The Homa Files

According to conservative economist Thomas Sowell:

Insurance is, at it’s core, a pooling of risk.

“But, political Incentives make it rational to mandate insurance coverage on things they would not be covered by insurance on purely economic grounds, since those things are not a matter of risk.

For example, the cost of an annual medical checkup is not a risk, since is known in advance that these checkups occur once a year.

To have health insurance covers annual checkups is like having automobile insurance cover annual state inspection checks or routine oil changes.

But, because of the stronger emotions involved in medical issues, annual health checkups are more readily depicted as a good thing — and therefore justified as part of a government mandate.”

Source:Applied Economics, Basic Books, 2009

This entry was posted on January 17, 2011 at 6:07 am and is filed under Economics, Insurance, Thomas Sowell. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.