In the course of being demolished by Ezra on his show this week, Larry Kudlow tried to bolster the case for private health insurance by mentioning that we have a reasonably successful private car insurance system.
Among the disanalogies between the two kinds of insurance is that it's not such a big deal if insurance costs cause people to forgo owning cars. Insurance is among the many hassles and expenses that caused me to opt out of car ownership. Instead, I pay up to live within walking distance of campus. Obviously, I'm lucky to have this option. But in my case, it's the way markets are supposed to work -- prices create incentives for efficient behavior.
But no matter how healthy you live, you can't opt out of being subject to a sudden medical catastrophe. And the massive non-financial costs of medical catastrophe will provide strong incentives to avoid it, whether you have insurance or not. Here's a situation where everybody needs something, and prices don't incentivize a lot of efficient individual behavior. So the case for a government system guaranteeing universal coverage is a lot stronger.
