Bill Lear wrote: > I usually find Krugman pretty sober, but this technical claim seems > economically dubious: "When people choose not to buy broccoli, they > don't make broccoli unavailable to those who want it. But when people > don't buy health insurance until they get sick --- which is what > happens in the absence of a mandate --- the resulting worsening of the > risk pool makes insurance more expensive, and often unaffordable, for > those who remain." > > While true that when people choose not to buy broccoli it might not > make broccoli "unavailable", it might affect "broccoli liquidity", > thereby prompting suppliers to switch to more lucrative veggies.
I think PK makes his point poorly. If I refuse to eat broccoli (and others follow me in droves, as they always do on matters of fashion), it drives down the price of broccoli, helping those hard-liners who stick to their antiquated pro-broccoli faith. On the other hand, if I refuse to buy health insurance (and lots of other people do so, likely because they don't anticipate having health problems or can't afford it), that _increases_ the cost of insurance for those who buy it, by decreasing the risk pool. (Insurance spreads the risk and the cost, with healthy people paying for sick people's medical costs at any point in time (with the healthy and the sick often changing roles over time). If large numbers of healthy people don't chip in, medical insurance companies are only paying for the sick people (with few profits earned from the healthy), so they have to raise rates. The higher insurance rates encourage adverse selection, since they drive out even more of the healthier people, driving rates up again.... In the end, there really isn't an insurance program. It's a classic case of the failure of the "price mechanism." It's also encouraged by the availability of emergency services to those who don't anticipate being sick.) BTW, when I referred to Scalito saying stupid things, this is what I was referring to: they don't understand how insurance works. They may be wonderful legal scholars, but their comments in the public hearings tell us once again what the limits of legal scholarship are. -- Jim Devine / "In science one tries to tell people, in such a way as to be understood by everyone, something that no one ever knew before. But in poetry, it's the exact opposite." -- Paul Dirac _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
