October 29, 2003

Universal Health Care Means Gov. Monopoly

Steve Verdon points out an important part of any universal health care plan:

This is why with universal coverage legislation you see in all the legislative mumbo-jumbo a section which outlaws private insurance. The universal insurance program offered by the government is basically a big pooling equilibrium. So if private insurance is not outlawed, then the government is left with only the high risk/high cost people. It should also be noted that in this situation (i.e., pooling equilibria), the low cost individuals are subsidizing the medical care for the high risk/high cost individuals.

"Moral Hazard, Adverse Selection and Insurance"