Now imagine we have a test, that can predict it with certainty. Very soon only those with positive results will want insurance. The insurance against it will become unprofitable and discontinued.
But that's one of those inconvenient truths that American politics refuses to confront.
"`(1) IN GENERAL- A health insurance issuer offering health insurance coverage in the individual market may not, on the basis of genetic information, impose any preexisting condition exclusion (as defined in section 2701(b)(1)(A)) with respect to such coverage."
Forbidding insurance companies to discriminate based on luck does not solve this problem, because the problem is caused by customers selectively buying insurance based on their own luck.
(Clarification: I'm describing reality-as-I-see-it. I'm not trying to make moral judgements on what laws we should or shouldn't pass.)
In insurance, people who get lucky subsidize people who get unlucky. If you can test luck before getting insurance, then lucky people don't get insurance and there's nobody left to subsidize unlucky people.
> Forbidding insurance companies to discriminate based on luck does not solve this problem, because the problem is caused by customers selectively buying insurance based on their own luck.
It's a little more nuanced than that. Let's say men are more prone to car crashes than women. Either you charge men more for auto insurance, OR you charge everyone a flat rate, and the market will rapidly clear itself of all women, since that flat rate will be too high to appeal to women. In this case, you end up with a market that's exclusively men, and women are uninsured.
When applied to health insurance, this means that, if you're forcing companies to insure everyone, they will have to insure people predisposed to expensive illnesses at incredibly high rates, because that's the expected cost of their lifetime care.
One implication of this is that the "no discrimination for pre-existing conditions" portion of the ACA is equivalent to "if you have a pre-existing condition, your coverage will be exorbitantly expensive".
There are ways of hiding this extra cost, but at the end of the day, it's like sweeping dust under the rug: it all has to sum to zero.
That does leave a time when the risk is still insurable: before the test is conducted.
One can imagine it evolving as an additional service that the testing provider may partner with insurance companies to provide. At the time you buy the test, they say "if you pay an extra $X now, you get insurance against us finding anything catastrophic."
(Just idly speculating here, who knows how these things will play out in a combination of regulatory, market, and technology changes.)
Insurance really only works when either 1) what it covers is truly unpredictable or 2) everybody is required to participate regardless of whether they really need it.