The Error In The Deal In Obamacare: Health Care Turned Into A Spot Market But Without The A La Carte Costs Applied
I bought into an HMO in my 20s, after doing spread sheets on butcher paper all across my New York apartment floor to decide which health care option was the best option.

I figured I'd get in then, when I was at my healthiest. Once you were in -- back before Obamacare -- the HMO would only go up by age. So, it was an investment I made -- one that turned into a big fat waste when they opened up the floodgates and let everybody in without any equity built up, and then lowered the prices for some...by raising them substantially and unaffordably for others. Big monthly costs. High deductibles.

John Cochrane (aka "The Grumpy Economist") gets the problem with this. Two links to his work -- a blog post and a very readable paper. And a tiny excerpt from the paper:

Healthcare is not a spot market, which people think about once, at fifty-five, when they get a heart attack. It is a long-term relationship. When your car breaks down at the side of the road, you're in a poor position to negotiate with the tow-truck driver. That is why you join AAA. If you, by virtue of being human, might someday need treatment for a heart attack, might you not purchase health insurance, or at least shop ahead of time for a long-term relationship to your doctor, who will help to arrange hospital care?

However, he points something out:

Nobody reading this essay really needs health insurance--income protection--for anything less than catastrophes. We pay for transmission repairs, leaking roofs, and vet bills out of pocket. We could easily "afford" most of our routine medical expenses, and even pretty big un- planned expenses, especially if we were paying commensurately lower health-insurance premiums.

This is why I got insurance -- not Cadillac insurance but adequate insurance: in case something terrible happened.

Frankly, I don't go to the doctor with any frequency. And frankly, if I came from a family with bum genetics (playing out in various diseases), I might have gone with a "fancier" form of care.

But way back when, paying an affordably sum monthly for catastrophe avoidance was worth it. Now, that catastrophe insurance is catastrophically expensive, keeping many from getting tests and care they would have in the past. I'm not an economist, but I wonder whether that will end up being more costly than if people had been able to afford the preventive care they needed.

via @ATabarrok