George F. Will Admits Public Option Will Cut Costs
Insurance exists because of the decreasing marginal utility of income: most people would rather have a 100% chance of paying $300 a month than a 1% chance of paying $30,000 a month. In fact, our hypothetical customer -- let's call him Frederick, after George F. Will's middle name -- might very well accept a 100% chance of paying $400 a month rather than take 1% chance of having to pay $30,000, which he might not be able to afford. This is true even though ... Full Story »
Posted by Derek Hawkins
The piece seems to overlook a major issue (also overlooked by mainstream media): Insurance companies pool all their risk. If AETNA looses money in other investments or other lines of insurance, it can adjust rates in all lines. It would be informative to have Nate use his analytical powers to determine what the actuarial tables might look like if the risk was limited to medical costs alone.