Arnold Kling  

Better than Health Insurance?

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Ezra Klein writes,


if consumers, as they've repeatedly proven, don't want insurance, but instead want insulation, why shouldn't we seek to make that work (as it does in a variety of other countries and systems).

Consumers do love to be insulated from health care spending. However, American consumers also love to have access to whatever health care services American doctors think are appropriate, which is something they would lose under another country's government-run health care system. Finally, Americans don't like the financial consequences of insulation, which show up in the form of lower paychecks, higher taxes, and lack of affordability of individual health insurance.

The point is that you cannot give American consumers everything they want when it comes to health care. However, if government were to back off, and give assistance only to the really poor and the really sick, my prediction is that many consumers would shed their insulation and replace it with real insurance. See the book.

Thanks to James Joyner for the pointer.


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COMMENTS (4 to date)
Bill writes:

When I was a child in the 70s, the idea that I should have something just because I wanted it was considered, well, childish. How old is Klein anyway, 5? I guess that some people never grow up.

David N. Welton writes:

So... what's the thinking on situations where someone is just not a good fit for insurance - i.e. they're a known risk? Say, someone with aids, a genetic condition, that sort of thing... ? How do you make the market work for them?

Robert writes:

There are a number of ways of handling known risks. Here are a few.

The insurance payments are negotiated for some term into the future in advance, and cover the possibility of someone becoming a known risk.

When a person becomes a known risk, they receive a one-time payment representing the expected costs of treating their condition.

When a person becomes a known risk, the insurance pays for their enrollment in a case-management system for that particualr illness, which essentially is the previous, with the uncertainty in the length and efficacity of their particular treatment transferred from the patient to the health-case provider.

Mr. Econotarian writes:

If health insurance were real insurance, you would have "whole life health insurance" which you could purchase for your entire life as well as "term health insurance" of 5-10 years.

Your premium would depend on your age, weight, health, and smoking status before entering the insured period.

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