Benefits Of The $ 250 Benefit Money On Wellness Related Issues

1364 Words May 5th, 2015 6 Pages
The $250 benefit guarantee is intended encourage individuals to spend money on wellness related issues. While current health care plans cover some services outright, before individuals pay a deductible, simply providing cash is a theoretically more efficient approach. If certain services are free to consumers, then there is a higher likelihood for overconsumption of services (Rosenthal 130). Providing the wellness benefit forces consumers to ration the small amount of subsidy they are given initially. Although the initial benefit is a theoretically efficient approach, some services, such as vaccinations, could be provided for in order to reduce competition with a pure public good. This would be especially important if the initial benefit 's allowable uses included services such as gym memberships, exercise products, or healthy foods. The doughnut, or parabolic, shaped introduction of coverage addresses one important area of concern that the flexible spending / high deductible insurance plan does not. As patients exhaust their initial benefit, there is a risk that they may diminish their health care spending to sub-optimal levels in order to avoid paying their deductible. This is particularly dangerous for individuals with chronic conditions that may choose to buy less medication than they need (Parente et al 1552). The health insurance model described herein essentially distributes the deductible throughout a very wide range of spending levels. It is important,…

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