Further, a healthful lifestyle is no guarantee of avoiding catastrophic medical problems. Healthy people have accidents. People enjoying healthful outdoor activities can contract Lyme disease. Healthful fruits and vegetables can be contaminated with E. coli bacteria. Healthful people can be exposed to deadly pollutants such as asbestos, which causes mesothelioma, and not know it.
The Cato Plan: Insurance Insurance
Unlike some of the other conservative think tanks, which depend on the Good Actuarial Fairy to take care of high-risk insurance customers, Cato does have a plan for taking care of your medical needs as you get older and frailer. Cato says you should buy insurance insurance.
No, I'm serious. They call it "health status insurance," but it's essentially an additional insurance policy to insure you against the increased costs of being dumped into a high-risk pool. This plan was proposed in February 2009 by Cato adjunct scholar John H. Cochrane, a professor of finance at the University of Chicago School of Business.
The "health status" plan, as most conservative plans do, calls for eliminating employee-based insurance and also removing constraints on insurance agencies that limit their ability to jack up premiums for people who get sick. Then your second insurance policy will pick up the slack when you do get sick. Cochrane writes...
Medical insurance covers your medical expenses in the current year, minus deductibles and copayments. Health-status insurance covers the risk that your medical insurance premiums will rise. If you get a long-term condition that moves you into a more expensive medical insurance premium category, health-status insurance pays you a lump sum large enough to cover your higher medical insurance premiums, with no change in out-of-pocket expenses.
Of course, keeping the cost of insurance insurance premiums reasonably low depends on people purchasing insurance insurance policies while they are still young and healthy. But Cato, of course, doesn't want to make insurance insurance mandatory, but simply leave it to the good sense of young people struggling with too many other expenses to purchase insurance insurance policies on top of health insurance policies. Sure.
To me, Cochrane's proposal (which you can read here) is an admission that a consumer-driven free-market plan will fail you, and to protect yourself from this failure you need more insurance.
A Pure, Religious Faith
As I said earlier, Cato isn't necessarily irrational on all issues. But when an issue touches on markets, at Cato rational thinking is replaced by magical thinking. "Free markets" will solve all problems. It's more accurate to say that free markets are very good at producing goods and services at which someone can make a profit. Cato assumes that everything that's needful is profitable, but outside pure faith there is no reason to believe that is always true.
There are no end of studies and reports saying that all those "socialist" countries with "government-run" health care get more bang out of their health care bucks than we do. A recent report by Alan M. Garber and Jonathan Skinner (see the document for their credentials) provide several reasons why U.S. health care is uniquely inefficient. Government regulations and mandates are not among those reasons.
On the other hand, one reason our current system is inefficient is that health-care dollars chase profit instead of outcome. In other words, the medical-industrial complex does not make a profit from curing you; it makes a profit from what it call sell to you, whether it cures you or not. That's an inefficiency built into a "free market" system.
Anything to say about that, Cato Institute?
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