i was reading a special section of a recent wsj that was reviewing the first year of the obama white house. it had a broad spectrum of types of op ed types both in terms of their age, politics and area of expertise. there were i think 4 economists. one old dog, martin feldstein made what i considered an amazing if in hind site obvious observation about the health care bills in congress. both i believe prohibit insurance companies from preventing or possibly even rating a new insured based on a pre existing condition. now this seem pro consumer on its face. but, he pointed out an amazing negative arbitrage.
it would make sense for relatively healthy people to pay the penalty for not having mandatory health insurance, save on paying the premiums and if they got seriously ill, apply for health insurance at that time and the insurance company would have to take them. in this hypothetical, the individual can free ride till they get sick, then after not paying premiums for say 10 years, send the bill to the insurance company. this arbitrage would ruin the insurance industry. a point that feldstein said maybe was not an accident.
at age 70, martin is as sharp as ever.
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I love this! I will make great use of this in future discussions. Thanks for the heads-up!
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