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Tuesday, August 16, 2022

Haneman: Pay as you go Demise

Victoria J. Haneman (Creighton; Google Scholar), Pay as you go Demise, 59 Harv. J. on Legis. 329 (2022):

Harvard J. on Legis.The price of an grownup funeral exceeds $9,000. Funerals are costly and demise will not be thought of an acceptable time to cut price store. The buyer is usually inexpert and weak because of bereavement. Selections are sometimes time-pressured and perceived as irreversibly closing. Accordingly, the demise care business advantages each from info asymmetry and etiquette uncertainty. Defending the bereaved client requires reversing the present norm of at-need (after demise) buying in favor of pre-need (earlier than demise) planning and prepayment. As a consequence of extreme affect of the business over its state regulators, known as regulatory seize, present pre-need prepayment devices are so deeply flawed that typical knowledge recommends towards prepayment.

This Article borrows from nudge idea to form an intervention that may right unfairness and inefficiency in an imperfect market, in a means that deftly sidesteps an all-out assault on the business itself. The proposed paradigm shapes an incentive that permits the patron to pay for pre-need demise care service with pre-tax earnings via Inside Income Code Part 125 and versatile spending account rules. Untangling regulatory seize turns into pointless: federal tax-sheltering of pre-need prepayment {dollars} will generate client demand for dependable and certified pre-need prepayment monetary devices. This elevated demand for pre-need devices will, in flip, present an incentive for funeral suppliers to supply the enticing phrases essential to compete for this new base.

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