[FoRK] Adverse selection in insurance

J. Andrew Rogers andrew at ceruleansystems.com
Mon Oct 19 09:00:25 PDT 2009


On Oct 19, 2009, at 5:13 AM, Dave Long wrote:
> Just a note on how we do it here in CH:
>
> 1/ everyone's covered.  why not simply have insurance act as  
> insurance?
>
> 2/ there's a gamut of providers and a wide range of plans, but the  
> relationship is directly between the insurer and the insuree.  what  
> motivates this US nonsense about tying insurance to (full time?)  
> employment?
>
> 3/ any social subsidization is done directly between the insuree and  
> the cantons, in the form of tax credits for premiums paid.
>
> In general I find the swiss approach of first setting market prices  
> and then ensuring that no one gets given a raw deal to be much less  
> schizophrenic than the american approach of first claiming universal  
> rights and then quietly delivering very uneven levels of service...


Yeah, as such things go the Swiss system is tidy and well-designed.

There is a significant path dependency component to the implementation  
of systems in various countries. The US ended up with employer-based  
health insurance -- a bad idea -- as a direct market consequence of  
ill-conceived regulation under Roosevelt and has never been able to  
get away from it since even though the regulations that caused it have  
not existed in a very long time.

This kind of path dependency is one of the bigger reasons not to  
cluelessly monkey with heavy-handed regulation. Even if you undo it  
later, you may find the market on an unfortunate trajectory that is  
politically very difficult to correct.  It is not as though being  
wrong does not have a long-term cost, but something resembling  
critical analysis of long-term consequences is rarely done.


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