Sunday, August 04, 2013
Health care plans must take into account adverse selection, regardless of "libertarian" motives
The basic reason for an individual mandate as part of “Obamacare” is to prevent adverse selection, or antiselection. Robert H. Frank explains this very clearly on p. 3 of the Sunday New York Times, Economic View, “For Obamacare to Work, Everyone Must Be In”, link here.
Sounds like the moral paradigm of the old military draft, doesn’t it?
New York has tried to prevent insurance companies from imposing pre-existing limits on individual policies with the result that individual premiums have been among the highest in the nation.
Frank explains how we used to depend on employer-paid group insurance to soften the blow of pre-existing conditions, and in today’s world it is much less practical to depend on it. Frank advocates a model a bit like what Switzerland uses, which is still “private” but more affordable than in the US.
Conservatives do have some good ideas: competition across state lines, portability, pre-tax parity for individuals with employers. But these ideas would not take care of the pre-existing condition problem.
So, as a moral argument, conservatives seem left with the gruesome idea of turning to “family and friends” for catastrophic health problems, in other words, filial responsibility, which is not exactly commensurate with libertarian ideas of personal responsibility.
By the way, when mentioning libertarianism, check out the Washington Post today, by Nick Gillespie, Reason story here.
Note also, recent New York Times stories on “medical tourism” and an explanation on why hip replacement is so much cheaper in Belgium than in the U.S.
Would the same apply to dental work? My computerized guide for my recent dental implants cae from Belgium.