by Peter Schiff, Euro Pacific Capital:
Those who claim that the Senate Republican proposal to replace Obamacare will kick millions of people out from health insurance coverage are dead wrong. Yes, it will cause the number of insured people to decline, but that will happen because millions of healthy individuals will be incentivized to voluntarily opt-out of traditional health insurance. For those people, the law will make traditional insurance a sucker bet. Instead of buying comprehensive health insurance policies, as they are currently known, they will either go without insurance for as long as possible or purchase a new type of low-cost insurance that the new proposals will likely create if they become law.
Let’s be clear. No one really wants to buy health insurance. When you do, you are effectively making a bet with your insurance company that you will get sick while they are betting you don’t. If you do get sick, you get a potential payoff. If you don’t, the insurance company keeps your premium. The same is true with all insurance. No one wants to buy auto or fire insurance, but we do in case we get into a car accident or our house burns down. But if the laws were changed so that fire insurance claims could be made after the fact, then consumer behavior would change significantly. People would simply opt-out, and then put in claims when and if they have a fire. But the only reason insurance companies can afford to rebuild houses is because so many of their customers pay premiums but never file claims. So if fire insurance companies could not discriminate against people with pre-existing fire conditions, they would cease to exist as businesses.