Saturday, August 08, 2009
"Private" insurance models sometimes run into anti-selection -- until it's mandatory
The “Your Money” column of Business Day of the Saturday August 8, 2009 issue of The New York Times has a provocative piece by Ron Lieber on the notion of private unemployment insurance. The title is "Good Luck Getting Private Insurance for Unemployment" and the link is here.
As I covered when discussing a Washington Post column recently (link here), unemployment insurance is mandatory, and premiums are paid mostly by employers in most states. However. As Lieber explains, offering additional private unemployment insurance (a libertarian idea to be sure) would confound the insurance business with anti-selection problems unless the additional coverage was also “mandatory.”
That’s why we see proposals to make health insurance mandatory, and maybe some day long term care insurance, too.
That’s one more reason I feel skeptical about media perils insurance for bloggers, discussed previously on this blog. As long as it is optional (as it is now), it would seem extremely difficult to price. But it would be difficult to price even if mandatory.