July 1, 2014

Innovation is the Key to Health Care Reform

Robert Graboyes

Senior Research Fellow
Summary

Summing it all up: Answer the pre-ex question. Learn the technologies. Identify the obstructions. Make some new friends, targeted precisely for specific islands of reform.

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Excerpt:

The essential first step is to deal with the omnipresent question, "How can we handle people with pre-existing conditions?" The UNIVERSAL COVERAGE answer is clear, simple, and wrong: "Mail them insurance cards." The Affordable Care Act makes it worse: "Force insurers to mail them insurance cards." This is a recipe for adverse selection, insurance market death spiral, and health care rationing...

John Cochrane of the University of Chicago identifies the greatest source of the pre-ex problem: we can't purchase long-term health insurance at a guaranteed future rate, as we do with life insurance and long-term care policies. Cochrane's remedy centers on "Health Status Insurance"—supplemental coverage that kicks in to cover higher premiums when a person becomes ill.

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