Real Health Insurance
By Arnold Kling
Extending the remarks I made earlier, in my latest essay I look at a recent study of medical-related bankruptcies and conclude that cost-reimbursement health insurance is ineffective and should be replaced by event-based insurance.
Event-based insurance means receiving a lump-sum payment at the time of diagnosis. Thus, even if the treatment goes on for years, the consumer has money to pay for it. The consumer does not have to worry about losing coverage with a pre-existing condition, because the consumer already has received benefits for that condition.
It would be reasonable to include a disability component to event-based insurance. If an ailment is going to cause a lapse in work, then the insurance payment can include a lump sum based on the typical amount of work time lost with that ailment.
UPDATE: For more on medical care issues, including economics-related issues, see Grand Rounds.
For Discussion. What problems would event-based insurance solve, and what problems would it create?