Why health insurance?

Barrack Obama, well-known Nobel Laureate, recently authored an article published in JAMA about the Affordable Care Act (ACA). I had half a mind to write one of my paper reports about it.

However, I thought it would be more interesting to have an open discussion on health insurance. I don’t pretend to be an expert, so please add your thoughts and/or tell me how wrong I am. Shorter posts encourage more reader discussion, so I’m splitting this into three bites:

Part 1: Why health insurance?
Part 2: Challenges to health insurance
Part 3: What does the ACA solve?

Health insurance seems really complicated to me, and I’m amazed that so many people think they understand it. It’s basically an exchange of money, for money. It’s not at all obvious how this is beneficial, and yet it is. Below, I list some possible reasons why it might be beneficial.
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On voting strategy

In a voting system like we have in the US (“plurality voting”), we may apply something called the median voter theorem. The median voter theorem says that in a face-off between two candidates, the candidate closer to the median voter wins. Here we’re assuming a one-dimensional preference scale (e.g. left to right) and that voters choose the candidate who is closest to them on the scale. The winning strategy for each candidate is to move closer to the median until they are nearly indistinguishable, and each has about 50% of the vote.

As a result, you can see many politicians shifting their views over time, carefully tracking the median view. In the US, voters seem to be uncomfortable with this optimal strategy, and thus they demand that politicians put on a show of having believed in their current views all along. And then when politicians visibly contradict their previous views it’s used as a gotcha. This is incredibly tedious.

Of course, it does not really seem like the major candidates follow the median. Trump and Clinton, are, after all, very far apart! In fact, I’m puzzled why US presidential elections don’t hew more closely to the median voter theorem. I imagine this is a subject of study for political scientists, but I only have baseless speculation to offer. And of course I’m ultimately trying to say something about the current election cycle.
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