MEGAN MCARDLE: HEALTH INSURANCE IS A FINANCIAL PRODUCT. It may not save lives–recent studies suggest it doesn’t–but, like other forms of insurance, it forestalls financial catastrophe.

Medical expenses really are different from other kinds of public policy programs, because they can be so wildly variable; 99 families out of 100 would be better off if you gave them cash instead of insurance, but the 100th will be hit by an expense that they could never realistically pay.

And that is what insurance is really for. As a health-care economist pointed out to me when the Oregon results came out, they were not actually all that surprising. Insurance is a financial product. It handles financial problems very well. We don’t expect car insurance to make us better drivers, or homeowner’s insurance to keep our house from burning down. Sure, insurance may change some behavior on the margins. But the direction of that change is not necessarily clear: Do you drive more safely to keep your rates down, or take more chances, because someone else will pay the bill if you damage another car? And whatever changes insurance produces are probably pretty marginal. Mostly what insurance does is protect us from financial ruin … and thereby, let us sleep a little easier at night.

The question, then, is “What program would you design if you wanted to give people the benefits that we know insurance confers?”

See her ideas here.