Arnold Kling  

What Health Insurance Reform Means

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The Boston Globe reports,


The number of people who appear to be gaming the state's health insurance system by purchasing coverage only when they are sick quadrupled from 2006 to 2008, according to a long-awaited report released yesterday from the Massachusetts Division of Insurance.

Pointer from Tyler Cowen. Health insurance reform means that the government destroys the freedom of insurance companies to design their own contracts. Instead, health insurance companies simply administer programs designed by the government. This puts a significant burden on government technocrats to design an economically rational system. That may prove difficult. The Dutch claim to have done a good job. Their example might be worth studying, in any case.


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COMMENTS (8 to date)
mark writes:

"This puts a significant burden on government technocrats to design an economically rational system."

We're doomed.

Joey Donuts writes:

According to the article 17,000 + gamed the system and raised premiums for others by 300 million. How much gaming will occur when the national health care "reform" happens with low penalties for not insuring and previous conditions not allowed to prevent a person from buying insurance? Will the "reform" result in the exact opposite conditions? I.e. Higher insurance costs and fewer people insured?


Patrick writes:

Everybody knows the reform bill was built to fail, right? Right?

I'm still predicting a Swissified system rising in its place. I don't think it's much of an exaggeration to say the implementation was window-dressing. The goodies—prohibition of rescission and caps, guaranteed issue, etc.—are what matter because they'll never be undone. Future congresses will be forced to find ways to implement a system which delivers the goodies, no matter what. The unpopular parts (i.e. the implementation) may change form a number of times, but the goodies will endure like any other entitlement program.

MernaMoose writes:

I'm still predicting a Swissified system rising in its place.

If we don't end up broke first.

Lorne M. writes:

How about finally forcing people to be continually covered, at least to a small extent? It would be social, there would be much less incentive for gaming the system and imagine how much the premiums would sink for all.
And don't tell me you don't want to be forced to be insured, because all of us in our right minds are insured continuously anyway.

endorendil writes:

There are at least two dozen working systems that should be studied as to their applicability to the US situation, as the US is the only developed country that hasn't figured it out yet.

In fact, all of these examples have been studied, and cool, dispassionate analysis (of the kind provided by candidate Obama) yields generally similar recommendations: single-payer healthcare insurance, where the government collects the premiums and sets minimal coverage standards, with private industry providing both the concrete coverage (which exceeds standards and aims to maximise profits by improving overall health of the insured population) and the actual healthcare (doctors/hospitals/...).

The problem remains that the visceral reaction to single-payer systems from a small but vocal minority in the US guarantees that cool and dispassionate analysis will not prevail. This is clearly proven by president Obama's retreat to a probably unworkable half-way point.

There is a wider point to be made, which is that perhaps the developed world (sans US) succeeds with its healthcare systems because they are part of a bigger picture, which includes cheap universal education including university and (partially as a consequence) better work-life balance for healthcare professionals. I think there's a good chance that healthcare can't be fixed without fixing the other issues as well, but it should be tried...

BTW, MernaMoose, the US is already broke.

Jeremy, Alabama writes:

Lorne M:

What level of coercion is appropriate to force people to purchase health insurance?

Should illegals be forced also? How do we find them to make them pay?

Should ID be checked at point-of-service to deny service to those who break the law? Should the "ER rule" be repealed to force everyone into the system?

Having forced everyone to purchase the product, at an appropriate level of coercion, what is a good mechanism for determining the price for the risk pool? Can the govt force everyone into the same risk pool? Should the coercion be more expensive than simply paying the penalty? Can people who simply pay the penalty buy the product when they have a need? If they get sick, can they just buy one month or one day of coverage and then exit the program again?

Is it a constitutional power for the govt to force people to purchase a product? What other products would you like to force people to buy with your newly-discovered coercive powers? What if some research shows that a home radon test saves more lives than availability of health insurance? Or that a home energy waste assessment is necessary to save the planet?

Babinich writes:

"How about finally forcing people to be continually covered, at least to a small extent?"

"forcing people"

I cannot find a better example to refute your position.

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