When you're spending other people's money, you spend it less carefully. Problem number two is that when other people pay for what I have, I want more of it. So we've subsidized the generosity of health insurance in America over the last so many years. And that encourages more generous coverage, which encourages more use of the health care system,. Which encourages higher prices and encourage people to pay for things they don't necessarily value as much as they cost.
Economist Ed Dolan of the Niskanen Center talks about employer-based health insurance with EconTalk host Russ Roberts. Dolan discusses how unusual it is relative to other countries that so many Americans get their health insurance through their employer and the implications of that phenomenon for the structure of the health insurance market. Dolan explores the drawbacks of this structure and makes the case for what he calls Universal Catastrophic Coverage.