This year’s debate over trying to repeal, replace, or just rename Obamacare often recycled the well-worn nostrums concerning private health insurance arrangements. Among them:
■ A large majority of health care spending involves a much smaller, less healthy portion of the insured population, which means that the distribution of health care spending is highly concentrated.
■ Most individuals are healthy and need to spend very little on health care each year.
■ Sustainable health insurance markets require that healthy customers pay more than they want so that less healthy customers can pay less for the care they need.
■ Extensive government intervention, such as standardized benefits, generous subsidies, and limits on risk-based underwriting, is necessary in health care markets because those markets are prone to adverse selection and dangerous “death spirals.”
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