• Such abnormal low-deductible policies also remove the incentive of the employee/patient to monitor his or her patient bills closely, thus encouraging high rates of fraudulent billing. Nor do insurance companies have any great incentive to investigate such abuses, because their contracts with employers are generally experience-rated.

Although these problems appear on the surface to bear no relation to tax policy, they should be regarded as indirect consequences of the tax code. In particular, income-tax policy creates an enormous upward pressure on health-care costs, although such costs are also affected by myriad other interventionist measures, as well as demographic factors.     

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