Baseball Crank
Covering the Front and Back Pages of the Newspaper
May 24, 2005
POLITICS: Health Savings Accounts

Matt Yglesias argues:

But let's say conservatives are right. Let's say the main problems with the US healthcare system really are overconsumption (i.e., third party payment encourages people to use health care services they don't really need) and overregulation (i.e., mandated features on insurance plans designed to make them better just price them out of the range of too many consumers) and that, therefore, HSAs are a good solution. Isn't universal health care still the way to go?

I think Yglesias undercounts the conservative objections, which also include lack of individual choice, erosion of the profit motive needed to drive further innovation, and the interposing of unnecessary third-party insurers. But anyway, let's look at his solutions:

First, eliminate the tax preference for health insurance as compensation vis-à-vis money.

This would politically difficult, but I'd certainly agree that having people go through their employers to get health care involves an extra level of intermediary that does no good.

Next, implement a national catastrophic care program where the government will pick up the tab for any health expenses you incur over a "deductible" of $X which you need to pay out of pocket. Providing catastrophic care to the entire under-65 population shouldn't be particularly expensive.

I'd agree with this - the present system is backwards. Insurance should be there, whether public or private (and in some cases public makes sense) to pick up costs that we can't handle, not to pay ordinary expenses.

Of course, this still leaves Health Savings Accounts as a logical solution for those intermediate-cost expenses, things that you can and should save for - Yglesias doesn't get to those.

Posted by Baseball Crank at 7:24 AM | Politics 2005 | Comments (1) | TrackBack (0)

Frankly, I'm skeptical of the catastrophic insurance/health savings accounts approach you're pitching here. Consider how pricing decisions are made in health care (particularly by physicians) and you'll understand what I mean. Docs won't lower their costs if fewer patients start walking in the door—they'll raise them so their incomes won't fall.

Posted by: Dave Schuler at May 24, 2005 10:49 AM
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