In case you were worried the US health care system burns up money, take heart. It’s worse in Israel.
According to Ynet News:
June 1, 2005An Israeli man was so fired up after a fight with his wife that he burned their joint savings of more than NIS 3 million (about USD 685,000) in cash, police said Wednesday.
A furious woman told police that her husband lost his temper after arguing with her about money and then went to the family safe, took out NIS 3 million in cash, and burned it in their backyard. An initial investigation at the scene revealed thousands of charred bills.
Dear Sir,
Why do you dismiss cost shifting as a mechanism for cost reduction? As Mark V Pauly showed in 1968 [“The economics of moral hazard: Comment”, Americn Econmic Review pp. 531-37] consumers’ behavior changes when someone else is paying the bill. It changes so that they buy medicine that is valued to them less than it costs society to make because they view the cost as zero. This is moral hazard.
If consumers are responsible for more cost, their price elasticity of demand for formerly covered medicines will increase. This will cause providers to compete on price and quality by lowering cost and raising quality.
Trapier K Michael
The previous comment was probably meant for the NStar post, but I’ll answer it here.
The problem is that employees are paying a fixed percentage of the premium. It doesn’t influence their behavior the way a consumer directed plan or even a co-pay change would.