A more apt example....

Reader comment on: Cochrane on Health Care

Submitted by Fast Eddie (United States), Jul 14, 2012 15:24

A more apt example for the professor's point would be automobile insurance. What if the government decided that all drivers, irrespective of their vehicles' values or their past driving records, were entitled to be charged exactly the same price for their insurance? Good drivers would be subsidizing poor drivers and poor drivers would have little to no incentive to drive carefully because they had a lifetime guarantee of low cost insurance irrespective of accidents they may be responsible for. And, just to complete the analogy, what if the government also created a penalty (or call it a tax if you wish) that companies could pay so that they would not have to buy insurance for company cars driven by their employees. There would surely be a stampede to pay such a penalty in order to avoid the much more costly insurance alternative.

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