[throwaway9848]

I'm a safe driver. Why should I have to pay for auto insurance? It's a wealth transfer to bad drivers.

... And actually, I completely reject your characterization of it as a wealth transfer. It's insurance. You have no idea if you're going to need it. You may be in a car accident and badly break your legs, and require corrective surgery and rehab. You may get pneumonia or a bad MERSA infection. If you haven't saved up a few hundred thousand dollars and you show up at an ER, then the wealth transfer is to you when the hospital eats the cost and passes it along to properly insured people. That's not even going chemo/surgery should you develop cancer, god forbid.

[fennecfoxen]

This is a stale discussion, but, auto insurance is not designed to be a wealth transfer to bad drivers. That's why you, as a safe driver, can pay a very small premium. Meanwhile, Mr. RacerX (with his super-powered sports car, speeding tickets, and an actuarial risk profile which suggests he is more likely to require payouts) will pay more.

More importantly, Mr. RacerX cannot call the insurance company from the scene of an accident, say that he needs auto care, and expect to pay the same rate that you do. Yet this is the financial equivalent of knowing that you have cancer, and signing up for a new insurance policy.

Finally, there's catastrophic health care insurance (which the ACA has more or less outlawed) which is in fact similar to auto insurance... then there are fancier plans with more coverage, which are more like warranty / service plans for your car. If you have an old car with 300,000 miles on it, it is likely to need more service or develop a crazy expensive engine issue than a brand-new car. If a warranty service plan or similar contract is available to you, you would expect to pay more for it. Likewise a human being, but the ACA has both mandated these plans and limited the amount that older human beings may be charged.

Please note that the moral rectitude, overall desirability, or similar characteristics of the wealth transfers associated with the ACA, or of other hypothetical wealth transfers or health-care related scheme... are not addressed by this post, which examines only financial structures. (The grandparent post examined only incentive structures.)

[dragonwriter]

> I'm a safe driver. Why should I have to pay for auto insurance?

AFAIK, at least in California and I think this is true more generally, you don't. In order to drive legally on public roads, you must demonstrate the ability to meet a certain minimum amount of financial liability in the event that you are responsible for a collision either by posting a bond or by demonstrating that you have adequate liability insurance.

Most people choose to meet that requirement through insurance, because it has a lower up-front cost (though likely higher lifetime cost), and because they also want other coverage besides the required liability coverage along with it.

> ... And actually, I completely reject your characterization of it as a wealth transfer. It's insurance.

It is insurance, but rules like the "no exclusions for pre-existing conditions" and controls on what factors can be used in rate setting also make it a wealth transfer. (At least part of the idea of making it a wealth transfer is to improve overall access to insurance and, through that, preventive care, to make the overall system more effective for everyone.)

[nickff]

The subsidies and relative price fixing are wealth transfers, why else would they exist?

[throwaway9848]

The subsidies are to poor people. The poor people get medical care anyway, at ERs, where hospitals cannot refuse them. Or they forgo the care until mundane problems become chronic or acute problems (and they end up in the ER). ERs happen to be the most expensive means of providing heath care. So, to answer the first part of your question, the subsidies exist so that people who cannot afford heath insurance via the exchanges can still have health insurance. And the reasoning behind it is to reduce health care costs that emerge from lack of access to care.

I know less about the age rating bands. Off the top of my head, it's to smooth costs over a lifetime. So it's a wealth transfer from your young self to your old self, if you have typical health care costs over your lifetime: http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1361028/

edit: http://www.rwjf.org/content/dam/farm/reports/issue_briefs/20... for more on age banding.