Is it logical or rational for a person to enter into a risk pooling plan with someone who has a money consuming disease? It makes no sense. To make it illegal for insurance companies to pick and choose eligible clientele based on costs associated with coverage means that those who do not have pre-existing diseases must pay for those who do.
Tyler Cowen shares a few ideas on his blog. The most rational coverage out there is catastrophe insurance. My non-libertarian accounting professor once told me that it was monetarily irrational to buy insurance on small ticket items such as cell phones and computers. However, catastrophe insurance would be a brilliant free market choice.Published in