The reality of fully risk-based health insurance is this.

Those who are least likely ever to need it, particularly the young and fit, will pay the lowest premiums.

Those who are most likely to require health care, i.e. those who are older and less fit, will pay the most.

On the surface, this seems appropriate. After all, why should those who take good care of themselves shell out for those who don't?

But as with everything related to our health, it is not always that straightforward. Even the young and fit can be vulnerable - witness the 27 year-old who suffered a heart attack in this year's Sydney City to Surf. Nor are all old people a burden on the system - it's all a matter of actuarial calculation.

Underneath that simple equation is a deeper problem.

Science - particularly genetics – increasingly allows us to more accurately predict potential health vulnerabilities.

http://www.genetics.com.au/factsheet/fs24.html

"Once a gene is isolated and its correct sequence defined, it is possible to determine if a person has the correct copy of the gene or the faulty version that may result in a particular genetic condition. This information may be used to diagnose a condition in an individual or during a pregnancy... or it may be used to test an individual prior to any symptoms being present."

Once you embark upon fully risk-based health insurance, how would you be able to refuse the insurer a copy of your "genome chart"? After all, we already provide information relating to our parents' health.

Makes every bit of sense from the insurer's viewpoint, but its social implications are far wider.

There is unfortunately no halfway house in this situation that is “fair” to all parties. If you allow insurer's to assess risk before assuming financial responsibility for it, why would you stop short of allowing them to collect all relevant data?

As anachronistic and as unbalanced as our present system of community rating may seem, it is a heck of a lot better than the alternative.

There is an interesting study comparing the life expectancy of homeless men in two cities in Canada and the other in America. Both cities have a similar climate.

There are no prizes as to which country's homeless men had a higher life expectancy.

The author suggests that young people pay lower health care premiums,
than people who are older, take this a step further and apply the same principle to young people who have for example diabetes or epilepsy.

Because they will use more health care resources than another person of the equivalent age. However this principle would disadvantage the people with these diseases as they already incur a high burden of cost including medications.

The Pharmaceutical companies would love to see the end of the Australian governments pharmaceutical scheme, which keeps the cost of medications down, by a significant amount when compared with the costs in a competitive deregulated market such as the US.

Competition between health funds in the US keeps people who are high risk from joining health care funds.