Medical Insurance

I read the Feldsteins’ “Put a Lid on Subsidized Health Care” (Column Right, Dec. 6) several times thinking that these very brilliant people were saying something that I was failing to grasp. I now believe they simply had a bad day.

The Feldsteins assert that because health insurance premiums are tax deductible by employers this provides an incentive for “most individuals to be overinsured.” No medical policy pays in excess of 100% of reimbursable expenses and very few pay anywhere near as much. In 20 years in the business, I’ve never met or heard of anyone who felt overinsured for medical insurance. Quite the contrary, in fact.

The Feldsteins state that if some or all of the employer-paid premiums were taxable to their employees that this would “lead to better cost control” as people would then compare costs of different treatments from doctors and hospitals. To my knowledge, they are the first authors in America to suggest a relationship exists between the amount of taxes people pay and their shopping habits when they become sick or injured. Or even that sick people actually shop for medical care. But insurance only reimburses expenses reasonably necessary to medical treatment in the first place. Taxes are irrelevant to what is prescribed or reimbursed.

I am amazed that two economists would not understand the relationship between favored tax treatment and the broad availability of medical insurance in the workplace. If they have any doubts, they should research how few employers provide life insurance in excess of what is deductible.

ALAN JONES

Calabasas