In the Wall Street Journal, writes:
But when insurers are forced to charge the same premium to all applicants, regardless of expected health-care costs, prices will be wrong for everyone—and both buyers and sellers of health-care policies will have perverse incentives.
On the buyer’s side, healthy people who are overcharged will underinsure, buying less coverage than they otherwise would. They may even decide to go without insurance, since thepenalties for being uninsured are weak and people can always buy a policy after they get sick. People with expensive health problems will overinsure, buying more generous coverage than they otherwise would.
Insurers, on the other hand, will try to sell policies to the healthy, on whom they expect to make a profit, while avoiding the unhealthy, on whom they expect to incur a loss,—and they will change the design of their plans to accomplish this goal.
Preventive care and wellness checkups with no deductible or copayment, for example, will attract and keep the healthy; insurers may even provide memberships in health clubs. But failure to include the best cancer-care center or the top heart clinic in a plan’s network will discourage the sick from enrolling. Insurers may also underprovide for unhealthy people by failing to include the latest cancer drugs in their offerings.
Goodman offers better alternatives than price controls:
- equalizing the tax treatment of insurance, in the individual and group markets
- high risk pools
- health status insurance