I think Richard Epstein develops your point of view in his book Mortal Peril, but Tim Greaney’s review of that book gives plenty of reasons to avoid such a scenario.

Of course, until our society is willing to confront the primary causes of rising medical costs (artificial restrictions on med school matriculation numbers, regulations that discourage affordable family practice, and patent law reform), then a lot of this is for naught. And socialized medicine has yet to prove sustainable, with the UK quietly raising taxes on a regular basis to cover expenses, and the wait-list for routine out-patient procedures in Canada being measured in months or even years. Taking away one’s choice to self-insure doesn’t seem like a good solution either.

The solution is a rule that says “if you don’t have insurance or a bond posted somewhere of a signficant value, then you will be left to bleed to death in the street or denied care at a hospital.” Only then can the painter make a rational decision about what is worth more to him, having insurance or being uninsured but keeping the money.

A note re: the bankruptcy post: even the option fo bankruptcy clouds the risk/benefit calculation by giving someone an “out” and a greater incentive not to carry insurance.

As for Steph’s point: sure, actuaries make these types of calculations, but they make them for populations, not individuals. It just strikes me as incredibly difficult for anyone to forecast their risk of serious illness/injury. Sure, I may only drive 20MPH at 6AM, and my risk-loving pal may drive like a maniac at rush hour. But at some point something might happen to the “ultra-cautious”–slipping on a patch of black ice while walking to the car, or getting blindsided by the maniacal driver! In other words, I just don’t see how any given person can say something like: “I have 0.000003% chance of getting run over by an SUV, 0.0003% of slipping on ice, 0.0000003% chance of falling down the stairs on an empty soda can,” etc. An actuary may well set rates for populations based on the prevalence of such injuries, but I can’t see how anyone would presume to set the risk levels for themselves as an individual.

As for Robert’s points on investment: I am cautious about extrapolating investor behavior to the insurance context. Health is the one thing we have that allows us to enjoy all other things. So it would seem strange to me if someone laid out, say, “expected values” of various policies and investments and was not much more careful about potential losses in the “health portfolio” than in other portfolios.

Of course, there is EMTALA. But I think few people realize the limits of those protections, especially after rules changes under the current administration reducing hospital obligations to such patients.

But isn’t that what the actuaries for insurance companies are supposed to do? Forecast the total risks and then tally them up to figure out what rates the company should charge in order to still remain profitable? In that sense, if one assumes (a) the actuaries are doing a decent job at predicting statistical risks, and (b) that younger people are statistically at less risk than older people, then it does seem somewhat rational for a young person to opt out of life insurance.

This is not to say that I agree with opting out of life insurance if one’s reasons are to avoid subsidizing the old people (again, assuming we can so easily differentiate risks). I just don’t think that buying insurance is automatically a rational choice–it depends on other factors such as the rate, the time period that one is planning to go without insurance, one’s approach to doctors, etc. Indeed, one could argue (as suggested by Dave above), that I’m being irrational in enrolling in an HMO plan rather than a catastrophic plan, given that I avoid seeing doctors unless in an emergency, whereas I was more rational over the summer, when I only had a catastrophic plan.

For someone who is young and does not have ongoing medical expenses, this is a terrific plan. If I have a bad year with a medical emergency, I will pay a maximum of $4,672 (the deductible plus the premiums). Under the regular HMO plan, I pay $4,200 a year, irregardless of whether I actually go the doctor! The $672 is simply insurance for the unexpected… if something serious does happen, I won’t have to mortgage my future nor risk my eventual admission to the bar.

All of which demonstrates one of the fundamental problems with traditional “insurance”: if people are paying for a plan without a significant deductible, they are incentivized to take advantage of medical services whether they need them or not, which drives up the costs of insurance across the board. If healthcare is to be mandated, catastrophic plans ahoud be a part of the solution for healthy young people.

I just don’t see how any of it’s forecastable.