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Thursday, April 21, 2011

Sullivan on healthcare

Always starting from the highly dubious Thatcherite proposition that all private wealth, by definition, is "other people's money", Andrew Sullivan appears to be wrestling anew with the morality of healthcare in society. He appears to have discovered, 15+ years on from the initial research, that a large chunk of Medicare/Medicaid costs are spent near end of life.

His proposal is for people to "voluntarily" forgo treatment, by empowering others to make the decisions.

Of course, there is another way, as this blog has long suggested: create a market for catastrophic health insurance.

Look at it this way. If you socked away $7,500 at age 20, it might cover $40,000 in real, current dollars of end-of-life or other catastrophic care. If you pool the risks, you might double or triple the amount of coverage that could be offered (and it might be much higher, because I'm not an expert health insurance actuary). So, private insurance might cover $100,000 of catastrophic care, say.

$7,500 is a lot of money at age 20, for most people, but it is less than the cost of a car. If an insurance company spread the cover cost out over ten years, it would be $750/yr over ten years. This is reachable, including with vouchers for the poor to help them buy and pay for these premiums. (It's even more reachable if a society chooses to cut out cost by using a single-payer system).

I'm not saying that the government needs to run such a program. It could simply offer a re-insurance plan, in order to get a catastrophic market up and running in America.

One of the things with catastrophic insurance is making sure that the insurer is around to pay off, so, yes, there would have to be regulation and transparency.