There are two types of seat in the room:
35 Consumers
14 Insurers
Sit one person to each seat.
If you are comfortable doing a lot of rudimentary
math, sit at an Insurer seat.
After all the seats are filled, extra bodies should
team up with insurers.
Do not team up with consumers.
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Health Insurance
www.antonydavies.org
The Players and the Goals
In this experiment, there are CONSUMERS and INSURERS.
INSURERS sell INSURANCE.
CONSUMERS buy FOOD and INSURANCE.
www.antonydavies.org
3
Consumers
Each consumer gets $25 per day.
A unit of food costs $1.
The more food the consumer eats, the happier the consumer
becomes.
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4
Consumers: The Catch
Each day, consumers face some risk of badness.
If badness befalls the consumer, the consumer loses all of the
purchased food for that day.
vs.
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5
Consumers: The Insurance
But, consumers can purchase insurance contracts from the
insurance companies.
Each contract pays the consumer $1 worth of food if badness
befalls the consumer that day.
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6
Consumers: Example
Suppose you can purchase insurance contracts at a price of
$0.50 each (the price of food is always $1 each).
You spend $5 on insurance contracts. The remaining $20 is
automatically spent on food.
10 insurance contracts
20 food
(Consumers may buy fractions of a unit of food.)
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7
Consumers: Example
If badness does not befall you, then you eat 20 units of food
and are very happy.
Very
Happy !!
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8
Consumers: Example
If badness does befall you, the 20 units of food disappear, and
each insurance contract pays $1. You automatically buy food,
eat it, and are somewhat happy.
Somewhat
Happy
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9
Consumers: Example
The consumer makes one set of decisions that are repeated for
each of the three days. Daily outcomes may change due to
randomness.
10 insurance contracts
15 food
10 insurance contracts
15 food
10 insurance contracts
15 food
Day 1
Decision
Day 2
Day 3
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10
Consumers
Each consumer’s goal: Maximize happiness
More insurance means
 More food when badness befalls.
 Less food when badness does not befall.
 Too little insurance is bad. Too much insurance is also bad.
www.antonydavies.org
11
Insurers
Each insurer can write as many insurance contracts as liked and
charge any price.
www.antonydavies.org
12
Insurers
If badness does not befall the consumer, the insurer walks away
with the money the consumer paid for the contracts.
www.antonydavies.org
$
$
$
$
$
$
13
Insurers
If badness does befall the consumer, the insurer pays the
consumer $1 for each contract the insurer sold the consumer.
www.antonydavies.org
14
Insurers: Example
You sell Consumer A six contracts for $0.60 each,
and sell Consumer B five contracts for $0.30 each.
For each of the three days, you collect $3.60 from Consumer A
and $1.50 from Consumer B.
Revenue =
www.antonydavies.org
$3.60
$3.60
$3.60
$1.50
$1.50
$1.50
$15.30
15
Insurers: Example
Suppose that badness then befalls Consumer B on two of the
days, but Consumer A on none of the days.
You owe Consumer B $1 for each contract for the two days.
$5.00
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Revenue =
$15.30
Cost =
$10.00
Profit =
$5.30
$5.00
16
Insurers: Example
Alternatively, suppose that badness befalls Consumer A on all
three days, but Consumer B on none of the days.
You owe Consumer A $1 for each contract for the three days.
$6.00
$6.00
Revenue =
$15.30
Cost =
$18.00
Loss =
$2.70
$6.00
(Insurers do not need cash reserves to cover policies.)
www.antonydavies.org
17
Insurers
Each insurer’s goal: Maximize expected profit
Insurers can ask whatever prices they like for contracts
 Too low a price is bad. Too high a price is also bad.
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18
Badness
There are five types of consumer. Each faces a
different probability of badness.
Type 1
Type 2
Type 3
Type 4
Type 5
10%
20%
30%
40%
50%
www.antonydavies.org
19
The Objects
= insurance contract(s)
Contracts Sold
Buyer
Suspected Risk
(0.1 to 0.5 )
Total Revenue
Expected Cost
(contracts x risk )
Expected Profit
(revenue - cost )
= sales register
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20
Contracts
Customer 6 purchases 12 contracts from insurer 4 for $0.40 each.
12
6
$4.80
This contract generates $4.80 daily
income for three days for the insurer.
www.antonydavies.org
21
You will need to estimate
consumers’ risks.
Register
Contracts Sold
12
Buyer
Risk (0.1 to 0.5)
6
0.3
Total Revenue
per Day
Cost per Day
(contracts x risk )
Expected Profit
per Day
The register is for your own use in tracking your customers.
• Be aware of customers who buy a lot of insurance.
• At the end of the round, watch to see which of your customers
has badness befall them.
 These are possible signs that the customer is high risk.
www.antonydavies.org
22
The Mechanics
Insurers
Consumers
Agent
Head Office
Prices are per contract.
You may buy multiple contracts.
www.antonydavies.org
23
The Mechanics
Insurers
Consumers
Agent
Head Office
www.antonydavies.org
24
The Mechanics
Insurers
Agent
Head Office
Consumers
Agent:
Try to estimate consumers’
risks based on how many
contracts they want and the
prices they are willing to pay.
Head Office:
Keep track of risk estimates and
expected profits. Advise the agent
on setting prices.
www.antonydavies.org
Consumers:
Keep track of how much
you have spent. You need
to save cash to buy food
and you only have $20.
25
Risk Types
www.antonydavies.org
26
Consumer #1
Consumer #2
Consumer #3
Consumer #4
Consumer #5
Consumer #6
Consumer #7
Consumer #8
Consumer #9
Consumer #10
Consumer #11
Consumer #12
Consumer #13
Consumer #14
Consumer #15
Consumer #16
Consumer #17
www.antonydavies.org
Risk Type
5
1
3
2
4
5
1
3
2
4
5
1
3
2
4
5
1
Prob. Of Badness
50%
10%
30%
20%
40%
50%
10%
30%
20%
40%
50%
10%
30%
20%
40%
50%
10%
Consumer #18
Consumer #19
Consumer #20
Consumer #21
Consumer #22
Consumer #23
Consumer #24
Consumer #25
Consumer #26
Consumer #27
Consumer #28
Consumer #29
Consumer #30
Consumer #31
Consumer #32
Consumer #33
Consumer #34
Consumer #35
Risk Type
3
2
4
5
1
3
2
4
5
1
3
2
4
5
1
3
2
4
Prob. Of Badness
30%
20%
40%
50%
10%
30%
20%
40%
50%
10%
30%
20%
40%
50%
10%
30%
20%
40%
27
Consumer #1
Consumer #2
Consumer #3
Consumer #4
Consumer #5
Consumer #6
Consumer #7
Consumer #8
Consumer #9
Consumer #10
Consumer #11
Consumer #12
Consumer #13
Consumer #14
Consumer #15
Consumer #16
Consumer #17
www.antonydavies.org
Risk Type
5
1
3
2
4
5
1
3
2
4
5
1
3
2
4
5
1
Prob. Of Badness
50%
10%
30%
20%
40%
50%
10%
30%
20%
40%
50%
10%
30%
20%
40%
50%
10%
28
Consumer #18
Consumer #19
Consumer #20
Consumer #21
Consumer #22
Consumer #23
Consumer #24
Consumer #25
Consumer #26
Consumer #27
Consumer #28
Consumer #29
Consumer #30
Consumer #31
Consumer #32
Consumer #33
Consumer #34
Consumer #35
www.antonydavies.org
Risk Type
3
2
4
5
1
3
2
4
5
1
3
2
4
5
1
3
2
4
Prob. Of Badness
30%
20%
40%
50%
10%
30%
20%
40%
50%
10%
30%
20%
40%
50%
10%
30%
20%
40%
29
Ready to begin…
www.antonydavies.org
30
Consumers: You have $25.
Buy some insurance (if you want).
All remaining money goes to food.
Insurers:
www.antonydavies.org
Sell insurance to maximize expected profit.
31
Accounting Phase
Consumers report:
• Contracts purchased, cost, and from which
insurer(s)
www.antonydavies.org
32
Consumer
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
www.antonydavies.org
Daily Purchases
Food
Contracts
18.6
19
22.5
10
22.8
10
24.5
5
22.5
10
20.8
15
25.0
0
22.8
10
22.0
10
21.0
20
18.0
20
24.4
3
18.7
18
20.5
15
16.5
20
22.9
10
20.7
18
22.6
8
21.9
13
Badness
Day 1
YES
no
no
no
no
no
no
no
no
no
YES
no
no
no
YES
YES
no
YES
no
Badness
Day 2
YES
no
YES
no
no
YES
no
YES
no
no
YES
no
no
no
YES
YES
YES
YES
no
Badness
Day 3
YES
no
no
no
no
no
no
YES
no
YES
no
no
no
YES
YES
YES
no
no
YES
Total
Consumption
57.0
67.5
55.6
73.5
67.5
56.5
75.0
42.8
66.0
62.0
58.0
73.2
56.1
56.0
60.0
30.0
59.4
38.6
56.8
33
Consumer
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
www.antonydavies.org
Daily Purchases
Food
Contracts
23.4
4
22.5
10
22.8
20
21.7
12
22.4
13
23.0
8
23.1
9
24.0
10
24.4
5
24.5
5
11.0
16
19.4
22
23.7
7
21.7
10
23.8
2
23.4
7
Badness
Day 1
no
YES
no
YES
no
YES
no
no
no
no
YES
YES
no
no
no
no
Badness Badness
Day 2
Day 3
no
YES
no
YES
no
no
no
no
no
no
YES
YES
no
no
no
no
no
YES
no
no
YES
YES
YES
no
no
no
no
no
no
no
YES
no
Maximum
Median
Minimum
Total
Consumption
50.8
42.5
68.4
55.4
67.2
24.0
69.2
72.0
53.7
73.5
48.0
63.4
71.1
65.1
71.4
53.8
75.0
58.0
30.0
34
Insurer
1
2
3
4
5
6
7
8
9
10
11
12
13
14
www.antonydavies.org
Total
Premia
$21.45
$13.80
$8.10
$32.55
$27.90
$28.50
$27.75
$28.50
$16.50
$58.35
$23.40
$12.00
$20.10
$16.05
Total
Costs
$51.00
$36.00
$5.00
$35.00
$10.00
$59.00
$42.00
$40.00
$14.00
$46.00
$61.00
$9.00
$36.00
$34.00
Total
Profit
($29.55)
($22.20)
$3.10
($2.45)
$17.90
($30.50)
($14.25)
($11.50)
$2.50
$12.35
($37.60)
$3.00
($15.90)
($17.95)
35
Mandated Insurance
People have lobbied the government to require insurance
companies to provide at least 50 contracts’ worth of
coverage.
Insurers now may not sell fewer than 50 contracts to a
consumer.*
*(unless the consumer already owns at least 50 contracts)
www.antonydavies.org
36
Ready to begin…
www.antonydavies.org
37
Consumers: You have $25.
Buy some insurance (if you want).
All remaining money goes to food.
Insurers:
Sell insurance to maximize expected profit.
You may not sell fewer than 50 contracts to a
consumer unless that consumer already owns at
least 50 contracts.
www.antonydavies.org
38
Accounting Phase
Consumers report:
• Contracts purchased, cost, and from which
insurer(s)
www.antonydavies.org
39
Consumer
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
www.antonydavies.org
Daily Purchases
Food
Contracts
9.5
50
25.0
0
12.5
50
25.0
0
12.3
85
6.8
70
22.5
50
25.0
0
8.0
60
11.5
50
12.0
50
17.5
50
14.0
50
18.0
50
12.5
50
11.0
55
25.0
0
8.3
50
10.5
54
Badness
Day 1
YES
no
no
no
no
no
no
YES
no
no
YES
no
no
no
YES
YES
no
no
no
Badness
Day 2
no
no
YES
no
YES
YES
no
YES
no
no
YES
no
no
no
no
YES
no
no
no
Badness
Total
Day 3 Consumption
YES
109.5
no
75.0
no
75.0
no
75.0
no
109.5
no
83.5
no
67.5
YES
0.0
no
24.0
no
34.5
YES
150.0
no
52.5
no
42.0
YES
86.0
YES
112.5
YES
165.0
no
75.0
YES
66.7
no
31.5
40
Consumer
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
www.antonydavies.org
Daily Purchases
Food
Contracts
25.0
0
15.0
50
20.0
50
9.3
50
17.5
50
13.5
50
11.5
50
25.0
0
17.0
50
17.5
50
10.0
50
15.0
50
17.5
50
15.0
50
20.0
50
25.0
0
Badness
Day 1
no
no
no
no
no
YES
no
no
no
no
no
no
no
YES
YES
no
Badness Badness
Total
Day 2
Day 3 Consumption
no
YES
50.0
YES
no
80.0
no
no
60.0
no
no
27.8
YES
no
85.0
no
no
77.0
YES
no
73.0
no
no
75.0
no
YES
84.0
no
no
52.5
no
no
30.0
YES
no
80.0
no
YES
85.0
no
YES
115.0
no
no
90.0
no
YES
50.0
Maximum
165.0
Median
75.0
Minimum
0.0
41
Insurer
1
2
3
4
5
6
7
8
9
10
11
12
13
14
www.antonydavies.org
Total
Premia
$43.50
$81.51
$27.00
$58.50
$57.75
$94.50
$76.50
$82.50
$33.00
$89.25
$18.00
$114.00
$71.25
$96.00
Total
Costs
$100.00
$120.00
$85.00
$130.00
$60.00
$120.00
$170.00
$100.00
$60.00
$110.00
$20.00
$140.00
$80.00
$25.00
Total
Profit
($56.50)
($38.49)
($58.00)
($71.50)
($2.25)
($25.50)
($93.50)
($17.50)
($27.00)
($20.75)
($2.00)
($26.00)
($8.75)
$71.00
42
Mandatory Insurance
Concerned that some consumers are uninsured, the
government requires that all consumers buy at least 50
contracts.
www.antonydavies.org
43
Ready to begin…
www.antonydavies.org
44
Consumers: You have $25.
You must buy at least 50 contracts.
All remaining money goes to food.
Insurers:
www.antonydavies.org
Sell insurance to maximize expected profit.
45
Accounting Phase
Consumers report:
• Contracts purchased, cost, and from which
insurer(s)
www.antonydavies.org
46
Consumer
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
www.antonydavies.org
Daily Purchases
Food
Contracts
7.3
55
22.5
50
13.8
50
22.5
50
9.5
80
3.0
95
17.0
200
1.0
80
19.5
50
15.0
50
11.0
50
15.0
50
15.4
50
16.5
50
11.3
50
16.3
55
15.0
50
7.0
50
13.3
50
Badness
Day 1
YES
no
no
no
YES
no
no
YES
no
no
YES
no
no
YES
no
no
no
no
no
Badness
Day 2
no
no
YES
no
YES
no
no
no
no
no
no
no
no
no
no
no
no
no
no
Badness
Total
Day 3 Consumption
YES
117.3
no
67.5
no
77.5
YES
95.0
no
169.5
YES
101.0
no
51.0
no
82.0
YES
89.0
no
45.0
no
72.0
no
45.0
YES
80.8
no
83.0
YES
72.5
YES
87.5
no
45.0
YES
64.0
no
39.8
47
Consumer
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
www.antonydavies.org
Daily Purchases
Food
Contracts
14.0
50
12.5
55
19.0
50
12.5
50
16.0
65
12.5
50
10.0
50
14.5
50
15.0
50
17.5
50
-1.5
100
16.3
50
17.5
50
22.4
60
17.0
50
15.0
50
Badness
Day 1
no
no
YES
no
no
YES
no
no
YES
no
YES
no
no
YES
no
no
Badness Badness
Total
Day 2
Day 3 Consumption
no
no
42.0
YES
no
80.0
YES
no
119.0
YES
YES
112.5
no
no
48.0
YES
YES
150.0
YES
no
70.0
no
no
43.5
no
no
80.0
no
no
52.5
YES
YES
300.0
YES
YES
116.3
no
no
52.5
no
YES
142.4
no
YES
84.0
no
YES
80.0
Maximum
169.5
Median
77.5
Minimum
39.8
48
Insurer
1
2
3
4
5
6
7
8
9
10
11
12
13
14
www.antonydavies.org
Total
Premia
$36.00
$97.50
$27.45
$99.00
$66.75
$64.50
$138.00
$112.50
$42.00
$135.00
$46.35
$135.00
$62.55
$117.00
Total
Costs
$110.00
$105.00
$62.00
$250.00
$125.00
$105.00
$210.00
$100.00
$115.00
$95.00
$78.00
$195.00
$250.00
$225.00
Total
Profit
($74.00)
($7.50)
($34.55)
($151.00)
($58.25)
($40.50)
($72.00)
$12.50
($73.00)
$40.00
($31.65)
($60.00)
($187.45)
($108.00)
49
Results…
www.antonydavies.org
50
Compared to the free market, what do you believe
happens to the price of insurance under…
1. Mandated insurance
2. Mandatory insurance
www.antonydavies.org
51
Insurance Price per Contract
$0.30
$0.25
$0.20
$0.15
$0.10
$0.05
$0.00
Free Market
www.antonydavies.org
Mandated
Mandatory
52
Compared to the free market, what do you believe
happens to the number of uninsured people under…
1. Mandated insurance
2. Mandatory insurance
www.antonydavies.org
53
Uninsured
25%
20%
15%
10%
5%
0%
Free Market
www.antonydavies.org
Mandated
Mandatory
54
Consider
The price per contract isn’t the consumer’s health
care cost.
The consumer’s health care cost is the total amount
of money the consumer pays for insurance.
www.antonydavies.org
55
Compared to the free market, what do you believe
happens to the total cost of insurance per insured
person under…
1. Mandated insurance
2. Mandatory insurance
www.antonydavies.org
56
Insurance Cost per Insured Person
$12
$10
$8
$6
$4
$2
$0
Free Market
www.antonydavies.org
Mandated
Mandatory
57
Insurance Cost per Insured Person
$25
$20
$15
$10
$5
$0
Free Market
www.antonydavies.org
Mandated
Mandatory
58
Compared to the free market, what do you believe
happens to food purchases under…
1. Mandated insurance
2. Mandatory insurance
www.antonydavies.org
59
Units of Food Purchased
900
800
700
600
500
400
300
200
100
0
Free Market
www.antonydavies.org
Mandated
Mandatory
60
Units of Food Purchased
90
80
70
60
50
40
30
20
10
0
Free Market
www.antonydavies.org
Mandated
Mandatory
61
On whom do you believe the insurance companies
make or lose money in each scenario?
www.antonydavies.org
62
Source of Insurance Profits
$100
$50
$0
-$50
Type 1
Type 2
Type 3
Type 4
Type 5
-$100
-$150
-$200
-$250
-$300
-$350
Free Market
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Mandated
Mandatory
63
Source of Insurance Profits (all firms per 3 days)
$600
$400
$200
$0
($200)
Type 1
Type 2
Type 3
Type 4
Type 5
($400)
($600)
($800)
Free Market
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Mandated
Mandatory
64
What is the effect of insurance mandates?
• Forces people to consume quantities of goods and
insurance that they may not want to consume.
• Transfers wealth from low risk to high risk people.
 A better solution is simply to tax the low risk
people, give the money to the high risk people
and let them buy what they want.
(but what if they don’t buy insurance?)
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65
But, we have to do something!
Look at what has been happening to the cost
of health care over time!
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66
400.0
Price of medical care has increased 350% since
1980 versus 135% for other consumer prices.
350.0
300.0
250.0
200.0
150.0
100.0
50.0
Price of Medical Care
2006
2003
2004
2005
2001
2002
1998
1999
2000
1996
1997
1993
1994
1995
1991
1992
1988
1989
1990
1986
1987
1983
1984
1985
1981
1982
1980
0.0
Consumer Prices Excluding Medical Care
Source: Bureau of Labor Statistics (www.economy.com)
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67
But, the cost of health care is only half of
the picture.
What has been happening to the quality of
health care?
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68
How do we measure the quality of health care?
1. What is “quality?”
2. How do we account for care didn’t exist in the
past?
3. How do we weigh qualities across different
types of care?
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69
How does one measure the quality of health care?
An easy and only-somewhat-sucky measure of the
effectiveness of health care is the mortality rate.
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70
30.0
From 1960 to 2006, infant mortality fell 70%.
25.0
20.0
15.0
10.0
5.0
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
1960
0.0
Infant Mortality per 1,000 Live Births
Source: Statistical Abstract of the United States, 2008, Table 77.
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71
60.0
50.0
40.0
30.0
20.0
From 1960 to 2004, deaths due to
influenza and pneumonia fell 60%.
10.0
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
1968
1966
1964
1962
1960
0.0
(per
100,000
population)
Deaths by
by Influenza
Influenceand
andPneumonia
Pneumonia
(per
100,000
population)
Source: Statistical Abstract of the United States, 2008, Table 110.
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72
10.0
From 1960 to 2006, the mortality rate fell by 15%.
9.5
9.0
8.5
8.0
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
1960
7.5
Deaths per 1,000 People
Source: Statistical Abstract of the United States, 2008, Table 77.
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73
What does the increased cost of
health care buy us?
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74
Millions
3.1
2.9
If the quality of our health care had remained
at the level it was in 1967, how many people
would have died each year since 1967?
2.7
2.5
2.3
2.1
1.9
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
1.7
Actual Deaths
Source: Derived from Statistical Abstract of the United States, and the Bureau of Economic Analysis.
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75
Millions
3.1
2.9
2.7
2.5
2.3
600,000 lives saved just in 2010
2.1
1.9
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
1.7
Actual Deaths
Deaths at 1967 Mortality Rate
Source: Derived from Statistical Abstract of the United States, and the Bureau of Economic Analysis.
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76
What are the claimed problems?
• Many people are uninsured.
• Many people cannot afford insurance.
• Lack of competition makes insurance too
expensive.
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77
Many people are uninsured
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78
18%
16%
14%
12%
10%
8%
The percentage of the population that is
uninsured has remained rather stable over time.
6%
4%
2%
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
0%
Source: Income, Poverty, and Health Insurance Coverage in the U.S.: 2006, US Census Bureau.
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How many Americans are uninsured?
Uninsured (15% of the population)
Insured
Source: Bureau of Labor Statistics, Census Bureau
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80
How many Americans are uninsured?
Uninsured (12% of the population)
Medicaid or
SCHIP Eligible
Claim to be
Uninsured but
Aren't
Insured
Source: Bureau of Labor Statistics, Census Bureau
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How many Americans are uninsured?
Uninsured Less
Than 4 Months
18 to 34 and
Childless
Uninsured (4% of the population)
Medicaid or
SCHIP Eligible
Claim to be
Uninsured but
Aren't
If we count one-third of this group, the uninsured
are between 6% and 8% of the population
depending on whether or not we count this group.
Insured
Source: Bureau of Labor Statistics, Census Bureau
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Many people cannot afford insurance
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83
$16,000
The average cost for individual coverage is
$3,300. The average cost for family coverage
(adjusted to the mean family size) is $6,900.
$14,000
Annual Premium
$12,000
$10,000
$8,000
$6,000
$4,000
$2,000
New York
Massachusetts
Rhode Island
Maine
Connecticut
New Hampshire
Montana
Nevada
Virginia
Georgia
Oklahoma
Texas
South Carolina
Florida
Tennessee
Minnesota
Arizona
Nebraska
California
Indiana
Pennsylvania
Illinois
Colorado
Kentucky
Missouri
Ohio
Kansas
North Carolina
Iowa
$0
Single
Family (adjusted for differing family sizes)
Source: Individual Health Insurance 2009, America’s Health Insurance Plans Center for Policy Research
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$16,000
Community Rating
 Cannot charge based on health
history
$14,000
Annual Premium
$12,000
Guaranteed Issue
 May not deny coverage
$10,000
$8,000
$6,000
$4,000
$2,000
New York
Massachusetts
Rhode Island
Maine
Connecticut
New Hampshire
Montana
Nevada
Virginia
Georgia
Oklahoma
Texas
South Carolina
Florida
Tennessee
Minnesota
Arizona
Nebraska
California
Indiana
Pennsylvania
Illinois
Colorado
Kentucky
Missouri
Ohio
Kansas
North Carolina
Iowa
$0
Single
Family (adjusted for differing family sizes)
Source: Individual Health Insurance 2009, America’s Health Insurance Plans Center for Policy Research
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$14,000
Annual premia are significantly
higher for low deductible policies.
Annual Premium (family policies)
$12,000
$10,000
$8,000
$6,000
$4,000
$2,000
$0
$0
$1,000
$2,000
$3,000
$5,000
$10,000
Deductible
Source: Individual Health Insurance 2009, America’s Health Insurance Plans Center for Policy Research
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Annual Costs for Average American Family
$10,000
$9,000
$8,000
Average annual expenditures (per household)
compared to the cost of family health insurance.
$7,000
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0
Source: Consumer Expenditures, US Bureau of Labor Statistics, 2009.
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Lack of competition makes insurance
expensive.
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88
The law makes it difficult for insurance companies
to operate across state lines.
Individual insurance is subject to mandates that
employer-provided insurance is not.
Employer-provided insurance benefits are taxfree, which causes an increase in demand for
insurance and health services.
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89
Can one place a value on a human life?
(and, if yes, is it wrong to do so?)
Yes, it is possible.
No, it is not wrong to do so.
 Almost everyone does it almost every day.
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90
Seat Belts on School Buses
It costs (on average) $2.5 million for every child’s life saved.
 Should we install seatbelts on school buses?
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Spend $2.5 million on:
# Lives Saved Annually
Seatbelts on school buses
1
Airbags in cars
3
Heart transplants
13
Malaria prevention
975
If our concern is saving lives, then we should not spend money
for seatbelts on school buses because every 1 life saved will be
offset by 975 lives we might otherwise have saved.
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