Monday, March 30, 2009

Health status insurance worth considering

President Barack Obama and Kentucky Gov. Steve Beshear seem to be of like mind when it comes to expanding government's role in health insurance. A Cato Institute scholar has a better idea: getting the government to back off and encouraging health insurers to provide better coverage against the risk of getting sick.

From Investor's Business Daily:

"Government does a mediocre and costly job of basic simple services like garbage removal; government-provided health insurance is a certain recipe for expensive, inefficient and ossified health care."

"Government is not the only option. Markets can provide long-term, secure health insurance while enhancing choice and competition. Given the chance, they will."

"The key innovation is "health-status insurance." If a health shock causes your medical-insurance premiums to rise, it pays a lump-sum payment sufficient to pay the higher medical-insurance premiums. (To deter fraud, the payment goes into a special account that can only be used for medical insurance premiums.)"

"You can always purchase medical insurance with no change in out-of-pocket costs, and therefore have complete long-term health security."

"When people have health-status insurance, medical insurers can be turned loose to freely compete, even though they will charge higher premiums to those with long-term illnesses."

"Insurers will compete for the sickest patients, attracting them with better care rather than "cost containing" them, or denying them coverage for pre-existing conditions. Insurers will compete hard for the healthy patients too, giving us all better service at lower cost."

The whole article is worth a read. Getting out of the way and allowing greater consumer choice is the way to enhance freedom and prosperity. We've given the alternate approach too many opportunities to succeed already.

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