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Commentary

Are High Deductibles a Good Thing? Part I



Because I am often called the “Father of Health Savings Accounts” people sometimes assume that I favor high deductible health insurance. I don’t. In fact, I don’t really favor deductibles at all. Deductibles, along with co-insurance payments, are very crude devices that give patients very imperfect incentives.

What I favor instead is self-insurance for many kinds of medical expenses, including almost all primary care and most diagnostic tests. Where third party insurance is involved I favor fixed payments — wherever practical – with the patient self-insuring for any additional expense. (See, for example, Anthem’s experiment with knee and hip replacements in California.)

In other words, I favor giving people the ability to purchase the healthcare they need, but allowing them to make marginal decisions between health services and others uses of money – undistorted by taxes, third-party reimbursement or any other artificial intrusion.

There was a time when cost sharing requirements were thought to be a step in the right direction by many health economists. But in today’s environment, deductibles and copayments are being misused by insurance companies and employers who are perversely trying to attract the healthy and avoid the sick. They are doing so precisely because of public policies forced upon them by politicians who thought they were actually helping people with medical problems.

Read the full article


John C. Goodman is a Senior Fellow at the Independent Institute, President of the Goodman Institute for Public Policy Research, and author of the widely acclaimed Independent books, A Better Choice: Healthcare Solutions for America, and the award-winning, Priceless: Curing the Healthcare Crisis. The Wall Street Journal and the National Journal, among other media, have called him the “Father of Health Savings Accounts.”


New from John C. Goodman!
A BETTER CHOICE: Healthcare Solutions for America
Obamacare remains highly controversial and faces ongoing legal and political challenges. Polls show that by a large margin Americans remain opposed to the healthcare law and seek to “repeal and replace” it. However, the question is: Replace it with what?







  • MyGovCost.org
  • FDAReview.org
  • OnPower.org
  • elindependent.org