As the left is apt to do, they are trying to redefine insurance. Actually, "trying" is probably the wrong word, as they've mostly done it. As John Goodman has said often on his blog and Mankiw alludes to here, in the past insurance was designed so that each participant paid his expected costs. This means that if I had a 50/50 chance of a $10,000 health condition, I paid $5,000 over the long-run. Presumably, someone else would do the same (or many, many people). On average, the insurance company would just about break even (not quite), and the half of the insured who had the bad coin flip weren't bankrupted by chance.
In this design, the lucky subsidize the unlucky, but everyone pays his expected costs. This is still how most insurance works-automobile, life, travel, shipping, everything but health.
In the past decade (which is about as far back as I can remember for this debate), the left has argued that insurance is meant for the healthy to subsidize the unhealthy, which just isn't true. That's no longer insurance.
John Cohn says men should subsidize women and E.J. Dionne says pro-lifers should be happy to subsidize women's higher insurance.
I strongly recommend reading Mankiw's post. I heartily agree. I still don't know how to handle the genetic issues that are out of anyone's control, but we should all be able to agree that we shouldn't subsidize choices that increase total costs. If someone makes decisions that increase their own personal costs, they should be responsible for them, they shouldn't be spread across society.
We should be very wary of liberals re-defining words. They're very adamant about it--subsidies, insurance, fair are all examples.
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