Whose Benefit?

The medical benefit plan I have requires payment of a certain sum before it begins paying a high percentage of the cost of prescriptions. This sum is called the deductible; it’s a sum uncovered by the insurance, deducted from the total expenses before consideration of payment. The policy term is one year, so the value resets every year.

The other day I had to purchase a prescribed drug. The pharmacy had a simple question for me: Did I want them to bill through the insurance company, or did I want to pay cash? If they billed through the insurance company, then the cost of the prescription would be applied to the deductible amount. If I paid cash, then the insurance company, not knowing of the cost, would not apply it to the deductible. One supposes that there’s a third option: to pay cash and then report the expense to the insurer.

This question came up because of a difference in the prices between the two methods: $300 more to bill the expense through the insurance company.

No, thank you. I’ll pay cash.

Simple Economics Too Complicated for Lou Dobbs?

I walked past a television at the hospital today, and Lou Dobbs was bemoaning that families could no longer afford college, though I’m sure his can. It seems to me that college tuition has always been expensive. There are many within living memory who were the first in their families to attend college. But it also seems to me as a naive observer that the explanation for the sharp increase in tuition costs over the past 20 years is relatively simple: demand exceeds supply. Why demand exceeds supply is a different question, but, again, I think that’s relatively simple: demand is increased by employers asking for college degrees because of the deflated value of a high school diploma — people think they need a college degree to get a good job — and supply is constrained by the accreditation process.

I think the same applies to health care costs, but think that the difference there is in the treatment of health insurance as a third-party payor rather than as a means to reduce one’s own risk.

In both cases, I do agree that they may be of great concern to voters — at least to those who also happen to be journalists — but I don’t think that a $500 Pell grant will significantly reduce the cost of a $40,000 tuition, nor that requiring health insurance for all citizens will reduce the demand for an over-priced good. Nor, even, that either is any business of the Federal government.