My recent comments on Michael Cannon’s entries for the Cavalcade of Risk struck a nerve or two, evidently without the benefit of anaesthesia.
It’s always interesting when Cannon looks at health care. While he does have critical gaps in his understanding of the health care/insurance/underwriting/sales process, he does make a couple of valid observations; one notes that lifestyle issues drive a substantial portion of health care costs and it is inappropriate for the healthy living folks to subsidize those who aren’t. I agree.
One of his complaints concerns my observation that “the end result of Mr. Cannon’s prescription is full self-insurance for all health care costs.” He doesn’t seem to understand my point.
Allow me to explain. Atop the ivory tower, Cannon’s perspective makes sense. Some insureds subsize others, and many of the “risks” that are subsidized are known, and therefore should fall outside a classic definition of insurance.
But Americans don’t live in ivory towers. If insurance companies truly medically underwrite every individual policy, then they are no longer providing insurance, but rather transaction processing. Many individuals’ health care needs would be essentially self-paid, with all but the most unlikely conditions excluded from their covered services. This would end the health insurance business.
That’s my point – insurance would not be available at any kind of affordable price for anyone who really needs it if Cannon’s prescription becomes reality. I think this is because libertarians don’t believe in health insurance as a means to help people with health conditions pay their bills. That’s certainly within their right.
Fortunately most Americans disagree.
