Hold the insurance companies accountable. Remove them from between you and your doctor. No discrimination for pre-existing conditions. No dropping your coverage because you get sick. No more job or life decisions made based on loss of coverage. No need to change doctors or plans. No co-pays for preventive care. No excessive out-of-pocket expenses, deductibles, or co-pays. No yearly or lifetime cost caps on what insurance companies cover.
— Nancy Pelosi, Speaker of the House of Representatives
So, when is the last time you heard about a life insurance company dropping someone's coverage because he got AIDS? Never happens. What about jacking up someone's life insurance premiums after the insured has a heart attack? Not a chance. How about dropping coverage just because a person changes jobs or retires? No way. Ever heard of a life insurer interfering with the doctor-patient relationship — say, pleading with the providers to keep the patient on life support so the company can delay paying the claim? Ridiculous.
Then why does the market for life insurance work so well while the health insurance market seems so dysfunctional — even when the same insurers are in both markets? Answer: because of politicians. Politicians who think just like Nancy Pelosi thinks.
Strange what desire will make foolish people do
For some reason (not well understood by me) politicians have largely left the life insurance market alone. As a result, in that market people face real premium prices that reflect real risks. The market is basically a free market and it works the way you would expect a real market to work. It meets peoples' needs and does so at minimum cost.
The health insurance market, by contrast, is so heavily regulated that it is a stretch to even call it a market. The small group market is a complete creation of government policy. It wouldn't exist at all were it not for government. Large companies basically can't buy health insurance. They're all effectively self-insured, whether they realize it or not. Basically, more than 90% of people with health insurance never even see a real premium reflecting real risks.
The closest thing to a real market is the individual market. But because the tax law discriminates against this type of insurance, people tend to be in this market for short periods of time. With a small market share to begin with and a transitory customer basis, insurers have weak incentives to innovate and experiment. And even in this market regulation is pervasive. (There are many mandated benefits and you can't buy across state lines, for example.)
The absence of real prices creates perverse incentives on both sides of the market. Buyers will tend to underinsure when they are healthy (and don't plan on using many services) and overinsure when they are sick (and plan on using a lot of services). On the seller side, insurers will try to attract the healthy (on whom they make a profit) and avoid the sick (on whom they incur losses). After enrollment, the plans will tend to overprovide to the healthy (in order to keep the ones they have and attract others) and underprovide to the sick (in order to encourage their exodus and discourage any new ones). When people pursue their own interests in this market they invariably impose costs on others and that leads to innumerable social problems.