Heritage’s Ongoing Analysis of Health Care Summit
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President Obama’s health care summit is set to begin at 10 AM and end at 4 PM. Throughout the summit, Heritage experts will provide their analysis. We will keep this post at the top of the Foundry, so check back often for our latest reaction to the summit.
4:34 – Senators Barrasso and Coburn were both medical doctors, and they just made the case that a health care system based on catastrophic insurance with health savings accounts would be preferable to a health care system based on comprehensive insurance. Senator Barrasso claims that people with catastrophic insurance are often the best consumers of health care – they are sensitive to price and recognize that medical procedures and tests have costs as well as benefits. Individuals with comprehensive coverage do not internalize the costs of their medical care and thus receive excess care that is worth far less than it costs to provide. Senator Coburn mentioned at the beginning of the summit that one-third of health care spending is wasted.
Comprehensive coverage leads to the problem of moral hazard, in which individuals are not faced with additional health care expenses that come from unhealthy lifestyle choices. Moral hazard is of far less concern when individuals have catastrophic insurance so that we expect individuals to make healthier choices under this insurance market. Individuals should of course have the option to purchase either comprehensive or catastrophic coverage, weighing the benefits from more generous coverage with the higher premium that must be paid. By his remarks the President is biased against catastrophic insurance which further indicates that he fails to recognize encouraging comprehensive insurance is incompatible with controlling costs. – Brian Blase