In healthcare, the pooling principle is the same. People who are healthy—most of us—pay something so the people who are really sick can receive the care they need. We adjust risk based on age and unhealthy behaviors.
The big difference between health and auto insurance is that almost everyone uses some healthcare over the course of a year, even though 15% of people account for 80% of costs. They're the ones who ultimately determine the size of the pool required to pay for healthcare.
The question for health insurers, then, is how to determine who pays how much into the pool. That's a tough question to answer because overall risk is not pooled in the fragmented American health insurance system.
Older adults and the poor—groups that require the most healthcare—are covered by taxpayer-financed Medicare and Medicaid. Most seniors and all of the poor could never afford their healthcare bills on their own.
About 150 million working-age Americans and their dependents get health insurance through their employers in a highly inefficient market when it comes to pooling risk. Google or Apple, highly profitable companies with younger workforces, pay significantly less per employee than General Motors or GE, which are less profitable and have older, sicker employees.
Finally, there's the individual market—the subject du jour in Washington. Estimates vary, but anywhere from 10 million to 20 million people (including dependents) buy individual plans either because they are self-employed or in jobs without coverage or they are between jobs or out of the workforce. About 50 million people are not covered at all.
Before reform and the exchanges came along, insurers offered many different plans for this population. They ranged from the very cheap, which did not cover serious illnesses (and were therefore attractive to healthier individuals), to more-comprehensive plans, which were generally far more expensive than similar coverage in an employer-based group.
