What is a Well-Functioning Insurance Market?

Brian attempts to answer that question in the post, “Why healthcare exchanges are not well-functioning markets”, as the first part of a three part post on healthcare costs. The idea of a well functioning market is an intriguing question about the Affordable Care Act. Here was my comment.

Thanks for posting your thoughts. I have been thinking about this subject for some time and am very interested in your methodology since I was planning a similar analysis to try and answer the question, “What is the price of self-insuring?” It should be interesting what insight your use of statistics can provide us for a non-linear market. Most of the intriguing strategy questions ask what do we do when we cross a certain boundary. In my case it is the classic customer is always right question. At what price have they gone too far? Maybe after reading your third post I will have more answers.

To me the idea of a well functioning exchange is a moot point.  It was born a political animal and will never overcome the inherent problems with subsidizing one group of the middle class at the expense of another part. As much as I would like a competitive market because it would not only be good for me but a good foundation for a sustainable health care policy, it is just not going to happen. Good economics was destined to lose this battle.

Brian has inspired me. Last week I researched pre-existing conditions and tonight I finished creating a spreadsheet of my last five years of medical expenses. Tomorrow I will attempt at connecting the dots and making a stab at answering the question, “What is the price of self-insuring?”