Confessions of a Health Insurance Scofflaw

Back in 2000 when I moved from Texas to Ohio I was given the opportunity to buy health insurance at what I thought was an exorbitant price of $350 per month. I declined. On Friday I commented on a post that about the insurance mandate that the insurance mandate is very expensive option for me for what I consider to be a hospital billing problem. Today I calculated about how much I saved by not having health insurance or having a low cost high deductable plan. Just for the health insurance premiums alone I would have spent $52,970. I used this slide from the Kaiser Family Foundation and its 131% increase to estimate my health insurance premium increases. This looks like a pretty conservative number since it assumes I can get a comparable low deductible policy today for $457 per month. From Quicken I can say that my medical and dental costs over this time period was about $37,900. Based on my ten year experience you can save a lot of money by being a savvy health care buyer.

Yesterday Ann Althouse and Les Jones both commented on an interview in the Wall  Street Journal with the Nobel economist, Gary Becker. They focused on his comment:

Here in the United States,” Mr. Becker says, “we spend about 17% of our GDP on health care, but out-of-pocket expenses make up only about 12% of total health-care spending. In Switzerland, where they spend only 11% of GDP on health care, their out-of-pocket expenses equal about 31% of total spending. The difference between 12% and 31% is huge. Once people begin spending substantial sums from their own pockets, they become willing to shop around. Ordinary market incentives begin to operate. A good bill would have encouraged that.

Although I agree with that statement I am most concerned about the following statement in the article since it links a bad health care policy with aggravating our current economic malaise. The next logical step for people frustrated with the current health care policy is to “game the system” and watch the legislators fumble around trying to explain how the policy is actually working quite well. Already we are seeing several unintended consequences such as, “AT&T Sees $1 Billion Charge Tied to Health”. There is definitely some passive-aggressive behavior going on here. You might call this scenario the sequel to “Jobs saved or created”.

Bad legislation, maintained by self-seeking interest groups. Back in 1982, I remind Mr. Becker, the economist Mancur Olson published a book, "The Rise and Decline of Nations," predicting just that trend. Over time, Olson argued, interest groups would form to press for policies that would almost invariably prove protectionist, redistributive or antitechnological. Policies, in a word, that would inhibit economic growth. Yet since the benefits of such policies would accrue directly to interest groups while the costs would be spread across the entire population, very little opposition to such self-seeking would ever develop. Interest groups””and bad policies””would proliferate, and the nation would stagnate.

Gary Becker: ‘Basically an Optimist’—Still
Sat, 27 Mar 2010 03:48:35 GMT