Bryan Caplan  

Health Care in California: Sick from Economic Illiteracy

Money and Happiness: Double-Ch... Punk Rock Star Finishes His Th...

The symptoms: Rapidly rising medical costs and lots of wasteful treatment.

The treatment: Crack down health savings accounts!

That's the quality of reasoning you get from California's Insurance Commissioner Garamendi. This critique from Richard Ralston of Americans for Free Choice in Medicine has to be read to be believed:

Because of their tax advantages, HSAs are attacked as being a benefit only for the wealthy. Take a moment and try to picture Donald Trump greedily rushing to shelter $2600 in one of these accounts so he can save a couple of hundred bucks in taxes. These accounts aren’t worth the paperwork for the wealthy...

The report also attacks HSAs and the high-deductible insurance policies to which they are linked because they “are likely to cause many to forgo necessary treatment.” In other words, all of these wealthy consumers with HSAs will not spend their own money for their own health care. They will seek treatment only when someone else is required to pay for it. Wow! This is in a report whose supposed purpose is addressing the high cost of health care now. Imagine what it will cost when we shove “necessary treatment” down the throats of well-off people who don’t want it.

It is clearly the very popularity of HSAs with consumers that the Commissioner sees as a threat. The chief complaint is that the federal government could make better use of the $7 billion a year in tax savings which these consumers realize: “These resources would be spent more effectively if they were used to help fund a universal health care system.” Of course, $7 billion would not even be a drop in the bucket for such a system. But the principle upon which these government functionaries base this fatuity is that government spends money on health care for everyone “more effectively” than individuals can for themselves.

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The author at The Club for Growth Blog in a related article titled Friday's Daily News writes:
    Social Security: Ready for Round Two? - David Hogberg, TAS The Right Way To Deregulate Electricity - Vernon Smith, WSJ Highway Robbery: $286 Billion - John Berthoud, Human Events No Pork Left Behind - Veronique de Rugy, TCS Paved With... [Tracked on August 12, 2005 9:20 AM]
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Matt McIntosh writes:

There's that idea trap again, eh Bryan?

Sarah writes:

Do hsa's cause marginally healthier people to drop out of the insurance scheme, jacking up the price and resulting in more uninsured people? Do they make employers less willing to offer company coverage? I think the "likely to cause consumers to forego treatment" argument is interesting. Are consumers less likely to spend money on day-to-day preventative medicine that could have major payoffs in the long run, since they know that only a small percent of the unlikely-but-catastrophic result of not acting preventitively will be paid for out of the HSA?

Mcwop writes:

Here is my favorite passage in the report:

The US government also spends more on health care than the governments of most other industrialized countries. In 2002, the US government spent $2,364 per capita on health care (primarily Medicare and Medicaid), while the governments of Canada ($2,048) and France ($2,080) spent less.


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