Congratulations to the Rio Grande Foundation’s Micha Gisser. His excellent letter to the editor regarding health policy was published yesterday in the Wall Street Journal. Here is a portion:
“The economic problem lies in the fact that traditional medical insurance covers two dissimilar events, catastrophic and minor illnesses. Consumers’ demand for catastrophic medical incidents is inelastic: a consumer will not use more of the heart-surgeon’s services just because his out-of-pocket spending is zero. Consumers’ demand for care for minor illnesses is elastic: it is inversely related to price. At the true high price a consumer would consult the medical encyclopedia and use over-the-counter drugs. At a low price (zero if her insurance pays the entire cost) a person would consume much more freely, mainly by making appointments with her doctor for every sniffle and headache. The problem with the prevailing health insurance is that the third-party payment of health-care bills insulates the consumers from the real costs of medical care services for non-catastrophic incidents.”
For the entire letter, click here (subscription required).
Nice job, Micha!
