In other words, your analysis is true and only half the story. The other half is that there are insurance companies, roughly all of them, who will not cover some people – and the older they get the more they don’t want to cover them – at least not for a price they can pay. The market for covering these people is indeed broken. Enter the current intervention.

Of course, the current intervention will result in ever increasing costs for insurers and rates that can’t be supported. Insurers will lose money or have to consolidate until you essentially have a single payer system, either because of consolidation or because there is a last resort government fund which takes the hard cases, leaving the easy cases to the private sector. Eventually, there will be no easy cases.

Can individuals get out of this? No. Employee-owned cooperatives may be able to by self-insuring. For that matter, any firm might be able to in that manner. They key is to make sure that they are able to do so under the law and that their tax burden is eased because they opt out, as public funding will likely be a feature of health care reform.