Why Cash Can't Replace Health Insurance

Since the release of the Oregon Health Study last week, conservative columnist Ross Douthat and liberal blogger Matt Yglesias have both written articles broaching the idea that the government should offer poor people more cash benefits in place of health benefits. Douthat argues more broadly for re-conceiving health insurance as something akin to homeowners insurance: a backstop against catastrophic losses, not a comprehensive package covering everyday expenses.

They might be right. But they are eliding a key reason that the U.S. -- along with every other advanced country -- has health-care policies aimed at providing people with coverage for both routine and extraordinary expenses. The Douthat and Yglesias plans would each make insurance against catastrophic losses universally available and provide redistribution from the rich to the poor, but they would do much less than Obamacare (or even the status quo) to redistribute from the healthy to the sick.