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So... Nate the great is voluntarily uninsured, and views this as choosing to bet that his medical expenses will be less than the insurance would have been.
Zerospinboson appears to be making the argument that insurance programs are untenable if the only people who enter the program are those who realistically expect to take more money out than they put in.
It seems to me that both of you are right! (more or less...) In the US insurance system, Nate's side of the bet leaves him open to the possibility of bankruptcy if he has bet wrong. In the mean time, he's paying out of pocket for any medical expenses he incurs. He is not "free-riding" in the sense that he's liable for any and all medical expenses that come his way.
But zsb's point is also correct. If you allow too much in the way of self-selection, you destroy the insurance program. It only works by spreading the risk over many people -- in the full knowledge that most of those people will pay a bit more than their actual expenses in any given year, and a few will pay less (sometimes far less).
In our admittedly partly broken US system there are several things that help encourage people not to make the bet that Nate is making. First, as people move into their prime earning years (middle-age, more or less), they begin to accumulate assets -- a house, retirement accounts, and the like. As these people have more to lose, they have more incentive to sign up with the insurance program. Second, a standard feature of all US health insurance programs (the private ones, not Medi*) is an exclusion for pre-existing conditions. Any problem that you develop while uninsured will not be covered for the first two years of insurance. Thus, if Nate is hit by a truck tomorrow (let's hope not!) and requires ongoing medical care as a result he would not be able to add health insurance so as to collect immediately. Instead, he'd pay into the plan for two years with full coverage for anything new, but not for the results of that hypothetical truck accident. Only after two years would his insurance pay out anything at all for a pre-existing condition. And that, too, is part of the bet that Nate is making. Finally, there's the convenience factor -- it's much easier to do sane budgeting when you can realistically predict your expenses. Medical insurance is one vehicle for making medical expenses predictable.
So my take is that Nate isn't a free-rider, but that he has self-selected out of the insurance pool. Zsb's point about the problems of self-selection is an important one! But from an my American (and admittedly fairly radical) point of view, Nate is free to make that decision. The question I would ask is this: "Is a two-year exclusion for pre-existing conditions enough to reduce self-selection bias sufficiently to keep the insurance pool viable?" I'm not an expert in this area, so I honestly don't know the answer to that question.
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