Articulatory Loop

Welcome to my 400th Blogger post. I figure a good way to spend this one is with a bit about numbers.

We all know health care in the US is ridiculously expensive. The costs seem to be out of control. There are lots of answers why, but none is complete. A convenient explanation is that, due to our third-party payment system, consumers are isolated from actual costs, and thus consume less wisely than they would in a direct payment scheme. This is almost certainly true: higher copays and coninsurance lead to less demand for care.

An editorial in today's Wall Street Journal discusses this, and the author concludes that expanding tax benefits to cover all health care costs would help. If you make out-of-pocket expenses deductible, she says, high copay/coinsurance plans will become more attractive, and consumers become more exposed to costs, and become wiser consumers, and costs go down. Fine. That's probably right, but I strongly doubt it's the whole story.

First off, the insurance and provider industries would find a way around it. Second, people seeking less care is not necessarily a good thing.

Discuss.