Thursday, February 2, 2012

Health Insurance is not Auto Insurance

John McDonough reviews Mitt Romney's concept of cost control: co-insurance and high deductibles (emphasis mine)
...Mitt Romney's approach to controlling private sector health spending growth is to continue and to accelerate the shift to insurance policies that expose patients to higher and higher levels of cost sharing. This reflects a view, popular among conservative health economists, that health insurance should, as much as possible, resemble auto insurance, where you only get help for catastrophic events.
 There is a big problem with equating health insurance and auto insurance.  With auto insurance underlying costs tend to correlate with income.  Someone working minimum wage probably drives a beater with no collision and minimal liability limits.  That policy costs much less than the one for a one-percenter driving a porsche with $1M limits.  Cost, and thus premiums correlate with income.

In contrast with health insurance there is no correlation, poorer people do not need less expensive care than richer people.  There is no equivalent to a "beater" surgeon, cutting people open in a dirty basement.  At least not today...

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