John Cochrane: preference

Transcript context

…How much do you worry about superior genetic information making it hard for insurance to actually serve insurance purposes? It would be fairly priced if you could buy it, but you’re just paying the value of your treatment plus a small fixed cost. You’ve spent too much time teaching Econ 101 where we’re worth 5 percent. We figure out that markets can handle 95 percent, and then you’re going to focus on the last 5 percent and tell me, “No, the government’s got to run everything.” Like any insurance, health-status insurance — you have to buy it before information is revealed that you’re sick. That’s fairly reasonable. Now, one answer to that is — let’s do this at the family level — I can buy health-status insurance before I conceive a child, for that child, and then if there’s a genetic problem that’s knowable, then the kid is covered. The other answer is, I will have a perfectly reasonable . . . Unless you’re at two o’clock in the morning, drinking stuff with libertarians, it is allowable for the government to step in when there’s a very clear market failure. I would be fine with — when we start this up, and you, Tyler, have some known genetic quantity that means you’re going to be more expensive, the government gives you a lump sum. “Here’s 50 grand, and we’ll put that in your health-status insurance account, and that will fund your higher insurance payments for the rest of your life. See you later.” There’s a clear argument for lump-sum transfers to the ex post insurance, mediated by the government. If that’s all the government did, and then left the rest of the healthcare and insurance industry free to cutthroat, free market, innovative competition, drive out the incumbents, serve you and me better, I’d be fine with it. Here’s a quotation from you online, which I didn’t follow. I’d like for you to explain. I think you’re talking about second- or third-best here. You wrote, “It has made me a tentative supporter of Medicare for any.” What did you mean?…

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