Commentary
In the pursuit of market-based changes in health care, it is important to pay attention to proposals that are both fundamental and smaller but represent a step in the right direction. The former category can include the radical deregulation of health care by abolishing monopolistic institutions such as the American Medical Association or the Food and Drug Administration. The latter includes reducing or eliminating fraud and waste in the government’s
Medicaid and
Medicare programs. However, regardless of the nature of these changes, it is essential and crucial to understand the key elements of a market-based health system, without which its achievement would not be possible.
Deregulation of Health Insurers
Insurance is a market institution and has
nothing to do with redistributive government plans. Many people complain that insurers—through exclusions and restrictions from coverage—limit access to health care for those most in need. But the truth is that insurance, as an institution, was never intended to cover everyone. This is not due to the ill will of insurers but to the specific nature of their business, which is risk calculation. Thanks to advanced methods in risk assessment, it is possible to include more groups in insurance coverage. It is worth emphasizing that, without insurance, the world would not look better, and people would be forced to deal with uncertainty and allocate more resources, not less. Insurance makes uncertainty and part of the real world presentable in a more manageable form based on probability calculus.
