This is a good analogy because it highlights the important problem. Insurance companies are incentivized to have healthcare prices increase so long as they get a discount. Why? Because it increase their value to the consumer to the point of necessity.
Also they are only allowed to make a certain profit margin: cost plus. One way to grow your profits is for the underlying cost to increase.
"The Affordable Care Act kept profit margins in check by requiring companies to use at least 80 percent of the premiums for medical care. That's good in theory, but it actually contributes to rising health care costs. If the insurance company has accurately built high costs into the premium, it can make more money. Here's how: Let's say administrative expenses eat up about 17 percent of each premium dollar and around 3 percent is profit. Making a 3 percent profit is better if the company spends more."
