I would suggest the idea of private insurance is actually completely non-functional without such heavy regulation that you might as well just institute public provision — which also has the benefit that it does not heavily incentivize over-provision.
With a competitive insurance market, you charge people a premium related to their expected healthcare costs. Some people have chronic diseases, and their expected healthcare costs are way beyond what they can likely afford.
However you regulate, insurance companies will always try to find a way to cream off the lowest risk customers to offer them the cheapest deal, progressively chipping away at the idea of collective insurance until it breaks.
Private health insurance is broken not only in practice but also in theory.
For sure - it's kind of absurd because healthcare costs are an inevitability.
With car and home insurance, the products can go their entire lifecycle without burning down, being robbed, or smashing into a tree.
With healthcare, a person is going to need it, and it incapacitates them when they don't get it. Personally I'm for treating healthcare as we treat most regional monopolies that everyone needs - make it a public utility. You'll need healthcare just like you'll need water and electricity.
> With healthcare, a person is going to need it [...]
Not really, at least not at the current stage of technology.
During most of your life, healthcare is more like a lottery, ie you might never need it.
When you are old, something will eventually get you. And a lot of health care costs are spend on these end-of-life conditions. Alas, our massive spending at the end doesn't actually help very much: they mostly give you a few more month of suffering. (For things like cancer etc.)
For a lot of people hospice care is both cheaper and provides a better quality of life. (Some in-law of mine went from hospital care to hospice care when the cancer treatments got worse than the disease.)
So you're saying that you don't eventually need healthcare, except for when everyone needs it then it's the most expensive?
That's like saying you don't really need electricity until later in the day, when it's more in demand for everyone. Should we treat electricity use as a lottery?
In fact, people should be using healthcare more, as a preventative measure (for reasons you just said), but because we treat it like car accidents and house fires and lotteries it's stuck in remedial mode.
>When faced with a terminal illness, medical professionals, who know the limits of modern medicine, often opt out of life-prolonging treatment. An American doctor explains why the best death can be the least medicated – and the art of dying peacefully, at home
To be clear, there are a few different kinds of health care along multiple dimensions, like
- price
- expected mean utility (as measured in quality adjusted life-years gained)
- variance of utility (which I am ignoring here)
I am saying that at current state of technology, if we exclude the expensive stuff with near zero or even negative utility, the remaining demand for big items fits an insurance model rather well.
Yes, I agree that we should probably do more preventive interventions---like exercise, decent nutrition, vaccinations, etc. These are mostly cheap.
And even though they are good for people already, the insurance company might very well decide to just pay for them (and perhaps even pay people extra on top with discounts etcs to nudge them even more) to save itself money in the long run.
EDIT: There's of course also expensive treatments that provide a lot of quality adjusted life years, but the need for these are more like a lottery. (Eg treatment after a car accident or massive burn, or certain treatable cancers.)
So why not explicitly pass a subsidy (e.g. through the tax code) for the chronically ill? Disguising such transfers through regulatory costs is both inefficient and dishonest. It's also very unclear whether society would choose to subsidize all sick people. For example, those who are sick and rich enough to afford their insurance premiums (or who were lucky enough to obtain long-term coverage before they got an expensive medical condition, so their premiums are low), might not merit such transfers. If women have higher expected lifetime health costs due to pregnancy-related care, society might or might not want to have healthcare-related subsidies that amount to a transfer payment from men to women.
The proper way to make these sorts of decisions is by passing laws that make the transfer payments explicit, not disguising them in byzantine insurance regulations.
