If insurance prices change with people's preferences, that's a strong signal the market doesn't have enough competition.
It makes sense why, it’s basically entirely 0 sum. There’s no innovation to be made, just stealing customers from other companies. Further, I don’t see how competition is improving the industry, as they have next to no tech. I see that competition may keep things honest, but especially in the cases like health insurance I can’t see how it has. Whether that’s entirely caused by bad policy I don’t know.
For all the above, in my dim understanding, it seems like one of the few truly ideal cases for being government run. I’d love to hear reasons why not.
so there is a lot of room for competition to drive down price (and increase quality) without it being a zero-sum game. the problem is that markets for financial products are irresistable to the greedy (as it's stripped down to the bare essence of pursuing money itself) making ethically dubious decisions under greedy incentive structures. the government can create a more competitive market through regulation and enforcement but chooses not to (because of its own perverse incentives), so it's not a given that a government monopoly would necessarily be any better.
with most issues like this, the default option should be to do both: have government-run options (with no unfair advantages) in competition with (for-profit and non-profit) market participants. this is a pretty rare configuration however, since it removes the obvious (unfair) leverage points for taking advantage of a market.
Health I can see has some room for quality, but still some high 90% of the market doesn't go outside the bottom three plans across almost any type of insurance.
I can see the case for allowing insurance alongside. No need for monopoly, though the level of greed in the industry and ability to manipulate through ads is a weird balance - they're incentivized to keep you a bit paranoid.
my guess, however, is that the current equilibrium point above the marginal cost of production is likely more a function of regulatory capture. insurance went through a broad round of demutualization over the past few decades, and some of the capital gains of that process surely went into legal and political initiatives.
to the article's point though, insurance is an adversely-incentivized industry driven to over-financialize every possible risk, which is where it veers into gambling (just like equities and derivatives) and sensationalizing paranoia (just like news). insurance should be reserved for unlikely but impactful natural events, not common or man-made ones, which is what insurance has expanded into.