Thanks to government policy, the word insurance has been fatally corrupted in the health care industry. Insurance arose as a way for groups of individuals to protect themselves against insolvency by pooling their risk of unlikely but highly costly happenings. Today, private and government health insurance is merely a scheme to have others—the taxpayers or other policyholders—pay one’s bills not only for rare but catastrophic events, but also for predictable and likely, that is, uninsurable, events—and even for goods and services used in freely chosen activities.
The system is so camouflaged that the privately insured are often simply prepaying for future consumption, but the prepayment includes a hefty administrative overhead charge, which means the policy would be a bad deal if customers were paying the full price with eyes open.
What makes private medical insurance look like a good deal today is that employers seem to provide it for "free" (or at low cost) as noncash compensation, or a fringe benefit, which is treated more favorably by the tax system than cash compensation. If an employer pays workers in part with a $5,000 policy, they get a policy that costs $5,000. But if the employer pays workers $5,000 in cash, they’ll have something less than $5,000 with which to buy insurance (or anything else) after the government finishes with them. That gives employer-provided insurance an appeal it would never have in a free society, where taxation would not distort decision-making. Moreover, the system creates an incentive to extend "insurance" to include noninsurable events simply to take advantage of the tax preference for noncash compensation. Today pseudo-insurance covers screening services and contraception, which of course are elective. (This does not mean they are trivial, only that they are chosen and are not happenings.)