The idea of high-deductible, catastrophic health insurance plans, coupled with tax-free health savings accounts has been pushed as a possible solution to healthcare costs for a while, but so far it hasn’t really taken off.
In theory, it puts the consumer in control of quotidian healthcare decisions, while the insurance company does what an insurance company does best — protect against unlikely, unpredictable fiscal calamity.
Alex Tabarrok points to a new study showing positive results where consumer-driven healthcare has been put into place. This part was particular interesting:
The knock on CDH plans has always been that they could cause people to avoid preventative case. Not only does this appear to be false it’s the opposite of the truth:
Generally, all of the studies indicated that cost savings did not result from avoidance of inappropriate care and that necessary care was received in equal or greater degree relative to traditional plans. All of the studies reported a signficant increase in preventative services for CDH participants.
Especially interesting is that some of the studies found that CDH plans resulted in better compliance with evidence-based care.
We can take a pretty good guess for why CDH plans don’t diminish the appetite for preventative care — sometimes paying for something is just easier than getting reimbursed for it. Economists who only see dollar signs may not grasp this, but we can easily envision scenarios where we’d rather just pay $75 than go through the hassle of getting an insurance company to pay for it.
You see the same thing happening in the music industry. There have been various attempts to give away “free” music, in exchange for watching an ad, or jumping through some other hoop. Investors in these companies ahve alawys thought they were a free lunch, and that consumers would go gaga for them. But in the end, the lack-of-headache in paying $.99 to Amazon or iTunes wins out.
Besides, if the money is segmented into a health-savings account, than the desire to save and invest that money — which can’t easily be used for much else — is diminished.
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