The health care debate over the last year has included massive attacks by President Barack Obama and his administration against the practices of health insurance companies, particularly those selling policies to individuals. Is this criticism valid? At a time when the much-debated legislation has become a reality, Mark V. Pauly, a health economist at the University of Pennsylvania’s Wharton School, raises serious issues about the premises of the president’s criticism and the likely effects of the new legislation. In his book, Health Reform without Side Effects: Making Markets Work for Individual Health Insurance (Hoover Press, 2010), Pauly offers a realistic assessment of how much improvement can be demanded and expected. Pauly observes that the most frequently discussed alternative reforms reflect an excessively simplistic view of insurance markets, which leads to policies likely to drive out some of the beneficial features of the present market. He discusses how individual insurance markets currently fit into the overall pattern of health insurance markets, identifies what is distinctive about current performance in that market in comparison to the proposed reforms, and suggests that taking into account the current strengths of the individual market would yield much higher net benefits.

Responding to Pauly were actuary Tom Wildsmith, a senior consultant at the Hay Group, and John A. Nyman, a health economist and professor of health policy and management at the University of Minnesota School of Public Health. AEI resident fellow Thomas P. Miller moderated. This event was cosponsored with the Hoover Institution.