June 26, 2005
Responses to Comment on Employee Health Insurance-BECKER
I have only a few reactions to the comments. The various state mandates on health coverage by insurance companies are a major problem in the American health insurance system that I did not address. One person mentions that New York State prohibits large deductions to individual accounts. I was not familiar with this, but I am not surprised. However, I am not sure that this is consistent with the HSA Act of 2003, which requires large deductions in order to implement an HSA.
Catastrophic care is clearly important, but is by no means the dominant source of medical care. In fact, it is generally not important for families up to age 60 or so. These families would gain the most from the combination of an HSA with catastrophic coverage.
If my proposal for catastrophic insurance is implemented, I am convinced many insurance companies would jump into this market, unless price controls over premiums made this type of coverage uneconomic.
One of the interesting aspects about drugs is that costs are typically per pill rather than per unit dosage. I regularly cut pills in half to take advantage of this. I am surprised more people do not do this.
I have no personal interest in the proposals I made. The health insurance at my university is fine, but I hope it moves to an HSA system.
More generally, I always prefer a large deductible on every type of insurance when I am given a choice. Individuals are much better at covering small loses than are insurance companies, and can take various efficient actions to minimize their expenditures on such loses. This is why HSA’s are such a good idea.
Someone asked my opinion of the attempted takeover of Unocal by the state-owned Chinese oil company, China National Offshore Oil Corporation. I do not see any good reason to oppose it. If they can run this company more efficiently, the United States is better off, not worse off. We went through such fears about Japanese takeovers of American companies during the 1980’s. Mainly, they overpaid for these companies, and in effect transferred wealth to Americans!
The Japanese Keiretsu have declined a lot in importance since economic stagnation set in there during the early 1990’s. No, our organization of business is totally different, so I do not see the slightest risk of such a development in the U.S.
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