In Chapter 4, I explained how and why traditional employer-based health insurance is expensive. One of the major reasons that health insurance is so expensive is because insurance pays the costs of routine medical care, which must be paid from (excessive) premiums collected by insurance companies. If insurance companies collected premiums to pay for only extraordinary medical care costs, premiums would decline substantially, and health insurance would then adhere to sound principles of indemnification (paying for a loss according to the terms of the insurance policy). Instead, insurance companies must cover their expected payouts, which are then passed on to employers in the form of ever-rising premiums. Employers, ...
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