So I’m writing this just as Bush enters the House Chamber. All reports suggest that health care, consumer directed/driven health care, health savings accounts, and the like, will form the core of the President’s speech. Let’s put this in perspective.
First, we have two alternative phrases for “consumer drive/directed health care.” (CDHC) The President might like the first one — “faith based health insurance” — because the point is that if you’re enrolled in one of these plans, you’re supposed to pray you don’t get sick. While minimum deductibles for a qualified HSA plan are $1,000 for an individual and $2,000 for a family, the journal Health Affairs reported last year that deductibles are actually averaging $2,000 and $4,000 — a serious impediment to care for most families.
The second alternative phrase is “Houdini health care.” The illusionist’s challenge is to distract you with one hand while performing the trick with the other. With HSA’s, you’re distracted by the $500 or $750 account you “control,” while the real point of the exercise is to sock you with high deductibles so you will use fewer medical services.
Second, the base assumption behind CDHC is that the root cause of rampant and destructive medical inflation is Y_O_U: your wasteful, profligate, irresponsible overconsumption of medical services. Therefore, we must, we have to sock you with as much cost sharing at the point of service as we can get away with to make you be a responsible consumer.
My answer to this can be found in Tom Bodenheimer’s outstanding series on health costs in the Annals of Internal Medicine in the spring of 2005 (email me if you would like the references): “…the United States has one of the highest levels of patient cost sharing among developed nations and yet has the highest expenditures per capita. … Seventy percent of health care expenditures are incurred by 10% of the population. It is likely that patients in the high cost 10% … are far too sick to impose limits on their care because they must pay for part of that care. Thus 70% of health expenditures may be unaffected by shifting costs to patients.”
Third, one of the attractions of HSA’s is that they offer tax breaks to account holders. Yet these tax benefits are completely regressive — high income account holders deduct 35% of contributions, middle income holders deduct 15%, and lower income holders in no-tax brackets deduct nothing. Yet, as we know, lack of health insurance is heavily tilted toward low income brackets. Tonight, Bush proposes yet steeper tax breaks for HSA account holders — enhancing the regressive nature of this benefit.
Fourth, by the way, these accounts are not free. For many of them, holders get dinged when they are set up, get dinged for every withdrawal, get dinged for a monthly maintenance fee, and get dinged for closing them. No wonder, as the New York Times reported this weekend, Wall Street profiteers are competing to get in on the lucrative HSA account management market.
In every health period I can recall since getting into this game around 1985, there have been fake solutions offered by con artists who either have nothing serious to offer or special interests to protect, or both.
More of the same…
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