I am unsure I understand your point. Please explain to me how, in a completely free and unfettered market, there exist incentives for insurers to cover seriously ill persons?

Of course, this could easily be done by simply correlating premiums to the risk level, but that kind of begs the question b/c, as you admit, so many sick persons would be priced out of coverage and thereby excluded from the pool. So I’m having difficulty seeing how this current case is a product of “regulation” rather than the array of incentives in the health insurance industry. Removing all regulation would hardly ameliorate these incentives, nor would it make it likelier that sick persons obtain insurance coverage, if we care about that at all.

Indeed, premiums are more closely calibrated to individual risk in the individual health insurance market, which is partly why the cost of individual health insurance is exorbitant.

Taiwan provides yet another model:

http://dissentmagazine.org/article/?article=985

“The provision of health care is not nationalized, despite a degree of information and coordination that, for example, the British system cannot match after spending billions on computerization. Rather, [Taiwan's National Health Insurance Program, introduced in 1995] is a classic single payer scheme—the government runs a compulsory, mostly premium-financed insurance system, which negotiates a single payment schedule with the private and municipal or government-owned providers.”

“Health care is provided by a competitive mixture of municipal and public (about one-third of the beds) and privately owned hospitals that also offer comprehensive primary care. Between them they employ almost two-thirds of doctors.”

In a free market, insurers could discriminate based on price and coverage, and reach an equilibrium which would offer the widest possible insurance options with the greatest efficiency. Since DNA does not guarantee future health (one way or the other), there would still be some degree of risk which could be shared among those that were not currently sick.

Would some people be priced out of health insurance? Of course. But at least they would have a viable health care industry to serve their needs as charity cases, in contrast to the slowly decaying monstrosity that would result from the complete nationalization of health care funding.

Whatever it takes, I guess.

Perhaps the tort reform proponents urging that consumers are not necessarily worse off in arbitration would endorse this decision?

The language in the opinion is actually worth quoting here, as its among the most acerbic I’ve seen from an arbitrator, though, admittedly, most arbitration resolutions are not reduced to writing:

“It’s difficult to imagine a policy more reprehensible than tying bonuses to encourage the rescission of health insurance that keeps the public well and alive.”

Reprehensible, surely. But it just shows the power the possibility of rents exerts on our behavior. It’s why, again, I query, along with Allen Buchanan, why anyone ever imagined for one solitary second that health insurers are likely to act in ways that allocate resources justly.