@FreeDuck,
I think you are not quite grasping the point here.
Private insurance did not want to assume the unreasonable risk (to them) of insuring San Francisco or Los Angeles or San Diego for damage from a severe earthquake and private insurance did not want to assume the unreasonable risk (to them) of insuring Des Moines or New Orleans against flood damage. The states of course could have written regulations to make that mandatory for any company writing insurance in those states, but the insurance companies simply then choose not to do business in those high risk states at all. That hurts everybody.
So, to remedy the situation, the federal government set up its own system by which the people could BUY--they aren't given, they BUY--the additional flood or earthquake insurance if they need it. A person who lives on a hilltop is not likely to need flood insurance . A farmer in Nebraska has essentially zero risk of damage from an earthquake and does not need earthquake insurance. The rates for those who do need it is not cheap and is based on a scale of probability of risk which reduces the risk to the taxpayer.
Because the federal government is making that kind of coverage available to those who need it, insurance companies are willing to accept the reasonable risk of providing homeowners insurance that everybody everywhere has, and they can do that at a much lower rate than they otherwise could do. That benefits everybody probably more than the risk involved and that is what justifies the government providing that service.
In this case the government is providing only that which cannot be provided more efficiently, effectively, or economically by the private sector.
I have no problem with the government providing the kinds of health insurance; i.e. catstrophic coverage etc., that the insurance companies would prefer not to offer and, in the case of certain pre-existing conditions, are not willing to offer. So a 'public option' dealing strictly with that would allow the insurance companies to offer routine coverage at a much lower rate than they can now do. Again, the government would be doing only that which cannot be provided more efficiently effectively, or economically by the private sector.
I have been accused, quite unkindly and unnecessarily hatefully, of wanting to impose additional government regulations on the insurance industry. But a law allowing insurance companies to compete across state lines would add a factor of healthy competition that almost certainly would break up oppressive monopolies in some states and would almost certainly reduce rates. Even President Obama acknowledges that. Remove the ability of old boy networks in the states to profit from monopolies, and they go away. Add in the GOP plan to make health insurance individually owned instead of employer owned, and you eliminate a lot of oppressive union power and make insurance portable while not eliminating the employer's ability to make paying for insurance coverage a benefit if they choose to do so. Add in the tort reform that all thinking people know is necessary, and a great deal of the broken system will be fixed without costing the taxpayer a dime.
Once such reasonable reforms are enacted, then President Obama can give the insurance companies an ultimatum. Okay, we've given you the opportunities and protections that you need. Now come up with affordable health care policies for the people or we will be forced to allow government systems to compete with you. And he can tell the people that you will be expected to have insurance when you show up at the doctor's office or the emergency room. If you do not, you can be assessed the cost of your healthcare if it takes you the rest of your life to pay it off. The government does that with taxes owed. It can do that with healthcare. And such enforcement of consequences for the choices people make would not in any way hinder their freedom or put any kind of unnecessary mandatory requirement on them.
