Care takers

Published in The New Republic -- February 11, 2002

To the Editors:

Although Jonathan Cohn rejects high-deductible health insurance, we've seen that the "first-dollar coverage" of managed care is no bargain. Affordable protection against catastrophic costs is just what many rational purchasers seek. Deductibles on automobile or home-owner policies are popular because retaining some risk makes sense financially for many people. The problem with health insurance is confusion about who really pays for the coverage. Economists like Mark Pauly have shown that the cost of health benefits at work is borne by employees through reduced wages; savings from more affordable coverage would likewise accrue to them, not to the company.

Still, Americans rightly resent the imposition of any particular health care paradigm, be it managed care or (gasp!) paying for routine care out of pocket. We should require everyone to carry basic health insurance, but let individuals decide what type of coverage they prefer. The tax exclusion for benefits at work, shackles employees to their bosses' choices; replacing it with individual income-based credits would allow all Americans to make the same cost-benefit decisions about insurance that they make about everything else they purchase.

Thomas Campbell Jackson
Senior Fellow
Institute for Economic Studies
White Plains, NY