Perhaps a crude but appropriate analogy is if you own an automobile, you know a couple of things. You know that if you don't maintain it well, if you don't change the oil, if you don't check your tire pressure, and if you don't do a few other safety things, you could find yourself in a lot of trouble in a hurry and really raise the cost of owning that vehicle.
Similarly, when you think of getting auto insurance, you have to make active decisions about the level of collision or comprehensive insurance and think actively about what level of risk you're willing to take on your deductible. We're incented to not drive our cars into trees, right? Because, gosh, it hurts and you can kill yourself, and in the best case, you have to pay your deductible. And even in the best case, your premiums go up after you have an act, if you will, of carelessness. So we need to think about ourselves in the healthcare system similarly.
Devil's advocate would ask about the distinction where you get to pick the car you buy but not your genes.
ReplyDeleteThe real problem is many health claims are correlated over time. If you get in an auto accident, this endogenously reveals information on your real historical risk so rates naturally go up. If you develop a chronic disease, your risk exogenously increases. And you can become uninsurable as a stand-alone customer. Health insurance needs to be a life long (or decades long) purchase which you acquire early in your career. For large employers, corporate plans suffice. Must-play government plans solve the problem, but create countless more. A Nobel Prize awaits the economist who can design a viable, voluntary, free market plan.
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