Friday, February 24, 2012

Anticipate adverse selection,

...lest you be victimized by it.

Apparently the administration forgot about adverse selection when they rolled out their new "Pre-Existing Condition Insurance Plan" designed to provide health insurance to those who had been declined by private carriers. Since last summer, nearly 50,000 Americans have enrolled in the program.

Predictably--at least for anyone who has read Chapter 19--the plan is costing us a lot more than we were told, $28,994 in in 2012, more than double the $13,026 that government-contracted actuaries predicted in November 2010.

“Once you’re enrolled you can begin chemotherapy the first day of your coverage,” said Richard Popper, deputy director of insurance programs at CCIIO. “We had individuals who enrolled and in their very first week went into surgery.”

Can we get our money back from the contractors?

HT: Matt D.


  1. I feel outraged that our government feels the need to give chemotherapy and medical care to those unprofitable sick people that other insurers had the good sense to dump. Rational actors are aware that dying in an efficient libertarian manner is the optimal solution in cases like this.

    Nobody wants to pay for someone who smoke/drank/Haagen-Dazs'd themselves into poor health, any more than they want to support the proverbial welfare queen. And yeah, there is some of that out there.

    But most of the seriously ill people I personally know didn't do anything wrong. Mental illness, brain tumors, muscular dystrophy, cerebral palsy. And I do not fault government (or those horrible, horrible liberals) for trying to help people that no one else either can or wants to.

    So since your health is a combination of a) purely random factors you have no control over and b) individual self-destructive behaviors, why not treat the problem at that level?

    HSA's capped by government-sponsored catastrophic insurance, subsidized to the poor, to cover the things you have no control over, and Pigouvian taxes on liquor/fast food/sugar to both reduce demand and help pay for treatment. It helps the needy, and I don't see anything Milton Friedman would disapprove of.

  2. And in case it wasn't patently obvious, Blogspot chopped the {/sarcasm} tag off the first paragraph.