Can a smart phone cure your depression?
A Hayekian approach to health care. But why was she working in the Obama administration?
Can a smart phone cure your depression?
A Hayekian approach to health care. But why was she working in the Obama administration?
In the article about a Trump health plan, I notice that he references an old John Cochrane idea about “health status” insurance. With such a policy, a person could buy low-cost insurance today, when they are healthy, but they could keep the insurance even after they got sick. The premium would be higher we see today for short-term coverage, but still within most budgets.
Now this was proposed by the economist John Cochrane, and I think the world of John Cochrane. The only problem is that we have never seen a real-live actuary tell us what health-status insurance would cost.
I was an actuarial student, so I know just enough to be dangerous. But I will suggest the following: if I were to design a product that would pay for $1 million in cancer care 20 years from now, I would charge a very high level premium.
And even then, the companies that wrote the insurance might start bailing out when their insureds got older and more expensive. This is exactly what has happened in the long -tern care market.
The Trump article links to an excellent 2020 Goodman article, “Short-Term Insurance Is Not the Problem. It’s the Solution.” I which I had seen it when new, as it validates much of what I have been thinking the past several years. The only part I question is “2. Provide the same tax credit to everyone, regardless of which market they buy insurance from.” Why is such a universal tax credit even needed, when STM coverage is relatively low-cost? It seems that the real subsidy is already covered under the next bullet point, “3. Let the Obamacare market serve as quasi-risk pool insurance and keep the premiums reasonable with subsidies paid for by taxpayers generally.”
STM insurance provides a better reality check on coverage costs than even pre-Obamacare private insurance, which was distorted by guaranteed renewal requirements and aging pools. STM’s is valuable for that reason alone, as Obamacare seems to be designed to obfuscate costs as much as possible.
A combination of STM and health status insurance might be a reasonable alternative to pre-Obamacare private insurance, but with Obamacare as the fallback plan, I don’t see a real need for health status coverage.