Tuesday, June 11, 2013

Skillfully Killing the Straw Man

At that point, the freedom-crushing regulatory burdens of Obamacare may turn into a blessing. And this, of course, is the entire concept of insurance. Insurance is the spreading of risk. What distinguishes health insurance from insurance against, say, fire, is that insurers can make a much better guess which customer is likely to need medical care than which is likely to have their house burn down. Some people are bad actuarial health risks, and some people are good actuarial health risks.

That's the whole dysfunction of our horrendous health-insurance system. The individual health insurance market is a tragic mess: People who need insurance the most can't buy it, while the only people who can afford insurance don't need it. That's the reason for health-care reform.

The objections to health-care reform present themselves as if they've uncovered some kind of nightmarish bureaucratic inefficiency. What they've actually discovered, to the extent that they aren't simply misleading people, is that a functioning insurance system takes money away from people who are healthy. Likewise, fire insurance screws people whose houses will never burn down.

It sure is easy to kill a straw man.

In this case, the straw man is the concept of health insurance being an example of market failure.  In contrast, is was a market long "mal-nipulated" by the government.  At this point it is becoming illegal to buy a policy that insures one against catastrophic disease, and instead we are forced to buy pre-paid service plans.  We don't buy those for our cars because they are too expensive!

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