Why Is Private Health Insurance Such A Disaster?
Why cannot markets allocate this function to the least cost decider? Why does the usual solution — intermediation — appear to be working so badly?
Asks Tyler Cowen over at Marginal Revolution. I believe that a large part of the problem comes from a side effect of the employer subsidy. Because health insurers are selling to the employers, because their customers are the large employers, they are not motivated to keep happy the folks getting medical treatment. (Who may not even be employees, but their employees’ family.)
To use an analogy, what if your employer selected your phone plans? (Oh, wait, they often do, and cell phone customer service reflects that.) What if your employer chose what kind of car you drove?