Public Choice and Private Insurance: The Case of Small-Group Market Reforms

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In this response to Professor Richard Epstein's book Mortal Peril, Professor Hall argues that health care is a partial public good which invites limited governmental intervention and some elements of social insurance. He therefore takes issue with Professor Epstein's opposition to small group market reforms. Such reforms include guaranteed issue, limits on preexisting condition exclusions, and affordability provisions. Professor Hall argues that small group market reforms help to preserve a private insurance market as well as a voluntary insurance purchase system. He agrees with Professor Epstein that such reforms create cross-subsidies and alter how insurers compete, but Professor Hall argues that these effects have market advantages. Although Professor Hall further agrees with Professor Epstein that some reforms create market distortions, Professor Hall has found from his empirical studies that small market reforms work reasonably well.

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