Of course, most people with big health risks are not the moral equivalent of arsonists. In the health insurance context, many people have pre-existing conditions that are no fault of their own. Government should help these individuals buy health insurance in the same transparent way many states help high-risk drivers — by establishing a high-risk pool and paying explicit subsidies to help them purchase insurance.
Explicit subsidies force policymakers to honestly disclose how much gets transferred to whom because lawmakers appropriate that money. For example, two early ACA regulations establishing temporary subsidy programs for people with pre-existing conditions and early retirees clearly disclosed that each regulation would cost taxpayers $5 billion over the 2.5-year program life. This is the honest way to help those in need.
Critics may claim explicit subsidies are impractical because legislators won’t fund them sufficiently. In other words, since the people’s elected representatives won’t support an honest subsidy program, we must fool the voters with a dishonest program that hides the cost. The end — increased insurance coverage — supposedly justifies the means — deception.
It’s time to end the deception. If Congress wants true reform, it would let insurers accurately price risk, then help those who can’t afford insurance with a transparent subsidy program. Those steps would not solve every problem in the health insurance marketplace, but they would transparently allocate aid to people who need it, instead of herding everyone into a buffet line in an effort to cure hunger.
Jerry Ellig is a senior research fellow with the Mercatus Center at George Mason University.