Over at California Medicine Man, Dr John is hosting a debate (of sorts) regarding Consumer Driven Health Care (CDHC). His post (linked in the title above) quotes from an Econlog item written by two economists.
Confused yet?
It gets better…
Briefly, Econlog posits that “most consumers would prefer…’insular’ coverage in favor of so-called ‘catastrophic’ insurance.” “Insular coverage” being defined as what most folks own today: office visit and rx co-pays, low deductibles and some modest co-insurance. In other words, generic coverage. “Catastrophic coverage” would be some form of High Deductible Health Plan (HDHP), presumably one that would be HSA-compliant. Econlog’s puzzlement with this mimics my own take on the generic vs HDHP debate, namely: most people, in most years, spend far more in premiums than they receive in benefits, which seems bass-ackwards. As economists, Econlog expresses dismay at this seemingly irrational choice. As a physician, Dr John believes this is because the patient/insured has no ownership in the claim (after all, it’s being taken care of – for the most part – by a third party), so there is a disconnect between the fact of a given claim and the patient/insured’s responsibility for it: “The issue isn't so much ownership in their ailments, it's the perception that someone else is paying the bill (employer or government).” His conclusion is that “(t)o bring down utilization (and therefore costs) from both the patient and the doctor side, one can require more direct patient out-of-pocket contributions.”
As an agent, I think they both fall somewhat short. As I noted in Dr John’s comments section: “Assume that your employer pays for your groceries. Are you going to eat steak or chicken every night? Assume further that your employer pays for your gasoline. Are you going to fill up with premium or the cheap stuff?”
Some answers tomorrow…
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