Health Insurance
In the fall in ec 10, we heard a lecture from David Cutler on health economics. David talked about the incentive effects of health insurance.
The issue is moving to the front of the policy agenda. In today's NY Times, Al Hubbard, director of the White House's National Economic Council, has an op-ed on the topic. The essence of the article is in this extract:
Health care is expensive because the vast majority of Americans consume it as if it were free. Health insurance policies with low deductibles insulate people from the cost of the medical care they use — so much so that they often do not even ask for prices. And people don't recognize the high premium costs of this low-deductible insurance because premiums are paid by employers. Finally, the tax code subsidizes these expensive, employer-purchased insurance policies.
To control health care costs, we must give consumers an incentive to spend money wisely. We can do this by encouraging the purchase of high-deductible policies and providing the same tax benefits for out-of-pocket health spending that employer-provided insurance enjoys...
gregmankiw.blogspot.com
I agree with this but the article you quoted and linked to shows how this idea only goes so far -
"Problem: the bulk of America's healthcare dollars are spent on people who are really, really sick. And when you are really, really sick, your price elasticity of demand for something that might cure you is damn close to zero. There are very few good substitutes for chemotherapy, no matter what they say on late-night television commercials."
But then while the bulk of health care spending might be on people who are "really, really sick", a pretty big chunk is spent on people who either aren't as sick, or are very sick but still have effective treatment options with different costs. Even if its only 1/3rd of health care spending, and the costs are reduced by only 15%, a 5% reduction in health care costs would be nothing to sneeze at.
Tim |
