Imagine that everytime you had a flat tire, a cracked windwhield, a dent in your bumper or needed an oil change that you filed a claim on your auto insurance. You would not be surprised if your auto insurance cost four times as much as it currently does.
Yet this is exactly how we treat our health inurance with co-pays and claims filed for every prescritpion and doctor’s visit. We are overinsured and it drives our costs up.
This is largely due to the tax break companies like mine get to buy health insurance for its individual employees. An individual gets no deduction for buying their own health insurnace yet their employer does. The effect of this perverse incentive is that we buy too much coverage and the end consumer is separated from that decision.
This tax perversion probably had its origin when the maximum tax bracket was over 70% and this became a tax smart way to comensate highly paid executives. The benefit was extended to rank and file workers over the years during union negotiations. We became used to our employer as our insurance provider.
This tax deduction should be removed and individuals should buy their own policy with whatever coverage and deductible they want. The coverge would be theirs, to take with them from job to job as they see fit, just like their auto insurance. The health savings account is a step in that direction. But I am afraid that the public has been so spoiled and the demand so distorted that it may take years before the public gets accustomed to having control of this portion of their lives.