Friday, May 11, 2012

Why are those with pre-existing conditions so often not offered health insurance at all, instead of just extra expensive health insurance?
An intriguing answer to that question comes from Nathaniel Hendren, a graduating Ph.D. student at MIT, in a study that got him offers from economics departments at Harvard, Stanford, and Princeton, among others. According to Hendren’s argument, not only are sick people a lot more expensive to care for, but they also know a lot more about what their cost of care is likely to be in the future. And it’s this inside information that makes the market for covering pre-existing conditions break down.

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