Health Insurance Idea
now the Kerry campaign has dusted off and brought forward a very clever idea from Brandeis’s Stuart Altman…Have the government take its task of social insurance seriously, and reinsure private insurers and HMOs: construct a ‘premium rebate’ pool to pay annual health-care bills over $50,000.
In effect, the government would offer catastrophic (re-)insurance. This would reduce the incentive for health insurance companies to play Old Maid with high-risk applicants for insurance and also, by lowering the cost of health insurance, make health insurance more attractive to consumers.
I think that something like Altman’s proposal is needed to make mandatory health insurance (which I favor) work. That is, just as with automobile insurance, the government has to step in to subsidize coverage for the highest-risk applicants.
For Discussion. DeLong argues that this is an idea that Republicans should “steal” from Democrats. Would economists of both parties tend to support it?