The Scoop On Healthcare Insurance

I strongly recommend this primer on healthcare insurance from the Wall Street Journal. If your experience with healthcare insurance is strictly as a healthcare consumer, it may be an eye-opener. One thing that I wish they’d mentioned is that almost half of employers (and 70% of medium-to-large companies) self-insure.

The recommendations are rather interesting:

There are better ways to go. Tax credits to individuals to buy insurance would make it more affordable and thus strengthen the individual market. Other tax rule changes could also make it easier for people to join and form their own risk pools beyond their employers, such as through business federations, labor unions or, say, the Kiwanis Club. They would no longer be hostage to one job for insurance.

University of Chicago economist John Cochrane also argues that in a more rational individual insurance market, people could insure not merely against medical expenses but also against changes in health status. This kind of insurance would cover the risk of premiums rising as you get older and your health condition changes.

In turn, that would free insurers to compete for the business of all patients, including those with pre-existing conditions, because then they could charge enough to cover the costs—instead of passing them to others. As for those with rare conditions (“orphan diseases”) that require a lifetime of special care and are thus uninsurable, this is where government subsidies could be both appropriate and affordable.

I think that state pools, as in Wyden-Bennett, are also a good idea.

Another thing that’s worth mentioning is that when you discount immigrants, the U. S.-born children of immigrants, and those with incomes sufficient to purchase healthcare insurance but who have elected not to from the frequently quoted figure of 46 million uninsured, the number is reduced by about 2/3’s. What I’m suggesting by this is that one size does not fit all.

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