Posts Tagged ‘health-status insurance’
September 8th, 2009 at 11:57 am
How to Cover Pre-Existing Conditions? The Free Market, Of Course
Posted by Print

From Ronald Bailey at Reason and the Cato Institute:

So how does health-status insurance work? As Cochrane [Cato Institute Scholar] explains, ‘Market-based lifetime health insurance has two components: medical insurance and health-status insurance. Medical insurance covers your medical expenses in the current year, minus deductibles and copayments. Health-status insurance covers the risk that your medical premiums will rise.’ Cochrane offers the example of a 25-year-old who will likely incur $2,000 in medical expenses in a year. His medical policy component would thus cost about $2,000 per year, plus administrative fees and profit. For purposes of illustration, Cochrane then assumes the 25-year-old has a 1 percent risk of developing a chronic medical condition that would increase his average medical expenses to $10,000 per year. In that case, he would be able to buy medical insurance for $10,000 per year—which is a big financial hit. That’s where health-status insurance comes in: It insures that you can be insured in the future.”