Thank Goodness for Insurance?
Tuesday, 25 September 2007 by Jacob TomawHow often have you said this or heard it said? Is insurance the answer?
Imagine if your car insurance covered oil changes and gasoline. You wouldn’t care how much gas you used, and you wouldn’t care what it cost. Mechanics would sell you $100 oil changes. Prices would skyrocket.
This is John Stossel moving the health care debate to something a little bit easier to grasp. You might say you cannot compare health care and auto care because one is a necessity of life. However, given the publics apparent inelastic demand for gasoline, I am not sure I know which is the necessity.
Read this weeks article spelling out the problem. Next week he promises to have some solutions.
Posted in Economics, Our Crazy World, politics
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September 25th, 2007 at 10:44
We do care about things that are insured, we have car insurance and we still care whether or not we total the car (just not as much). The real difference between car insurance and health insurance is that we bear the full cost of premiums for our car insurance and we do not for employer sponsored health insurance. We care even less about the amount of health care we consume because we don’t bear the full cost of premium increases associated with health care use.
If your car insurance covered oil changes how much would they increase your premium? Would you hit your deductible sooner or would that be raised? I have to imagine some combination of these things would prevent you from willingly consuming a $100 oil change.
September 25th, 2007 at 16:13
Also, I don’t believe that mechanics would charge $100 for an oil change. In health care, insurance generally only covers you if you go to “in-network” providers. Those providers are only allowed to charge certain amounts for various procedures, and many procedures are not covered. Health care providers often complain that the rates set by insurers are artificially low - whether this is true or not, I’m not sure.
I’ll read the full article when I get a chance, but if that strawman is the bulk of his argument, I’m not totally convinced.