Who pays when there is a car wreck and both drivers -who were young and healthy – have neither car insurance nor health insurance?

Buying insurance is paying for something that might not happen. In fact, both the insured and the insurance companies count on the probability that the negative event, such as a car accident, will not occur. That’s how they make money. Some individuals would rather gamble that they won’t get into a car accident and decide not to purchase insurance. They prefer to keep money that would be spent on insurance even though auto insurance is required by law in most states. Despite the state mandates, about 14% of drivers are uninsured across the nation.

Fines, fees and even programs for low-income drivers with good driving records have had little or no effect on enticing drivers to buy insurance. Bare bones liability insurance averages $500 a year nationwide.

Young and Healthy Take Risks
The same individuals are not going to buy health insurance. They prefer to take the chance that they are not going to get sick or injured. If they require medical care, they will be taken care of and somehow the bills will get negotiated, reduced and eventually paid or written off as charity. Unlike car insurance, medical treatment and payments may go on for years in the case of cancer or other chronic diseases. Will these former young healthy individuals be allowed to purchase insurance at the same price as current healthy individuals? Yes. And with the exception of a small annual fine, they don’t ever make up for the years they did not purchase health insurance.

Financial Incentives
The young healthy people are necessary to balance the cost of older and sicker people to make the current insurance setup work. However, there is no incentive to purchase when one is young and healthy. The incentive to purchase while young must be financial. If an individual does not purchase insurance continuously while young and healthy, then when they decide to purchase, they pay a higher premium based on the number of years that they did not have a policy. The higher premium would make up for the years of premium that they did not pay.

This is similar to auto insurance carriers who offer a discount for continuous coverage with the same carrier. While the price of health insurance would stay the same, previous and continuous coverage would be a new added factor.

The simple answer to the opening question is that we who purchase insurance pay through higher auto premiums and through taxes for the care that is received in hospitals and cannot be collected. As long as we are a voluntary insurance driven society, incentives are mandatory to make the system function.