More on High Deductible Health Insurance

Stuart Buck's post on not insuring for small health expenses got me thinking again about why people have low deductible insurance and why one of the arguments against high deductible insurance is weaker than it seems. 

The incentive alignment in health insurance is bad so why do people choose to use insurance for health expenses that they can afford. (I have a $10,000 deductible health insurance plan, partly because I want to minimize fighting with insurance companies.) one might argue that we have low deductible insurance because the deduction is better if health spending is done through an employer but that begs the question of why people would support such a tax situation.

My current explanation for why low deductible health insurance still dominates is that it gives people peace of mind, one less thing to worry about. Also when healthcare spending was just 5% of GDP it was a nice way for companies (or Governments) to that they cared.

It worked OK while health spending was below 10% of GDP but that peace of mind has become too expensive now that health spending is 18% of GDP. At 18% of GDP, we need individuals to make more of the spending decisions directly. The trade offs between spending on health care and other things can be very different for people. At 18% of GDP it is not even a sure think spending that much on healthcare increase health more that say buying a newer safer car or a gym membership or opting to work a lower paid but safer job. 

One of the arguments that people will make against very high deductible insuracen is that when one is  sick it is difficult to shop for price and that shopping for price is very difficult in health care but,  the health care industry is not that as bad as people think in this regard because patients can have GP's who do very little of the expensive care themselves who can seek the best options on behalf of their patients.  So even if the patient is too upset by the sickness to make the decisions himself they can have an advocate acting on their behalf.

I have had situations where Doctors have found much cheaper options for us after we have explained how much we will pay with our $10,000 deductible health insurance plan.

If Your Mind could be Transplanted

If Your Mind could be Transplanted into the either into Warren Buffet's body or into the body of a poor black teen which would choose?  you of course get Warren's money if you choose him but you get his age too.

That seems like an easy one to answer but how about this:  A well built but poor young back man or Warren Buffet's pudgy son? 

Question to Advocates of Government Expansion in Healthcare

Advocates for more government expansion into healthcare often point out that industrialized countries with socialized medicine pay much less for healthcare than we in the USA do.  They claim that it is becuase it is socialized that it is cheaper.  But we in the USA have socialized schooling and we still spend a lot more on schooling that the other industrialized countries.  So wouldn't it be good to insist that any Government expansion into healthcare be funded with cuts in spending on schooling, at least until that expansion in healthcare lowers spending.

Employment is Signaling Signaling

Unemployment is low among college grads and yet over 50% of college grads take jobs that do not require a college degree.  It is is not surprising that unemployment is low among college grads.  They tend to be more capable than people who did not graduate from college but sine they are not using the knowledge that they gained in college it is unlikely that college made them better employees but they were more capable and that allowed them to graduate for college.

I say that is evidence that college is more signaling than education.

A Green Jobs Program Spent $38.6 Billion to Create About 3,600 Jobs

The Classical values  blog has a post on the cost of green jobs created:

A Green Jobs Program spent $38.6 billion to create about 3,600 jobs.

That is $10 million per job. I figure I could take that $10 million and create two jobs for $5 million and pocket the difference. That would have doubled the efficiency of the program. And I could become a 1%er. Of course a long time ago I was a different kind of 1%er.

Of course if produced energy at a competitive price that would be find but that is not the case. 

To my friends who are advocates of green jobs:  You should insist on more efficient methods! Politicians tend to not care much about efficient use of funds but all taxpayers Democrats and Republicans should! 

BTW very little little of this is basic research for which an argument for direct Government funding can be made.  This is all technology, which the private sector tends to do more efficiently.  You should drop your support for most of this stuff and insist on a carbon tax or nothing.

Even Democratic politicians are NOT on your side, they are only on their own side and will screw you if given half a chance. (The same goes for Republican supports, you think that they would have learned this from Bush.) it seems many intelligent democrats have come to the point where they support any nonsense as long as its intentions appear good, it increases Government intervention and the Republicans hate it. 

This is like the stimulus, even if you use the Obama Administrations numbers it cost over $233k per job created or saved.  These are not high paying jobs they spent $233k each to create $20k/year jobs!

Postrel and Cowen on Schooling

Tyler Cowen praises and excerpts a post by Steve Postrel about the signalling model of schooling and the rising cost of University level education.  

In it he attacks the signaling model on education but talks a lot about rigor and the lessening for rigor in a negative way.  

 
If schooling is about capital formation shouldn’t rigor be reduced over time as new discoveries about how to educate and new technologies come on line?

If the goal is to teach more people more of what they need to know to live a better more productive life we should never focus on rigor.  We should rather focus on what is learned. Instead of talking about rigor we should discussing that students need to learn more information, more important information and develop better skills. Once you mention rigor, though it can be a tool to get people to learn more, I think signaling because rigor is an indirect goal. Rigor in the non-signaling model in never the goal, learning is the goal and we are not sure that rigor always increases learning (see Robert Frank).

Sumner: "Lower inflation during recessions is a sign of procyclical monetary policy, i.e. policy failure"

Scott Sumner writes:

Lower inflation during recessions is a sign of procyclical monetary policy, i.e. policy failure.

Yes! I do not know why pop econ is so counter to this.  If we are producing less due to investment mistakes or supply shocks or whatever, prices in general should go up as supply goes down. The fact is that sometimes inflation is good and sometimes deflation is good.

 
One proof that inflation is sometimes good is that farm and petroleum economies are doing good (North Dakota has very low unemployment).  Employment is high in food and petroleum producing areas, and as for real wealth production is up and rising. 

Let me address another thing to my fellow conservatives.  You think that debt is bad and that people and corporations should pay down their debt but you fret about the rise in base money.  Well since money is created be debt wont we need much more base money if everyone gets wiser and uses less debt?

Now a big problem is that monetary policy is controlled by voters and though relatively lower home prices are good and needed but to home owners, who are mostly voters lower home prices are a negative and so they want lower food and gasoline prices and higher home prices.