Health Care

Making HSAs Better - John C. Goodman, Ph.D.

Making Incentives Better. Not all medical services are the same. Patients can exercise discretion for many of their health care needs, and it is appropriate for them to do so. Take arthritic pain relief. The annual cost of brand-name drugs is typically $800 more than over-the-counter substitutes and they are riskier. (Vioxx and Betra, for example, have been removed from the market.) Is the extra cost and risk worth the marginal improvement in pain relief offered by a prescription drug? Since drugs affect people differently, none of us can determine for another individual whether the tradeoff between cost and pain relief is worthwhile. So it is appropriate and desirable for people to make these decisions themselves, and reap the benefits and bear the costs of their decisions.