Tuesday, December 11, 2007

I was half-listening to Divorce Court (or a similar show) when they were arguing about who pays for a child's health care. Fairly standard orders--If medical insurance is available from the employer, it must be provided, and the father is responsible for half the medical bills. In a divorce, I don't know if there is a completely fair way of handling this, and that probably is a decent compromise.

This led me to another thought--There is a belief that medical costs are all legitimate and necessary, and not subject to economizing. I've said before that one of the (many) problems with the US system is that there is no economy-class care, and neither the means nor incentive for most people to make decisions that will save money.

What could a doctor (or nurse-practitioner) charge if his care was "as is", with no possibility of malpractice recovery?

Some people would rather have a prescription than over the counter, because insurance will pay prescriptions. If two drugs work almost equally, should you take the one that costs 20 times as much?

Would you like car insurance that covers not only collision, but routine maintenance and repair? Oil changes, new tires, maybe even fuel?

Or, how about if engine replacement is covered, but oil changes aren't?

Of course, the average person will be paying at least the same costs as before, with some administrative overhead tacked on. In the case of the car--If fuel is covered, you'll be paying the average costs of people with no incentive to save gas--may as well drive as fast as you can without getting tickets, jackrabbit starts, no incentive to drive economically. Or if the engine will be replaced if needed, no reason to bother with oil changes. No matter how insurance like this is structured, it will change behavior.

This is one of the reasons medical insurance has screwed up our system--someone else pays the individual bills, and the incentive to reduce costs is reduced or eliminated. My employer is offering options where there is a high deductible for everything except preventative care, but there is also a medical savings account with employer contribution--I get to decide how to spend pre-deductible money, but I'm covered for extreme circumstances. It is decent for the individual, but I think the whole country would be much better off if this had been the standard for the past 20 years.

1 comment:

  1. Anonymous6:08 AM

    Moral Hazzard, Dave, Moral Hazzard.

    Calculating Risk, and Naked Capitalism, and housepanic.