Health Care for the Healthy

Jon Cohn has more on Rudy Giuliani's health care plan:

A year ago, after Bush first floated an embryonic version of his proposal, economist Jason Furman wrote in the National Tax Journal that "Empirical estimates show that eliminating the tax incentive for employer-provided insurance, without creating another pooling arrangement, could increase the number of people without insurance--even in a relatively limited proposal like that of President Bush." What's more, research has suggested that those getting insurance will probably be relatively healthy, while those losing it will be relatively unhealthy.

I'm not a regular National Tax Journal reader myself, and Google unfortunately doesn't turn up a copy of that paper, but the result is pretty intuitive -- giving even a small incentive for the relatively healthy to drop out of pooling mechanisms you could have a very large effect since every time a health person drops out of the pool, the pool becomes a worse deal for the next-healthiest people. Next thing you know, pools start falling apart.