isn't a big surprise when your wife gets pregnant (well...I mean...). It isn't a big surprise when you start breaking down toward the end of your life, which is why ~40% of our health care is already socialized via Medicare.