[zerospinboson]

Originally Posted by Xenophon

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!

Paying as little as you can get away with in order to qualify for membership of some program (be that road tax or insurance) is also free-riding; it's just that there are a few more obstacles put in your path, or checks that exist to prevent free-riding that you have to take into account. Anyway, sure he runs a small risk by not being insured now, but that isn't really all that interesting. The point is that, with a system that exists for longer time periods, an amount of money has to come in every year both to cover the current pool of insured, and to save for some time down the road, to compensate for the increased costs that come with age-related diseases in an aging population.

Sidenote: This is how "they" more or less made sure SocSec would fail. Because of changes made in the early '80s to the way socsec was being funded there now isn't enough money in the pot to pay for the retirement plans of the future. (that is, because a bunch of important people noticed that a lot of money was being put in there that wasn't really "doing" anything, who then took it "to invest in innovation" leaving an promissory note to "pay it back later" with interest. They never did, of course, because by the time they needed to start paying it back nobody wanted to decrease spending anymore)

By choosing to not pay now, and only start paying once you feel you'll need it, you're not just increasing the premiums that people have to pay now, you're also promising to take a disproportionate amount in the future; the only reason you can "get away with" that is because of the relative anonymity the system offers.
And because the insurance providers know that people do this, they are then justified to increase the premiums for those currently insured (in order to offset those future extra costs), and the late-insured will have more reason to say "it's too expensive now", thus closing the loop. (As well as excluding people who might be able to afford it in a mandatory system, but not when after the premiums are increased in order to correct for this type of free-riding.)

But from 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?"

At issue are not just preexisting conditions: the (i suspect more costly) problem is that normally you would've been (statistically) saving for your own later-in-life conditions. When you don't, you're forcing other (real) people to bear those costs for you.
The fact that you don't know the people whom you're forcing to pay for you doesn't detract from that at all. "Insurance" is not a game or control mechanism invented by the government, nor by evil corporations (although abuse may happen): insurance is a mutual agreement between those who choose to be insured to pay for each others possible costs.