Why rational for healthy people not to buy health insurance

Reference no: EM131021239

An article in the Economist magazine argues that the real problem with health insurance is:

The healthy people who decide not to buy insurance out of rational self-interest, and who turn out to be right. By not buying insurance, those (largely young) healthy people will be failing to subsidize the people insurance is meant for: the ones who end up getting sick.

a. Why is it rational for healthy people not to buy health insurance?

b. Do you agree that health insurance is meant for people who end up getting sick?

c. Why is the situation described here a problem for a system of health insurance? If it is a problem, suggest possible solutions.

Source: "Romney on Health Care: To Boldly Go Where He Had Already Been Before," Economist, May 13, 2011.

Reference no: EM131021239

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