Arnold Kling  

90 Percent Lack Health Insurance

Applying Douglass North, et... Why Does Homelessness Persist ...

In this essay, I start by suggesting that hardly anyone has health insurance.

The health coverage most Americans have is what I call “insulation,” not insurance. Rather than insuring them against risk, most families’ health plans insulate them from paying for most health care bills, large and small.

It touches on several themes from Crisis of Abundance. The essay leads off a new issue of Cato Unbound, so over the course of the next week or so you will see responses from other writers.

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COMMENTS (7 to date)
Michael Sullivan writes:

I'll have to check out your book, this seems like an excellent analysis.

You may have to check or explain yourself in places if you want this to be palatable to the typical middle class reader. At first glance, the idea of being on the hook for $5-10k a year in medical care before the insurance kicks in looks like you're presenting a huge burden for typical or poor families. Of course, in practice, their employers are often paying this much already (if they have health insurance), which could be in salary if it wasn't devoted to buying low-deductible health insurance.

I believe a lot of people could be convinced to accept a high deductible (more like what you call "proper" insurance) plan if their employer would pay them the difference in cost. Or if employers were disconnected from the process entirely (either disallow employer deduction off HI, or allow personal deductions).

I wonder if a similar analysis is worth doing for the other great inflationary expenditure of our time: education. I don't think the insulation in education is nearly as big as in health care (people have to pay back their student loans), but it exists to some degree.


Mike writes:


This is probably not the right place for it, but it's on my mind. (I enjoyed the piece however).

I just returned from the AEA meetings and attended several sessions on health care. In none of those sessions, and in so little of the discussion among economists about health care have I heard a thing about the provider side of the coin.

Any realistic consideration of the health care situation in the US is that insurers, consumers, providers and government have to all be considered important agents facing different optimization problems. The providers, IMHO, are in the worst position of the 4 groups - and I have in mind hospitals, not plastic surgeons per se.


I find this a highly-convincing analysis - I'm a convert.

The simplest answer to the objection that consumers cannot make informed health care choices is that consumers should employ expert *agents* to advise them about expensive specialist treatments.

In other words, patients should usually consult primary health care physicians for expert independent advice before embarking upon expensive specialist treatments.

mjh writes:
For example, if I buy a policy in January of 2007 and my expenses from 2007 to 2011 total $35,000, I would be reimbursed for $5000.
Doesn't this system of reimbursing these things require me to have $35,000 today? Part of the purpose of insurance (for me) is so that I don't have to have huge sums of money in a crisis. Let's say that I did have this policy, and 1 year after purchasing the policy, I had some seriously expensive health problem that cost me $100,000 to pay for. It doesn't do me much good that I'll get $70,000 back in 4 years if I don't have the total $100,000 now. Withoug the $100,000 now, I might not live to see the expiration of my policy 4 years hence.

I don't understand how this works. Is it better explained in the book?

Robert writes:

Age 52: overweight, high blood pressure, self employed. Cannot buy individual health insurance with any deductable. Have had high deductable plans for several years and have not had a claim paid since 2000.

Fortunately, Nebraska has a decent high-risk pool. I signed up for the $10K deductable.

While I generally agree with this article, my recent experience looking for health insurance to replace a plan that is going defunct is driving me to support single payer and all that it entails.

Paul Zrimsek writes:

Let's say that I did have this policy, and 1 year after purchasing the policy, I had some seriously expensive health problem that cost me $100,000 to pay for. It doesn't do me much good that I'll get $70,000 back in 4 years if I don't have the total $100,000 now.

What he said. Also, are the 5-year policies he bought in 2006, 2005, etc. also going to pay him $70,000 on that same expense?

I recommend that you pull the article and completely rewrite this section. As it stands now it's utterly incomprehensible.

Mmm.. it doesn't make sense to me. The essence of insurance is to cover the risks you can't carry yourself, not to take a loan for it.

In Holland insurances are called verzekeringen. We have a obliged insurance and 99% of the citizens are ensured. Onlt thoses who have religious reasons for not participating aren't. I thionk this is a better system then yours.

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