Health Care Costs

Greg Mankiw, along with my other Economists, may miss the most important aspect of the Health insurance, here, here, and here. What is the major element wrong with their thinking, which apparently even includes the current Administration? It consists of two Parts, both vital for any benefit to accrue to health care insurance regulation. The first states that any attempt to restrict Consumer choice, without an attempt to limit health care Costs, will not curb Health Care Expenses or satisfy cancellation of overdraft of insurance services; something all three articles pretend Wish to curb. The second Part insists that any Change in health care insurance must be understood by the Users of such insurance, to get any change in their behavioral use of the insurance. Most Consumers, under these Proposals, will not even notice any regulatory change.

How can there be curbs placed on Health Care Costs through regulation?

Instead of making all Health Care insurance premiums Tax-deductible, or the opposite, making even employer contributions non-Tax deductible, One could take a positive role and define exactly what Type of Health Care insurance can be sold: I suggest three basic of Types of Health Care polices be allowed, each of which would give a separate Rate schedule set payment for each policy use: Doctor Visit, Hospital Stay, or Procedure payment; the three separate Types separated by set Dollar amounts for each service. The policies would be issued for say $25, $50, or $100 per Doctor’s visit, Hospital Day rate of $250, $500, or $750. Procedure rates would again be set on specific payment rates in Dollar terms. The Health Insurance policies themselves have been expressed in terms all Consumers can understand. They will easily grasp what policy Type provides their best Risk-avoidance avenue in relation to their own Income level. This translates into instant awareness of health care insurance regulation change.

You may ask how this could limit excessive Health Care Costs, or excessive use of insurance benefits?

The Government could, under such a Sea Change in issuing Insurance, regulate far more than Consumer use of benefits. It can insist on hard Accounting, with Insurance industry justification of premiums and Costs. It can insist on major elimination of Administration Costs, demanding Insurance Coverage cover the listed Rate schedules. It can pass regulation which states Tax-deductibles will be issued only to cover the Costs of the cheapest Type of Insurance offered, stating it is up to the Consumer to further insure against health risk. Such a program of regulation will incite Health Care Providers to minimize their Charges in pursuit of higher Patient Turnover, when it is known that higher Charges will vacate Patient utilization of health services. No Change at one end of the Health Care Payment system will resolve the issue of high Health Care Costs; both ends must be assaulted effectively by regulation. lgl