IMO/understanding, insurance as a concept of pooling funding and then paying out for those who need it most makes perfect sense. It's the same general idea as taxes going to public services.
In practice, when it's private for-profit insurance, I don't know of any design where it's not fundamentally bad. Because 1) You're inserting into the equation a whole entity whose purpose is not to meet people's needs with the funding but to make money off of it and 2) It undermines the point of the shared pool being as big as possible to make the math work out more practically. Instead of one big pool (such as with a federal government), you get lots of smaller pools, like the asinine US health insurance industry. And if the pool is too small, it becomes less effectual for covering anyone.
So basically, creating for-profit out of institutions that should just be pooled funding for public services is where it falls apart.
IMO/understanding, insurance as a concept of pooling funding and then paying out for those who need it most makes perfect sense. It's the same general idea as taxes going to public services.
In practice, when it's private for-profit insurance, I don't know of any design where it's not fundamentally bad. Because 1) You're inserting into the equation a whole entity whose purpose is not to meet people's needs with the funding but to make money off of it and 2) It undermines the point of the shared pool being as big as possible to make the math work out more practically. Instead of one big pool (such as with a federal government), you get lots of smaller pools, like the asinine US health insurance industry. And if the pool is too small, it becomes less effectual for covering anyone.
So basically, creating for-profit out of institutions that should just be pooled funding for public services is where it falls apart.