Why do people buy health insurance? The most often cited reason is to transfer the risk of illness to a third party by paying a premium. University of Minnesota economist John Nyman has studied this for many years. He argues that people buy health insurance as an income transfer in the event they become sick. People who are ill often lose their income and health insurance pays a benefit that patients would use their income on. A commenter on the NCPA Health Blog a few years ago said he believed that people buy health insurance for the negotiated discounts. That makes a lot of sense.
Category: Drug Prices & Regulations
Why Health Care is Not Competitive and How to Fix It
Technology is a significant driver of high health care spending. For instance, many treatments common today were not available 50, 40 or even 30 years ago. There are far more drugs and medical procedures than there were in the 1990s when I first began studying health care. Yet, treatments and therapies that have been in use for decades are still quite expensive. In typical consumer markets, the quality of technology gets progressively better while the inflation-adjusted prices often falls as older technology is surpassed by newer technology. This is especially true of consumer electronics but also true of automobiles, appliances and other types of consumer goods.
Portland Back-Peddles on Public Drug Use
There is an odd theory that making illicit drugs easier to use will make them safer, such as needle exchanges and safe injection sites. Other reformers argue that decriminalizing small quantities will avoid court costs and incarceration costs. Moreover, the proponents of the above theories believe the policy known as The War on Drugs has been ineffective and even racist.
There is another theory, one that is grounded in reason, common sense as well as backed by empirical testing, that demand curves are downward sloping. Similar there is an economic truism that posits if governments wish to encourage some activity, then subsidize it. If government wishes to discourage some activity, then tax it.
Monday Links
- The food stamp program doubled in size during th pandemic, yet its 42 million recipients have less healthy diets and are more obese than other Americans.
- The typical Medicare beneficiary has access to around 40 Medicare Advantage plans. (WSJ)
- Medicaid in NY: volatile budget swings.
- GOP answer to drug shortages: exempt generics from the 340b discounts until the shortage is over. (gated)
- The case for drinking. HT: David Henderson