(This post originally appeared in CharismaNews.com | Image from Charisma News)
By Joel Nobel (Samaritan Ministries) and Greg Scandlen
Different kinds of insurance operate very differently. Auto, homeowners, health, life, Workers’ Compensation and medical malpractice all operate in different markets under different rules and different organizational structures. But one thing they all have in common is “risk pooling.”
“Risk pooling” certainly figures into recent discussions about repealing, replacing for “fixing” government health care. And it is almost universally misunderstood by policy-makers. It is a pool of money, yes, but it is also a pool of risks. From the customer’s perspective, they pay money into a pool of funds that is available to pay their claims according to the terms of the contract they have with the insurance company. Because of that contract, the “pool” is not just a big vat of money that can be allocated any way they want. Every penny is already contractually obligated to be paid out in the future.