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The Complete Idiot's Guide to Economics, 2nd Edition by Tom Gorman

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What Is Health Insurance?

What we call health insurance has characteristics of insurance, but differs from it in certain ways. Health insurance resembles life insurance in that at some point most people suffer injury or illness, just as everyone dies. Yet death is universal and its result is uniform. Because everyone dies and the benefit payout is known beforehand, it’s easy to set premiums actuarially that will fund the payouts. That’s not the case with health insurance.
Health insurance resembles car and fire insurance because it pays benefits intended to make you whole when an insurable event occurs. But not everyone has a serious car accident, and most houses don’t burn down. For that matter, not everyone drives a car. If your auto insurance ...

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