The strange structure of health insurance

Ezra Klein is busy transcribing a speech from Dr. Mark Smith, CEO of the California Health Care Foundation. Here's an excerpt:

It's a strange business you're in. What you are selling is four different things. Why do we want people to have health insurance? I always get some variant of four answers. 1) We want people to be protected against rare, unpredictable and uncontrollable catastrophic events. 2) We want people to be covered so they can have their preventive services paid for. They're not rare, they're not unpredictable. But if we have them put it on their Visa, they don't do it. So we prepay for it. 3) So you can get discounts, and don't have to pay rack rate at the doctor. But that's not insurance, it's market leverage. 4) So people who have chronic diseases don't have to pay for the cost of their care, transferring assets from the known healthy to the known unhealthy. Each of these is a socially useful function, but they operate very differently. Saying you need to protect assets from financial loss is a difficult proposition for someone who has no assets to protect. [...]

It's like trying to sell a car that's bundled together with car insurance and three dozen eggs every week and a trip to Bermuda when you turn 27. Those are kind of different things and people will be differentially inclined to buy them, but if they're bundled together you have a pretty dysfunctional product. That's part of why we have such difficulty in the public space agreeing on what is adequate insurance.