[FoRK] Adverse selection in insurance

Benjamin Black b at b3k.us
Sun Oct 18 11:28:26 PDT 2009


Jeff Bone wrote:
> 
> More confusion.  (I.e., on the CEA --- not EconLog.)
> 
>     http://econlog.econlib.org/archives/2009/10/obamas_cea_on_a.html
> 
> Closely related to the moral hazard issue -wrt- insurance as well.
> 
> jb
>

"Moreover, a significant proportion of individuals may be uninsured
because many of them are charged high rates as a result of medical
underwriting and many of them choose not to pay those rates."

This economist trickery of saying not that someone can't afford to pay a
given rate, but that they choose not to pay those rates has worn quite
thin.  If I have no money, I am not starving because I choose not to pay
the going rates for food.  Market religion results in some very strange
notions about how people behave and why.

Greenspan discovered a 'flaw' in his model of the world.  Who, even
someone as intelligent, experienced, and connected as Greenspan, might
have guessed that promoting amoral psychopaths to positions of enormous
power in the financial industry would result in their treating it like a
machine for creating bubbles and harvesting money from the rest of the
population?  Might there be a similar flaw in the current health care
system model?  Or are an awful lot of people with no money simply making
a bad choice about how they spend their insurance dollars?


b




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