Brad DeLong likes John Kerry’s health care proposal, and says why.
The trick in creating catastrophic insurance is to make sure the deductible is high enough not to tempt healthy people to self-insure. By covering only 75% of the costs over $50,000 and tying eligibility to having private health insurance, Kerry gets around that problem, while still greatly reducing the incentives for cherry-picking and cost-shifting.
Neat.