His latest book is now available.
Offering a fixed-sum tax credit for its purchase (in place of tax exemptions for employer-provided insurance and tax deductions for the self-employed and for Obamacare subsidies in the exchanges) would eliminate the perverse incentives in the current system and allow people to make their own choices between health
insurance and other goods and services without financial penalty.
Harry Truman said, “I never gave ’em hell. I just told the truth and they thought it was hell.”
Goodman applies economic logic to health care, and people think it’s hell.
Obviously, that would not help those who, for whatever reason, do not file and/or do not pay taxes, but that could be handled with a pre-funded HSA-type account (limited to medical uses) for those folks, who could still shop around for services or an insurance plan that might suit their needs and wants.
Goodman’s concept is so simple, we will never see it happen.
Agreed.
I think it’s an undertalked about point that democratic decision making in large groups has no inertial tendencies towards simplicity, no matter how much sense it makes.
It seems like food stamp programs are pretty simple and operate along the same lines as Goodman’s recommendation for health care. Why is there a difference between the two?
Food markets are transparent.
Everyone understands food
Food is cheap
Our need for food is extremely predictable and consistent.
Food is consumed in small increments several times per day.
Healthcare markets are opaque
Healthcare is often almost impossible for non-professionals to understand
Healthcare is expensive
Our need for healthcare can remain non-existent for decades, but can also escalate without warning into five or six figure expenses, while at the same time our ability to earn money is compromised.
Hmmm. Most of health is diet. Besides that, one needs to understand their medical treatments.
I’d like to split the issue of medical advice into two or three parts Because that story seems a little split personality to me.
One is division of labor. In this sense medical is very much like everything else. You don’t understand the vast majority of decisions that go into any product or service you purchase. However you do have to know enough. In fact a lot of doctors get informed about new treatments from their patients. Some only because of those “ask your doctor about X” drug ads bit others by highly motivated and intelligent patients.
Second is the idea that a doctor’s information on asymmetry makes it easy for them to sell you unnecessary procedures. I find this persuasive for high ethical standards for doctors but an odd justification for 3rd part payment with 1st and 2nd party decision-making, which is why the equilibrium always solves for some form of dea…I mean effectiveness panels.
Third is that neither doctors nor patients are on a position to know public health statistics. However it is their collective process that produces that information.
I think your points on heath care are symptoms of the an industry that has been primarily 3rd party payments for so long.
I think those resolve themselves if 1st party payments became the norm.
I think previous government distortions have made 3rd party payment the norm and that is so engrained that any solution tends to try to preserve that. So, it’s not just because it’s too simple.
In my own experience, when I transitioned from full insurance coverage to HSA + high deductible plan, I was amazed at the questions I started spontaneously asking doctors and billing departments, how transparent things became (they’d answer them, to my shock) and just how easy it was to get discounts to make the fees very reasonable if you were paying out-of-pocket.
That made me think that if we went to more 1st party payments and let the markets work, we may even see a day where high deductible insurance would be bundled into product purchases, like how credit card companies provided travel insurance if you used their card to buy airline tickets. Maybe buy Coppertone sunscreen and you get coverage for treatments related to skin cancer exceeding $10,000.
I agree with your position that 1st party payments would make a major difference in how healthcare vendors behaved. I do think you are overstating that difference.
You and anyone else who takes interest in economics blogs are not normal consumers. Market based solutions to healthcare will work for those who can analyze, plan for, and set aside resources for possible needs many years in advance. Clearly, a significant number of people cannot do this consistently.
Markets can only work by accepting the notion of failure. In healthcare, that means a consumer failed to plan for the possibility of an illness that is now too expensive for them to deal with. There is no market based approach that will prevent this from occurring far too often for most of us to stomach.
Dr Goodman is usually right on target. It is a sad story how he got forced out of NCPA.
Fixed rate credits would clear up the health care exchanges in about 24 hours. The main reason the exchanges are so clunky is the perfectionist effort to tie health care premiums exactly into income. The back room laws of the ACA are absolutely maddening if your read them or try to program them. You have the second cheapest silver plan trying to tie into estimated family incomes — what a mess!
However — I certainly hope that Dr Goodman’s tax credits are age rated. A flat $250 credit for everyone makes a young person’s insurance nearly free, and an older person’s insurance still unaffordable for many.