On Dec 1, 2007 1:28 PM, Michael Perelman <[EMAIL PROTECTED]> wrote: > But in your health care example you have predictability for the population, > but not > for the individual. Insurance makes sense, especially w/o the market > distortions. >
Michael, But there *is* some predictability for the individual. Far more so than in the case of life insurance. It is precisely this predictability that allows insurance companies to cherry-pick customers and gives rise to this adverse selection. In contrast to healthcare, no scientific study can give a very precise prediction for the occurrence of an earthquake even if you know everything about the geology of the place a factory is located. So there is no adverse-selection problem there. For instance I can say with a fair amount of certainty that any given 90 year old will have at least $1000 a year in medical expenses. I am sure a serious scientific study can provide a much more precise prediction for any individual. So why should healthcare be provided in the form of insurance rather than as a service appropriately subsidised etc. -raghu.
