Individuals switch to consumer directed health plans (CDHP) in an effort to save money, and to have an insurance plan that accurately reflects their risk aversion and actuarial value. Such plans are cost effective for individuals with low risk of catastrophic (high cost) events because the plans are generally offered in connection with higher deductibles … Continue reading
Author Archives: gannawag
A (Very Simple) Forecast of the Most Popular Type of Insurance
My overly simple linear forecasts about insurance types predict that high deductible health plans with savings options will soon have more enrollees than any other type of insurance. Why? I assume that it is due to the perceived low probability of maxing out on deductibles combined with the desires to pay as little per month … Continue reading
Where is the problem in HealthCare Spending?
It is obvious to say that healthcare costs have been increasing over the past half century. Something needs to happen to slow the trend, to bend the cost curve back towards earth. Certain avenues may need more attention than others. This graphic breaks down where the dollars are flowing into since 1960 (adapted from data … Continue reading
The Romney Medicare Plan
Medicare spending is out of control. A key reason is that the government is inefficiently shoving its clumsy hand across the program, demonstrating a failure to understand the power of the free market. When individuals feel an inaccurately small marginal cost for a good, they purchase too much of that good. Too much medical care? … Continue reading
Super Crunching and Medical Care
Evidence Based Medicine is a simple concept: using evidence and data (on top of intuition) to help inform physicians regarding diagnostics and treatment. Why would any physician object to this practice? It’s not like the data will be taking over their minds, or forcing them to make decisions. Medical data will do what data always … Continue reading
Using the Principles of Economics to “Fix” Health Care
The phrase “at the margin” refers to the next decision made. Thus, marginal cost is the cost of the next good or service. So the marginal cost of apples is the cost of the next apple purchased. One of the fundamental principles of economics is that rational people think on the margin. That means that … Continue reading
Aligning the Incentives of Patients and Insurers
A cause of increasing health care costs is the three-player game between patients, providers, and insurers. Patients interact with providers at the time of service, deciding which service to provide. Insurers interact with providers after the service has been performed to supply payment. Patients interact with insurers regularly to pay premiums. Thus, patients do not … Continue reading
