For the second time in 8 years, America’s elected leaders are grappling with the thorny problem of how to improve health coverage and care for all Americans.
This time will be the same in one critical respect - the simple, unavoidable market realities to providing real access to health coverage for people who aren’t able to obtain coverage from an employer.
This will again be a free market issue – whatever its faults, the Affordable Care Act (ACA) was firmly built around preserving a central role for private insurers to provide coverage and for consumers to have choice of plans and doctors. This pro-market nature of the ACA has been obscured by all the politics surrounding it.
Also, we need to take luck into account, as the great conservative economist Milton Friedman observed. None of us know which of us will be sick in the future, or which of us may lose our jobs. By its very nature, insurance redistributes the burdens of the unfortunate few across the many who are more fortunate. That’s built in, that’s how insurance works.
The upshot is that to expand health coverage in a private insurance market, we need to employ three interdependent tools, like the legs on a stool:
- Require insurers to offer coverage to everyone, even if they have a pre-existing condition;
- Require/incentivize younger, healthier people to buy into the insurance pool, even though they might otherwise choose not to buy insurance and;
- Provide subsidies for lower income people who earn too little to pay the full cost of their premiums but earn too much above the poverty line to receive fully-subsidized health coverage
