White House economist: third-party payment increases health care spending

Last week I noted that President Obama does not know what health insurance is, and decries real insurance while praising prepaid health plans masquerading as insurance.  I also posted about how ObamaCare, HR 3590, threatens real insurance policies, that is, HSA-qualified plans. Maybe the President should listen to one of his economic advisors.  From the Wall Street Journal a few months back:

One liberal sage noted in a 2007 paper that “four decades of empirical research” have shown that insulating people through third-party insurance coverage “from the full cost of health care has been responsible for anywhere from 10% to 50% of the large increase in health expenditures.” Ultimately, he concluded, increasing cost-sharing would give individuals a direct stake in more prudent purchasing, as opposed to today’s invisible health dollars that vanish as more expensive premiums, foregone wages and higher taxes.

Those are the words of Jason Furman, now the White House deputy economic director who seems to have been put into witness protection. Every serious health economist in the country recommends reforming the tax exclusion for employer-sponsored insurance, perhaps by converting it to a deduction or credit. Cost control will never stick unless it is extricated from politics and transferred to individuals to make their own trade-offs.

(Via EconLog)

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Filed under insurance, tax code, HSAs

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