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November 12, 2012

"After the ACA: Freeing the market for health care"

The University of Chicago's John Cochrane offers a compact--even at 25 pages--but comprehensive look at we should reform health insurance and health care. Very useful and very good.

Preexisting conditions, lack of insurance by the young and healthy, and spiraling insurance costs– the main problems motivating the ACA ‐‐ are neatly addressed by this alternative.  

Why do we not have a system? Because law and regulation prevent it from emerging.  Before ACA, the elephant in the room was the tax deduction and regulatory pressure for employer‐based group plans. This distortion killed the long‐term individual market and thus directly caused the pre‐existing conditions mess.  Anyone who might get a job in the future will not buy long‐term insurance. Mandated coverage, tax deductibility of regular expenses if cloaked as “insurance,” prohibition of full rating barriers to insurance across state lines – why buy long term insurance if you might move? – and a string of other regulations did the rest.  Now, the ACA is the whale in the room: The kind of private health insurance I described is simply and explicitly illegal.

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