January 12, 2010

If You Don't See It, You Don't Feel It

Marc Comtois

For those who remember when health insurance used to be only "hospital insurance" or "catastrophic", this chart shouldn't be a surprise.

Veronique de Rugy puts it in context:

Much of the rationale behind the current reform of the healthcare system is about controlling inflation in healthcare costs. However, based on the trend presented above, a better alternative to the semi-nationalization that the president has in mind would be to increase individual responsibility for medical decisions and costs. When people aren’t exposed to the true cost of their care—even if they pay for it in foregone wages and higher taxes—they consume more.

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Didn't George Bush urge us to go out and consume more? Don't certain economists talk about the need for more consumer spending?

Isn't it better to spend money on a better form of insulin than it is to spend it on an X-box?

Just curious.

Posted by: OldTimeLefty at January 12, 2010 4:40 PM

"When people aren’t exposed to the true cost of their care—even if they pay for it in foregone wages and higher taxes—they consume more."

That is generally the case when you separate the service from the payment.

If you are shopping for a windshield, the first question is "is it covered by insurance?". I had an insured windshield replaced, that was $800. A year later I had a windshield replaced in the same car, without insurance, $300. When I lived in Cambridge, the local glass shop has a sign that read "free tank of gas with new windshield". I am sure that was for insured windshields.

I am sure the same pschology applies to medical services. Except in unusal circumstances. the "rich doctor" is a cration of insurnace. Before then, you could assume that a "rich doctor" had "family money". Before my time, Buick build a low line car called teh "doctor's coupe". I can recall when many doctors practiced out of a portion of their houses. There was a time when many doctors, such as Conan Doyle turned to writing because they couldn't make a living. Sherlock Holmes fans will recall that Dr. Watson was saving to "buy an established practice", that was the only way he could assure himself a living. Granted, today there is more that a doctor can actually do for you.

Posted by: Warrington Faust at January 12, 2010 6:00 PM
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