EconTalk John Cogan on Improving the Health Care System
10 snips
Jul 31, 2006 
John Cogan, a Stanford public policy scholar and Hoover fellow focused on health policy, digs into why American health care gets so expensive. He explores how insurance dulls price awareness. The conversation looks at defensive medicine, tax rules that built employer coverage, RAND findings on deductibles, and how mandates and state barriers can drive up premiums.
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Third Party Payment Distorts Health Care Demand
- John Cogan argues health care looks broken mainly because patients rarely feel they spend their own money.
- Third-party payment makes routine care seem cheap, so people buy low-value services they would likely reject if paying directly.
Why Health Technology Raises Quality But Not Productivity
- Cogan says insurance-driven medicine rewards quality-improving technology but weakens demand for cost-reducing innovation.
- He contrasts insured care with LASIK and cosmetic surgery, where direct payment pushed prices down as technology improved.
The Tax Code Created Overinsurance
- Cogan traces employer-based insurance and overly generous coverage to the tax exclusion for job-based health benefits.
- He says the RAND experiment found high-deductible families used much less care yet most saw no worse health outcomes.
