Follow the Link

One of the problems with the blogosphere and the Internet in general is an inability to read something all the way through, or even worse click the link and read an entire entry. I know I’ve been guilty of reading a part of a post and then commenting and coming off like an idiot. And now, I have two trackbacks where people have done the same thing to me (the second one really irks me in that the person copying and pasting part of my post omitted the reference to footnote 2 in this post of mine).

The responses were both based on this paragraph:

I think a better approach would be to give every person a fixed amount of money that can be used to purchase health insurance, say $2,000.1 This would still allow for market incentives to help contain costs (after all if I can find two policies that are identical save that one costs $2,200 and the other $2,000 I’ll go with the less costly option). On top of this make health insurance mandatory. Believe it or not there are people out there who don’t buy health insurance on purpose. I think we should basically make such behavior punishable (yes, as in, “I’m sorry, you are just too stupid on this decision so the act of making a decision has been taken away. Now, pick your health insurance or we’ll get really nasty.”)2 So, now there will be mandatory health care insurance and on top of it people will be helped with this purchase. No more uninsured and we can still get some decent market incentives.

And the part in particular about people being too stupid to make certain decisions (about purchasing health insurance). What many seem unable to do, is click on the link for footnote 2 and read this part of the post (or even click on the link to the post):

Yes, I know that sounds a bit over the top, but when you think about it, this is basically the message of any and all nationalization schemes. If health care is nationalized you will have health care and you will pay for it (via taxes). The option of “opting out” will not exist at all because only those who know they are healthy will opt out leaving only the sickly in the system. So, if you are a liberal and this view shocks you, tough crap, this is what you have been agitating for and I admit defeat. You win, this is what you get…without all the sugar coating that is.

I even included a link internal to the post that would take you right to that part. In answer to the complaints: Yes this view is obnoxious. Taking away a choice is not a good thing, IMO. The problem is that currently we are already heavily subsidizing health care spending. Those who don’t purchase health care will still have their medical bills paid one way or another–i.e. taxes, higher health care costs, or both. Given this, we shouldn’t be surprised if young healthy people with relatively no assets view purchasing health insurance as a sucker’s game and don’t do it. So what should we do?

Some might say, “Get the government out and let the market do its thing.” Great. There are some problems though:

  1. Some people wont be able to get insurance.
  2. There are information problems in insurance markets (adverse selection, moral hazard and non-verifiability).
  3. Externalities (a person with a communicable disease is a walking talking vector).

All of these things could prevent the market from actually improving on the current situation. On top of this, we don’t live in an anarcho-capitalist society. We live in a country were a great many decisions are made via democracy. Imagine a politician who decides to go with just the market. He puts forward a bold plan to cut all government spending on health care/insurance. What would his opponent do? Run ads of cute little kids who don’t get health care because of this mean S.O.B.? That’d be my guess. What would likely happen to this candidate? He’d lose. Fearing the same tactic the guy who replaced him would abandon such a draconian plan. Now, maybe one could try a piecemeal approach, but personally I don’t think that would work. And besides, I’m not even sure a politician would want to do this. When was the last time there was a politician that didn’t like spending other people’s money?

This pretty much leaves either doing nothing or trying to make the current system work better–i.e. introduce some market incentives that will slow growth rates for health care costs and also cut out a lot of the waste and abuse in the current byzantine system.

That and remember to try and click on the link and read what the other guy has said in its entirety. It’ll save you embarrassment, trust me I know I’ve been there.

FILED UNDER: Blogosphere, Democracy, Economics and Business, Health, Political Theory, ,
Steve Verdon
About Steve Verdon
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research. He joined the staff at OTB in November 2004.


  1. Leopold Stotch says:

    One of the problems with the blogosphere and the internet in general is an inability to read something all the way through.

    Wait, what was your post about? Oh, insuring the market against stupid people. Not likely.

  2. Rick DeMent says:

    “the market” is made up of many stupid people, why on earth would you think it is not stupid as well? [grin]

  3. Deb says:

    Actually, I read your footnote. I’m just not a fan of the argument that we should hurry and nationalize the thing properly before the other guys can screw it up even worse.

  4. Jay says:

    FWIW I not only read the footnotes, but also thought they, and the internal links to them, were a cool idea.

    The number one solution for improving the market for insurance? Eliminate Medicare and Medicaid.

    That employers pay for most other insurance is a bit distorting, sure, and that originated with – surprise! – government intervention that promoted fringe benefits as a way to attract employees. But it is nothing like the distortion to the entire health market caused by those massive government programs.

    If there were a Hell, LBJ would surely be burning in it for that.

  5. Steve Verdon says:

    Jay and Deb,

    Great idea for reducing the rate at which health care costs are climbing, but it just isn’t going to happen. We live in a society were certain decisions are already made for us, it is not a huge stretch to add one more (or 10 more). So my view is do you keep spitting in the wind, or do you try to fix the current mess?


    Actually, I think groups of people in certain situations are smarter than any individual. Grab 100 random people and said 100 people could probably answer some pretty hard questions (i.e. your chances of getting at least one expert in any given field goes up). Not so with any random individual.


    LOL, sure ruin my day.