It took awhile, but health insurance industry executives are finally speaking out about the future of health insurance under the various healthcare reform proposals being considered by Congress.

It is gratifying to see the leaders of major health care insurance companies echoing the comments I have made here.

In my September 14 analysis of the president’s primetime address on health insurance, I wrote, “These…mandates…will force the health insurance companies to spend billions of dollars in additional benefits with no way to recoup the expenses, upsetting the actuarial apple cart.”

Yesterday, a group of health insurance executives meeting in Colorado said virtually the same thing. The Denver Post reported that the executives believed that “insurance companies…would end up spending more to treat patients than they would receive in premiums.” Under such a scenario, said John Martie, president and general manager of Anthem Blue Cross Blue Shield of Colorado, “The whole system would collapse.”

That is what I called the “actuarial unsustainability” of the president’s proposals.

The health insurance executives expressed concern that consumers would buy health care insurance only when they know they need it, such as after a diagnosis for cancer or heart disease. “People would come in, pay premiums for a few months while they were getting their cancer treatments,” said Martie.

Supporters of health insurance reform dismissed the insurance company executives’ concerns. “They are assuming that people would game the system,” said Denise de Percin, executive director of the Colorado Consumer Health Initiative. “They are looking at the worst-case scenario. People aren’t stupid—they are not going to pay a penalty and get nothing,” de Percin said.

Percin is only half right: People are not stupid, but that is exactly why they would “game” the system. If people know they can get insurance at any time, regardless of existing health problems, they will wait until they are sick to get a health insurance policy. To do otherwise would be stupid.

To put it another way, fear of uninsurability is one of the main reasons that healthy people sign up for health insurance. They know that if they wait until there are sick to get insurance, they will not be able to get coverage for that condition.

Health insurance reform proponents love to trot out the example of automobile insurance to show that the government can force people to buy insurance. That analogy is false, however, because states do not require motorists to insure themselves, only the damage they do to others.

But since the analogy is out there, think of it this way: Forcing health insurance companies to write policies for people with preexisting conditions is like forcing car insurance companies to write policies for drivers after they have had an accident—and to pay for repairs stemming from the accident.

If drivers could wait until they had an accident to get insurance, they would. Likewise, a homeowner would not insure the home until it had burned to the ground. A boat owner would not insure the vessel until it had sunk. The list is endless.

This is the actuarial foundation of insurance: A large group of people pay a small amount of money, knowing that the insurer will pay a much larger sum, if needed. If no one pays premiums until they have a claim, the system does not work.

In its present form, the new healthcare system will not work, because it defies actuarial reality. It is not insurance at all; it is a scheme to drive private insurance out of business, leaving government to pick up the pieces. Proponents of healthcare reform should come out and say they plan to kill private health insurance, but that is not politically viable. So they pretend that they will simply improve the present system.

That’s the funny thing about words: They don’t come with “true” or “false” labels. It’s up to the individual to use common sense to discover the truth. Fortunately, that isn’t too hard with the current health insurance debate.