Speaking of Paul Ryan's health-care plan, Tyler Cowen voices a concern.
I am very interested in voucher plans but here is one source of my unease. Let's say you are given a voucher for a health insurance plan and there is no legal requirement that the plan cover Parkinson's. Many people buy plans which do not cover Parkinson's. Some of those people get Parkinson's. Are we pre-committing to ignore the woes of those people? If so, how exactly do we do this?
I'm not ruling this alternative out (there are plenty of cases where we let people die), I just want to know what are the surrounding institutional structures, what happens if these people show up at emergency rooms, and also whether this wouldn't, eventually, give rise to a new "second tier" of lower-quality public sector institutions to handle cases not covered by insurance.
This gets to the importance of regulations and subsidies, I think. Ryan got that in theory, even if his plan doesn't really put it into practice. "You need to define what insurance is," Ryan told me. "I agree with that." In his plan, the exchanges are forced to offer insurance plans "with the same standard health benefits available to members of Congress." And what if people can't afford those plans? Well, Ryan really doesn't say. Maybe they go outside of the exchanges and purchase insurance that is less comprehensive in ways they don't understand. Maybe they don't get insurance at all.
The Senate and, even more so, the House plans really do define what insurance is, and what it has to do. And the Senate and, again more so, the House plans use subsidies to try and make that insurance affordable. Some people see that as government intrusion, and it is. But the alternative is a whole lot worse, both for people in general and conservatives in particular. In the next few decades, cost pressures are going to require serious, structural reform of the system. If insurers are as hated then as they are now -- if their products are as mistrusted, and their motivations considered as malign -- I wouldn't bet on their industry surviving the upheaval. Conversely, if they become more like insurers in Netherlands -- which are heavily regulated and thus fairly trusted, and whose product is affordable because of subsidies -- they might make it out alive.
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