GENETIC DISCRIMINATION….Congress voted nearly unanimously last week to outlaw genetic discrimination by health insurance companies. Michael Kinsley comments:
The very appealing notion that genetic discrimination is unfair looks especially odd in the context of insurance. The idea of insurance is to protect against the unexpected or unlikely. Forbidding insurers to take predictable risks into account when choosing whom to insure and how much to charge is asking them to behave irrationally and make bets they are sure to lose. Not insuring people who are likely to get cancer, or charging them more, isn’t evil. It’s rational behavior. Of course, we outlaw a lot of behavior that would be rational if it weren’t against the law. But the skeptics who say this is a step on the way to universal health care actually understate the case.
This paragraph is preceded by some silliness about Yo-Yo Ma and followed by some further silliness about a possible descent into Stalinism. But that stuff aside, Kinsley is right about this. Insurance companies have to be allowed to assess risks when they set premiums. If they don’t, then they aren’t insurance companies.
So what’s the eventual result of forbidding healthcare insurers to rationally assess risks when they write policies? They go out of business. Slowly, to be sure, but eventually they go kaput.
So think of this as a revealed preference. Conservatives all claim to believe that the private market is the best way to provide health insurance. And yet, given a close look at exactly what that means, they voted to outlaw the very thing that makes private insurance work: rational discrimination. The reality was just too ugly to support. If a conservative is a liberal who’s been mugged, I guess that means a liberal is a conservative who’s been denied insurance because of a congenital condition.