GMU Economist Russ Roberts posts an interesting question from a reader named Tom on his Café Hayek blog. In essence, the reader questions how the free market could possibly service the health care needs of senior citizens, given that pretty much everyone’s health care needs increase dramatically in their senior years.
“So here is my question: which insurer in their right mind would take on my risk?

“I suspect none. Once philanthropy and savings were exhausted, I would surely risk a painful life and preventable death.

“Do I want this? Does anyone? Isn’t “socialized” medicine for older people an unpleasant moral necessity for our wealthy society? Please note I am deeply suspicious of most arguments cast in moral terms in discussions of politics and economics. I ask these questions guardedly.”
Roberts then asks his readers to answer these questions. The response has been pretty prolific. While no one mentions the Medical Savings and Loan concept, plenty of other ideas are offered.

Some readers take exception with Tom’s assumption that no private insurer would accept the risk. They note the success of long term care and cancer care insurances, which anticipate significantly high risk.

Others suggest that Tom’s question shows that he is blinded by the state of our current health care market, which is heavily skewed by government meddling. One respondent says that Tom incorrectly “assumes that greed driven capitalism has no answer to the problems associated with the ravages of time.” In a truly free market (or even a more free market), it is claimed, insurance would look and act far differently than it does today. It would evolve to become far more tailored to people’s needs.

Some mention health savings plans and high deductible insurance. Many discuss long-term contracts where level premiums would be charged, with the premiums being lower the younger the contract is begun.

Some raise the question of how to deal with people that have very high cost (or potentially very high cost) health conditions, especially where those conditions are no fault of their own. Wouldn’t government have to step in to help these people? Not necessarily say some. A mixture of private enterprise and philanthropy may be sufficient.

But not everyone thinks that government has no role to play in health care. One respondent says that “when all else fails the government may be the reliever of last resort,” but that “there is a long road for each of us to reach that stage….” But it is important to note that “during this trip WE CONTROL ALL OUR MEDICAL DECISIONS” instead of having the state control them.

Some that say that government coverage of seniors is the only feasible solution argue for voucherizing the system to enable as much flexibility and market input as possible.

One respondent expresses his faith in the free market to come up with all kinds of solutions that we can’t even conceptualize at present. In response to this, a pessimist writes:
“The problem is that a free market would deliver unequal results. Better results for everyone, but still unequal. And since people would have nothing to compare it to, they'd bemoan the inequality and press for regulation and subsidies and guarantees. …

Schumpeter predicted that democracies would trend towards socialism as basic human needs are met and the people become afraid of creative destruction. How right he was.”
It takes quite a while to read through the entire body of responses to Tom’s questions, but doing so is an informative experience.

The general point is that given the chance, the free market would evolve to satisfactorily handle the health care needs of most of our senior citizens and even those among us that have serious health conditions. Government could play a role in helping those that the market simply couldn’t reach.

But it is also entirely possible that dissatisfaction with diversity of outcomes might engender a desire to once again politicize the system in a vain attempt to enforce equality. We never seem to learn the lessons of the consequences that must be paid when we try to achieve altruism by force.

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