Editore"s Note
Tilting at Windmills

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January 31, 2006
By: Kevin Drum

HSA QUESTION....We've been hearing ad nauseam for the past couple of weeks that George Bush's domestic centerpiece for this year's State of the Union address will be Health Savings Accounts. Fine. But what exactly does that mean?

The reason I ask is that we already have Health Savings Accounts. They've been around for a couple of years now (or even longer if you count their predecessors, Medical Savings Accounts). So obviously Bush isn't going to propose that we create a new and wonderful thing called an HSA. Instead, he's going to propose some kind of expansion or modification of HSAs.

But what? I haven't even heard any speculation, and it's an important question since as an emailer reminded me last week since there are plenty of proposals Bush could make that would be pretty popular among people who already use HSAs. For example: increasing the contribution limit; expanding the range of services covered by HSAs to include things like hearing aids and maternity care (which isn't covered by many plans); allowing money to be withdrawn for nonmedical purposes after age 65 (or even better, 55); and so forth.

My point here is mainly a political one. Fighting HSAs on philosophical grounds is one thing, but people who already use them would be pretty pleased to see some concrete, money-saving improvements to HSAs and wouldn't much care about their abstract virtues or defects. If we're going to fight the HSA-ization of healthcare, we'd better be prepared to be on the opposite side of some motherhood and apple pie proposals from the White House that might sound pretty good to current users. I'm not quite sure how we plan to do that.

Kevin Drum 1:46 PM Permalink | Trackbacks | Comments (72)

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I would like to get market value for my money instead of the pultry 3% they offer .Pisses me off when someone can make more money with my money than I can.

Posted by: pssst on January 31, 2006 at 1:56 PM | PERMALINK

If we're going to fight the HSA-ization of healthcare, we'd better be prepared to be on the opposite side of some motherhood and apple pie proposals from the White House that might sound pretty good to current users. I'm not quite sure how we plan to do that.

Let's not catch the Republican Binary Disease. It's not a question of opposing HSAs; the point to make, repeatedly and loudly, is that HSAs in any form are a tiny band-aid on the gushing wound that is the American health-care system.

Acknowledge this proposal for what it does--and then point out that what it does is strictly limited. The message, once again, is that Bush and the GOP are out of touch with the American people and will not acknowledge, much less come up with a viable solution, for America's health-care woes.

Posted by: shortstop on January 31, 2006 at 1:56 PM | PERMALINK

Why does it matter? All that has to happen is the media gets the bobbleheads to talk about how evil and obstructionist the Dems are, and they roll over and play dead. 42 voted against Alito, but 17 couldn't be bothered to have any balls yesterday. Why even have any Dems?

Did the right roll over when W nominated Harriot? HA!

Posted by: Gore/Obama '08 on January 31, 2006 at 1:57 PM | PERMALINK

I think the thing that needs to be pointed out relentlessly is that HSA don't do a single thing to give people more health care. Nothing. HSAs don't insure more people, they don't give people a prescription drug benefit, they don't cover children. All they do is allow you to set aside money to use on health care. If you have no money to begin with, tough. If you can't get health insurance because of a pre-existing condition, tough. If you run out of money because you get stricken with cancer, or get hit by a bus, tough.

HSAs solve the problem of too much health insurance. The public needs to be told that over and over, and they need to be asked the unspoke question: do you think you have too much health insurance? If people do, then they can go with the HSA plan. If people don't think they have too much health insurance, they can go with something else.

Posted by: Doctor Gonzo on January 31, 2006 at 1:58 PM | PERMALINK

Very simple: we propose a plan that would do it right. Even if it is not passed and some prescription-drug-benefit-like proposal is planned, at lease we can say, "Had you done it our way, this wouldn't have happened". As it stands now, doing something poorly is about as good, maybe better than not doing anything at all.

Elect us and we will do it right AND HERE IS HOW>....

Posted by: yep on January 31, 2006 at 1:58 PM | PERMALINK

Drop the bomb. Announce the plan for a major reformation of the health care system. Point out the problems, and name the solutions.

Imagine that. If the Democrats came out tonight and trumped Bush's speech with a more ambitious..and positive outlook.

Posted by: Karmakin on January 31, 2006 at 2:01 PM | PERMALINK

Our company is offering Health Ins.To ins.my wife and two kids will cost me $838 a month,How am I supposed to come up 838 dollars a Month.Stuck between a rock and a hard place.I will insure them but not me that will drop to 686 a month,Anything happens to me Don't pull a Terry Schivao on me just let me die in the woods.

Posted by: pssst on January 31, 2006 at 2:02 PM | PERMALINK

Kevin, we oppose it because it's being used as a red herring. Something to throw the media and others off of discussing single payer health care.

And you know that any modifications made to the current medical savings plans would be at the expense of the general public and to the benefit of the administrations' corporate masters.

Posted by: Dr. Morpheus on January 31, 2006 at 2:05 PM | PERMALINK

Exactly.

The health care system is broken: insurance companies are denying claims, deductibles and co-pays are climbing every year, employers are making people pay more for insurance or dropping it altogether, 45 million people don't have any insurance at all, every year we spend more as a nation on healthcare with no end in sight...

And the Bush Administration's solution is to say the problem is we all have too much insurance and we all need to be more frugal?

Call me crazy, but I don't see how making every American family face bigger co-pays and deductibles is the solution.

And I don't think many people would be interested in betting their life against having a full health care savings account if they or their kids get really sick.

Posted by: theorajones on January 31, 2006 at 2:05 PM | PERMALINK

The Medical Savings Accounts I have seen are a supplement to standard HMO or fee-for-service heath insurance plans. They let you set your own money aside to pay for deductibles, co-pays and uncovered care using pre-tax dollars but any money that isn't used up during the year is lost.

The HSA's that Bush seems to be proposing (he hasn't formally proposed anything yet and probably never will get very specific unless and until he thinks he can get the votes to pass it) are a plan where people get health plans with large deductibles and/or copays and can set aside pre-tax money that can be carried over from year-to-year to pay part or all of the increased out-of-pocket. The idea is that by making people responsible of their own expenses they will be smarter consumers and the wonders of the free market will bring down total health care spending in the coutry. Naturally, there are many problems with such a proposal.

First and most central to the supposed benefits is that limited information and urgent need sharply limit patient's ability to make informed choices about different treatment options, and there is no evidence that such plans will have any impact on reducing total health care costs.

Second, to the extent that patients are encouraged to avoid routine or preventative care, the plans may even be counterproductive by encouraging patients to wait until their problems are more serious and more costly to treat. I am not aware of any reliable studies that suggest the primary driver for U.S. health care costs is overconsumption of health care by the patients. Nor is there any indication that this is a serious problem in countries with some form of universal coverage.

Third, basically healthy younger patients will probably see their costs decline under such a program, but seriously ill patients will see their costs rise, possibly dramatically. Furthermore, those seriously ill patients who represent the biggest share of the total costs of the system will still run up bills exceeding the higher deductibles. Thus, their out-of-pocket costs, while higher, will still be capped. Therefore, they will still have no incentive to find ways to reduce the total costs of their care (assuming they had the information they needed to do so anyway).

Posted by: tanj on January 31, 2006 at 2:10 PM | PERMALINK

Could you imagine what would happen if the Dem response was single payer?

I can't. You would have a bunch of talking heads saying the Dems are nutcases, but the Dems would have made a point that caused people to dream about something better. We haven't done that since Bill Clinton came and went.

One problem with Bush's proposals will be that they cost money. Another problem will be that only the Upper Middle Class will be able to take advantage of HSAs. This probably will put Dems into the naysaying responsible mode, which never got us anywhere.

Posted by: reino on January 31, 2006 at 2:10 PM | PERMALINK

I think we need to hash out the following:

Who should pay for my healthcare? How much of my healthcare should I be responsible for? Who should pay the rest? Are the present costs of healthcare realistic or could we do better (we know drugs could be a lot cheaper, bet the same is true of tests and procedures)?

HSA's are not realistic for the currently uninsured. The uninsured group is largely made up of people already in the zero or very low tax brackets and so would see no benefits from the plan. It's a lovely plan for the comfortable, rich, and smug. So what else is new.

Why haven't progressives (fuggedabaht dilatory Democrats) come up with a plan? Beats me.

If what I've written here sounds kind of disjointed, that's because I'm not offering my opinions here. Rather, I'm listening as I type to a variety of opinions about universal healthcare-- all interesting, very diverse -- on the Al Franken show. As one expert just said, the left needs to get together and have a cohesive plan. My response is Fat Chance! Why? Because we don't yet even know what we mean by universal health care -- who it covers, to what extent, and at whose expense or instead of which existing programs?

Posted by: PW on January 31, 2006 at 2:11 PM | PERMALINK

The current issue of the Economist has an informative article on the state of American health care, and what should (or should not) be done about it.

Here's the concluding paragraph:

Mr Bush's health-care philosophy has a certain political appeal. It suggests incremental change rather than a comprehensive solution. It reinforces existing industry trends. And it promises to be pain-free. Unfortunately, it will not work. The Bush agenda may speed the reform of American health care, but only by hastening the day the current system falls apart.

Posted by: S Ra on January 31, 2006 at 2:16 PM | PERMALINK

If we're going to fight the HSA-ization of healthcare, we'd better be prepared to be on the opposite side of some motherhood and apple pie proposals from the White House that might sound pretty good to current users. I'm not quite sure how we plan to do that.

Pathetic.

Posted by: Thinker on January 31, 2006 at 2:18 PM | PERMALINK

I cannot remember where I saw this. I thought it was here. Somebody, somewhere in the blogosphere said that he'll do what he did on SS--say we need a new, better HSA program, and then press democrats for a detailed reply. He'll talk about skyrocketing health care costs, and the need for people to manage their own health care needs, more efficiently.

(Even the abstract argument is a very hard sell, because it's really hard to disguise the fact that what he means is LESS health care.)

I suspect this is a ruse, that it may not be a major part of the speech at all. (note wiggle words necessary in any prediction "suspect" "may")

Posted by: JayAckroyd on January 31, 2006 at 2:19 PM | PERMALINK

Why the heck would you oppose HSAs?

All they really do is give the tax benefits that companies get for providing health care to more people.

The only subsidy that occurs is to the healthcare industry (more customers and customers who are able to spend more).

Posted by: aaron on January 31, 2006 at 2:20 PM | PERMALINK

last year the u-s had its first negative savings rate since 1933...

so how smart is it to propose expanding health "savings" accounts?

Posted by: thisspaceavailable on January 31, 2006 at 2:23 PM | PERMALINK

Shortstop got it right. HSA's are fine as far as they go, which is not very far.

The assumption that people "shop" for healthcare based on price is simply wrong -- except for a few elective procedures like, say, lasik surgery for eyesight. If your wife is in premature labor, are you going to shop for the cheapest intensive care nursery in the region?

People buy healthcare based on what their doctor recommends or urgency demands.

Posted by: jb on January 31, 2006 at 2:31 PM | PERMALINK

I have been on high-deductible HMO + HSA/flex plan (employer funds the HSA, I fund the flex plan) for about two years now. It's pretty much as tanj describes it, though I would amend one thing.

It's not only the seriously ill who see their costs rise. If you have a even a mild but chronic medical condition you will likely blow through your HSA and flex plan long before the plan year is over. Likewise if you have a minor accident (such as a broken arm or serious infection). Then, you are paying out of pocket until insurance kicks in.

In my experience, the switch from a straight HMO to an HSA+HMO plan is/was nothing more than a transparent ploy to muddy the water and distract people from the fact that every year we pay more for stingier insurance. That's just my philosophical objection to it.

My tangible objection is this: the high-deductible plan completely destroys my ability to predict medical expenses in a given. If I don't get sick, I just pay my premium: a fixed, predictable cost. If I do get sick, I have to pay the deductible, of which my maximum out of pocket expense is $1500. Oh, and even once the insurance kicks in I'm still liable for coinsurance and copays up to another max of $1500.

So, to recap: even though I ostensibly have insurance my medical costs could rise by up to $3000 any year. I guess if you have several thousand dollars in liquid savings that's not a big deal. For me however, it's a lot of risk to be exposed to. Isn't the purpose of insurance to mitigate risk?

Posted by: joe bob on January 31, 2006 at 2:36 PM | PERMALINK

Folks:

We're being scammed - If the left side of the blogosphere is this alive with talk about HSA's you can bet we're being suckered into a rovian diversion.
I expect some grand healthcare plan that's breathtaking in scope, benefits large insurers pharmaceutical companies and corporate hospital networks, has no way of being paid for and works as well as the current medicare drug plan.
But it will catch the attention of that small slice of independents tht will secure the 06 house and senate majorities.

Posted by: mossypete on January 31, 2006 at 2:38 PM | PERMALINK

Kevin, I'm not sure WHY we need to address the question you've posed. Just how many people actually do have HSAs? Seems to me it's likely a trivial number, and consists nearly entirely of, not to put too fine a point on it, rich people.

To me, your asking this question is like asking, "Shouldn't we come up with argument targeting rich people outlining the downside of tax cuts?"

Now, the larger point -- that we need an effective counternarrative in general -- is certainly valid. I'm with the folks here who say the Dems should trump W and propose universal, single-payer coverage.

Posted by: The Confidence Man on January 31, 2006 at 2:38 PM | PERMALINK

the point to make, repeatedly and loudly, is that HSAs in any form are a tiny band-aid on the gushing wound that is the American health-care system.

Quite right. I'm a doctor, and after I changed jobs and lost my work-related coverage, I had little choice but to get an HSA. (Ever try to buy plain-vanilla standard single or family coverage outside of any group? Yikes! And we're all healthy!)

Anyway, what I was struck with is how complicated it was, even for someone I consider reasonably with-it, like myself. Finding out who offers these plans, who offers them in your state, whether they'll take you, setting up the account, doing the paperwork before and once you're in an HSA... as they exist today, HSA's are just not a realistic solution for poor folks, old folks, or most ordinary folks.

If Bush's health care plan for America is to get everyone into HSA's, he's looking at a mess like Medicare part D, raised to the nth power.

Posted by: pdq on January 31, 2006 at 2:40 PM | PERMALINK

Since we all have too much insurance, it will do us good to have control our health care so we have too little insurance.

Perfect logic.

What is there to fight about?

Posted by: lib on January 31, 2006 at 2:41 PM | PERMALINK

My last trip to the emergency room: the costs-- visit with the triage nurse, examination by the attending physician, stitches from a medical student, x-ray from the x-ray tech. evaluation of x-ray by the attending. followup with nurse practitioner in a week to get the sitches out.

That's going to be a lot of separate charges for what was essentially a minor injury. Apparently I would be expected, under an HSA, to pay all of those cost out-of-pocket or, perhaps, to negotiate charges with the desk staff at the ER while my hand was bleeding onto the reception desk.

What I actually want is insurance to be able to mitigate the risk of accidently slashing up my hand while doing the dishes by ensuring that the costs for treatment of such an accident are covered.

Posted by: Constantine on January 31, 2006 at 2:45 PM | PERMALINK

Dems should go for the long bomb on healthcare. A defensive strategy is worthless and a two-yards inacloudofdust offense is weak. Go long.

Posted by: jb on January 31, 2006 at 2:47 PM | PERMALINK

Support 'em ... if done right. "Bush thinks HSAs do a heckuva job. Jack Abramoff likes HSA. I'm all for the idea of HSAs ... but can we trust this administration to do it right? First they broke Medicare ... now they have their sights on -your- insurance."

Posted by: adam on January 31, 2006 at 2:48 PM | PERMALINK

Dems need to get out in front and propose that every American have access to healthcare like the VA. They do a better job with less money. I'm disgusted that not one of them is proposing this. They've all bought the mantra that it would be political suicide to suggest it. The electorate (including lots of Republicans) are way ahead of the politicians on this issue.

Posted by: ExBrit on January 31, 2006 at 2:49 PM | PERMALINK

To follow up on jb's comment about one's ability to "shop" for health care: I second the notion that the 'consumer-driven health care' concept is just a fantasy. Even if you are in a non-urgent situation where you can weigh your options, good luck getting a price you can understand and compare, if you can get a straight answer about dollar costs in the first place.

For those in an HSA, the only cost you have 100% percent easily-grasped control over is just whether or not you go to the doctor. When you realize this you see why employers and insurers might like HSAs: it gives the prospective patient a financial disincentive to see a doctor. Now, if you are prone to seeing the doctor for no good reason this is a good thing, but I don't actually know anyone like that.

Posted by: joe bob on January 31, 2006 at 2:49 PM | PERMALINK

Call me crazy, but I don't see how making every American family face bigger co-pays and deductibles is the solution.
It's the only way. The goal is to control the rising cost of medical care. If that is not controlled, it doesn't matter how the money gets transferred from you to the medical care providers, costs still rise.

Right now, your insurance costs are going up, why? You don't know. The use of insurance masks what you pay for medical services.

Is it in the interest of the insurance companies to control medical costs? No. In fact, the more money that passes through their hands, the more money they make.

Is it in the governments interest to control medical costs? No. The more money that passes through their hands, the more power they have. And ask yourself if our government has controlled any costs.

Is it in your and my interest to control medical costs? Yes. Because we are one paying the bills no matter whether we do it directly, through insurance, or through taxes.

If you want to control medical costs, you put the buying decision into the hands of the people that both receive the treatments and pay the bills.

Posted by: conspiracy nut on January 31, 2006 at 2:50 PM | PERMALINK

I can tell you flat out that I have an HSA, and hate it. I don't have it by choice; I have it because it's all my company can afford to give me for insurance.

HSAs suck. Period. And expanding them would hurt me directly. But I'm not wealthy, so I'm used to it.

Posted by: Jeff Fecke on January 31, 2006 at 2:52 PM | PERMALINK

Fighting HSAs on philosophical grounds is one thing, but people who already use them would be pretty pleased to see some concrete, money-saving improvements to HSA

Exactly right.

People already better off need to see some more benefits coming their way before we get to any of those who might need initial help.

Great analysis, Drum.

Posted by: Lettuce on January 31, 2006 at 2:55 PM | PERMALINK

If you want to control medical costs, you put the buying decision into the hands of the people that both receive the treatments and pay the bills.

I think most people would prefer not to buy any medical services at all. Alas, when your car gets hit by a semi-truck, you hardly have that luxury, or the ability to comparison shop.

Posted by: tinfoil on January 31, 2006 at 2:55 PM | PERMALINK

The Medical Savings Accounts I have seen are a supplement to standard HMO or fee-for-service heath insurance plans. They let you set your own money aside to pay for deductibles, co-pays and uncovered care using pre-tax dollars but any money that isn't used up during the year is lost.

The HSA's that Bush seems to be proposing (he hasn't formally proposed anything yet and probably never will get very specific unless and until he thinks he can get the votes to pass it) are a plan where people get health plans with large deductibles and/or copays and can set aside pre-tax money that can be carried over from year-to-year to pay part or all of the increased out-of-pocket. The idea is that by making people responsible of their own expenses they will be smarter consumers and the wonders of the free market will bring down total health care spending in the coutry. Naturally, there are many problems with such a proposal.


Actually both types of plans are currently offered to federal employees. See

http://www.opm.gov/hsa/

and

https://www.fsafeds.com/fsafeds/index.asp

for info on both programs. The Feds have been offering these things for three years now. You can get one, but not both. If you are healthy the high deductible plans are awful. A windfall for the insurance companies that will collect lots of premiums and pay little or nothing out in benefits. If you aren't healthy, I suppose the insurance companies will find a way around that too.

Posted by: Majun on January 31, 2006 at 2:55 PM | PERMALINK

Did anybody here see the CBO report on the "Deficit Reduction Act" that cuts Medicaid, student loans, etc? Here's a snippet:

About 80 percent of the savings from higher cost-sharing [for Medicaid] would be due to decreased use of services

That's what HSAs are about, too. Cut costs by forcing people to get less treatment. Never mind that preventative services are a hell of a lot cheaper, we should only go to the hospital when, as pointed out above, we're in no position to negotiate costs.

Posted by: fiat lux on January 31, 2006 at 3:03 PM | PERMALINK

I agree with Joe Bob.

My personal experience is that even when they have comprehensive health coverage, most people are reluctant to visit a doctor until they absolutely have to.

Conspiracy Nut, posting more or less simultaneously with Joe Bob, managed to hit all of the pro-HSA talking points. Unfortunately, there is no evidence any of those talking points have any connection with reality. There are a number of issues driving health care costs in this country, but people seeking unnecessary care is not a significant. People receiving expensive treatment programs when less expensive ones would be just as effect may be part of the problem, but there is no way to provide patients with enough timely information to correctly evaluate all of the different options and make the best possible choices, particularly for conditions that require starting some kind of treatment programs as soon as possible after they are diagnosed.

Posted by: tanj on January 31, 2006 at 3:05 PM | PERMALINK

Actually both types of plans are currently offered to federal employees. See

http://www.opm.gov/hsa/

and

https://www.fsafeds.com/fsafeds/index.asp

Yes, high deductible health plans (HDHP) with HSA and Flexible Spending Accounts (FSAs) are both offered to Federal employees, but one has nothing to do with the other.

You cannot have an FSA if you are in a HDHP. An FSA is used to set aside tax-deductible money that can be used to pay co-pays, deductibles and other medical expenses not paid by health insurance. FSA money must be used by March 15th of the following year.

An HDHP with HSA is a different animal altogether. Individuals who enroll in an HDHP can set aside money in an HSA for use in meeting medical expenses until you have exhaused your deductible (anywhere from $1000 to $2500 in the Federal Plans.) HSA money can be carried over from year to year (if you don't use it for medical expenses).

One poster was right: If you have a chronic health problem --even if it is well under control, you can reach your deductible every year and not have anything left over in the HSA. Also, if you don't make much and don't have any taxable income, then an HSA does you little good.

I work in HR in the Federal government, and I can tell you that only a miniscule number of Feds elect the HDHP with HSA -- mostly, becuase it is too confusing.


Posted by: DCNative on January 31, 2006 at 3:09 PM | PERMALINK

The HSA and a high deductable insurance policy has certain attractions. It might appeal to a group that is underinsured, those with adequate incomes but who choose not to buy insurance because they don't think they will get sick.

The problems are many. They big problem right now is the gap between "retail" prices and the insurance company discounts that make the "20% co-pay" equal to 50% or 60% of the entire payment. That is the dirty secret of present-day managed care. The individual does not have the negotiating power.

Secondly, the physician can be punished for offering a discount for cash. Medicare bans discounts that defeat the concept of co-pay. The clinics that advertise "We take Medicare as payment in full" can be prosecuted and a few have been. The physician who discounts for cash runs a risk of having his or her Medicare fee profile adjusted down to the price offered for cash.

The best system would probably be one that is single payer with a Medicare-type administration plus with an option for additional private care. The private option would keep the single payer system honest because competition is healthy. The NHS is better for the "Fund Holding" reforms of Thatcher.

The Clinton plan would probably have passed but for several mistakes by Hillary. She excluded providers, assuming that they would be obstructionist, perhaps. She enlisted a bunch of academics to design it in secret and that lost the confidence of the providers, especially physicians. They feared an unworkable bureaucracy and the criminal penalties that were included for offering care outside the plans. That brings thoughts of the persecution of pain medicine providers and the few internists who practice geriatrics outside Medicare. They have been harrassed and prosecuted in a few cases.

Hillary was too rigid and paranoid in setting that commission up. It concerns, or should, those who think she'd be a good president. Maybe she's learned.

This subject is why I hate to see the Democratic Party self-destruct.

Posted by: Mike K on January 31, 2006 at 3:17 PM | PERMALINK

"Our company is offering Health Ins.To ins.my wife and two kids will cost me $838 a month,How am I supposed to come up 838 dollars a Month.Stuck between a rock and a hard place.I will insure them but not me that will drop to 686 a month,Anything happens to me Don't pull a Terry Schivao on me just let me die in the woods."

pssst, I think this is a mistake. A couple both 46 with 6 year old and 11 year old can get high deductibe Blue Cross Blue Shield coverage for $364.04 a month. Max out of pocket $10,000. Considering that you would be saving $6,000 in premiums only this seems like a good deal for year. You would be able to make $5200 worth of tax free contributions to the HSA.

Depending on your company plan, you might consider just putting the wife and kids on a high deductible plan.

It seems to me you can definitely do better than $864. Your company probable has had a lot of claims and are paying higher deductibles because of it.

Posted by: Chad on January 31, 2006 at 3:17 PM | PERMALINK

The HSA and a high deductable insurance policy has certain attractions. It might appeal to a group that is underinsured, those with adequate incomes but who choose not to buy insurance because they don't think they will get sick.

The problems are many. They big problem right now is the gap between "retail" prices and the insurance company discounts that make the "20% co-pay" equal to 50% or 60% of the entire payment. That is the dirty secret of present-day managed care. The individual does not have the negotiating power.

Secondly, the physician can be punished for offering a discount for cash. Medicare bans discounts that defeat the concept of co-pay. The clinics that advertise "We take Medicare as payment in full" can be prosecuted and a few have been. The physician who discounts for cash runs a risk of having his or her Medicare fee profile adjusted down to the price offered for cash.

The best system would probably be one that is single payer with a Medicare-type administration plus with an option for additional private care. The private option would keep the single payer system honest because competition is healthy. The NHS is better for the "Fund Holding" reforms of Thatcher.

The Clinton plan would probably have passed but for several mistakes by Hillary. She excluded providers, assuming that they would be obstructionist, perhaps. She enlisted a bunch of academics to design it in secret and that lost the confidence of the providers, especially physicians. They feared an unworkable bureaucracy and the criminal penalties that were included for offering care outside the plans. That brings thoughts of the persecution of pain medicine providers and the few internists who practice geriatrics outside Medicare. They have been harrassed and prosecuted in a few cases.

Hillary was too rigid and paranoid in setting that commission up. It concerns, or should, those who think she'd be a good president. Maybe she's learned.

This subject is why I hate to see the Democratic Party self-destruct.

Posted by: Mike K on January 31, 2006 at 3:17 PM | PERMALINK

but there is no way to provide patients with enough timely information to correctly evaluate all of the different options and make the best possible choices
How often does one go for routine medical visits as opposed to emergency care? I think you'll find that most visits have plenty of time.

Not long ago I had a shoulder malfunction, it was fairly bad, but not an emergency. I had time to not only research orthos in the area, but also to research what my selected ortho recommended for treatment. I waited longer between calling for the appointment and getting it than I did with all the researching.

Imagine this scenario: you have group auto insurance at work that pays for routine maintenance like oil changes. What do you suppose will happen to the cost of oil changes? Market forces no longer drive the cost down.

Posted by: conspiracy nut on January 31, 2006 at 3:24 PM | PERMALINK

HSA simply DO NOT mean less health insurance. It expands the tax benefits to people who they are currently unavailable to.

Posted by: aaron on January 31, 2006 at 3:33 PM | PERMALINK

I have a HSA and it is really nothing more than high deductible insurance and with some minor IRA style tax benefits on the deductible portion. They don't solve the problem.

I will admit I never asked the Doctor how much medication or a visit was going to cost before. So they do have some effect.

Funny thing about the HSA, the high deductible premium is just about where the low deductible was two years ago.

Posted by: Ron Byers on January 31, 2006 at 3:37 PM | PERMALINK

I think that a single payer system has to be the foundation of health care payment for this country, but I think that the biggest problem I see is the careless use of 'broken' in the debate. Our health care delivery system works extremely well in the vast majority of the nation. The problem is in payments -- a separate system. Conflating the two seems to give the proponents of the status quo an advantage that need not be there.

Keep the "best system in the world". Make it work for everyone.

Posted by: free lunch on January 31, 2006 at 3:39 PM | PERMALINK

Adam's got it. HSA make a lot of sense. What needs to happen is we have to make sure that they are done right and aren't into be a bureaucratic mess.

Posted by: aaron on January 31, 2006 at 3:40 PM | PERMALINK

HSAs make little sense in the context of most people's modern health needs. Some major operations that are scheduled months ahead of time might benefit, as well as those who "go to the doctor" when they want a prescription for medicine to treat a minor, acute condition, such as a cough or flu.

However, for emergency or chronic conditions, I don't really see how they help. If I have an HSA with a $5000 deductible and a chronic condition that costs me $5000/year in drugs, it's not going to save me too much money, is it?

There may well be a small minority of patients who are demanding unnecessary tests and unnecessary drugs from their doctors, but those people are the exceptions, not the rule-- how many people really can take time out of their day to visit their doctor to ask for treatments they don't really need? I know I don't.

Posted by: Constantine on January 31, 2006 at 3:53 PM | PERMALINK

Constantine, the simple answer is that if you are concerned with developing chronic condition, get insured against it. If you have one, stick with your current plan.

HSAs don't necessarily have to restrict you to buying a high deductible plan. You will just have to pay the high premiums that you currently do, but all of your out of pocket costs atleast might now be with pre-tax dollars.

Posted by: aaron on January 31, 2006 at 4:08 PM | PERMALINK

If we're going to fight the HSA-ization of healthcare

"The Republican party wants to take away your health insurance."

Simple as that.

Posted by: tam1MI on January 31, 2006 at 4:08 PM | PERMALINK

Hmmm. If I were attacking this with wingnut accuracy, I would claim that the President was proposing that health care plans no longer cover maternity care.

Of course, I just might anyway.

(How and why could a health plan get away with not covering maternity care?)

Posted by: NotThatMo on January 31, 2006 at 4:17 PM | PERMALINK

People should have to pay the price for their sexual actions, NotThatMo.

Posted by: shortstop on January 31, 2006 at 4:19 PM | PERMALINK

My HSA makes me feel like an asshole.

I have a $5200 deductible policy for the wife and I. That means I pay the first $5200 of this year's health care. It's January.

She's been having what appears to me episodes of bad gas-she doesn't like that. We go to the doctor. He has no idea what it could be: "irritable bowel syndrome" is today's maddeningly vague catch-all diagnosis. He recommends two ultrasounds (abdominal and pelvic), bloodwork, and an endoscopy. Ok that's about $3,000 to shell out. To learn what? Well-to eliminate possibilities.

Ok-are these tests necessary? How the hell do I know-I'm not a doctor! Maybe he assumes our insurance covers it so he goes wholehog. Whatever. A moment of grumbling hurts my wife's feelings. Is money more important than her health etc.?

Fuck HSAs-they were worse for my "traditional marriage" than any homos getting hitched could ever be!

Posted by: Martin on January 31, 2006 at 4:22 PM | PERMALINK

aaron, shouldn't we all be insured against the risk of developing a chronic condition? Isn't hte point of insurance to create a large risk pool such that the costs of treating those who develop chronic conditions can be absorbed?

The nature of chronic conditions is such that we don't know if we're going to get them, and they're very expensive to treat-- which is why any health care plan needs to provide an inexpensive way of covering them. If Bush doesn't address that specific problem, then his proposal is of no use to me or anyone else.

Posted by: Constantine on January 31, 2006 at 4:27 PM | PERMALINK

There is one big problem with President Doorknob's HSA proposal - Poor people don't have one thin dime to put in them! DUH!

Posted by: Stephen Kriz on January 31, 2006 at 4:36 PM | PERMALINK

Martin: Fuck HSAs-they were worse for my "traditional marriage" than any homos getting hitched could ever be!

Expand "HSAs" to include almost every Bush policy, and here you have the entire, succinct message Dems should be trumpeting from the rooftops.

Posted by: shortstop on January 31, 2006 at 4:45 PM | PERMALINK

Constantine, exactly right. And it has ablsolutely nothing to do HSA. You can still get coverage for chronic conditions. Are you afraid that most people don't want coverage for that, would rather pay out of pocket if they get one and leave you with too small of a pool to cover most of the costs if you develop one? That's absurd, it simply won't happen.

Posted by: aaron on January 31, 2006 at 4:45 PM | PERMALINK

I don't understand the economics of HSA's. A consumer puts aside his own money to pay for non-catastrophic health care. Let's say you can afford to deposit a net $150 per month in an account. You have 2 children and a wife working part-time with no health benefits at her job. For a great many families $150 is a lot of money. Now, take a kid to the emergency rooom at 3AM with a 105 degree temperature and a couple other troublesome symptons. Several tests, a couple x-rays and a couple cousultations later, along with room charge, IV's, drugs and supplies and you're sent home with junior mostly well (if you're lucky). It was mostly a false alarm, not catastrophic in nature, but you have to be careful with your kids, right? Now the bill comes. Say goodbye to your $1800, plus a few more bucks on top of that. You could have put $250 a month away and that visit may have burned through it. OK, that's it for the year, no more HSA money in the account, what now?

Posted by: steve duncan on January 31, 2006 at 4:45 PM | PERMALINK

So you're admitting that HSA's simply don't help the problems in our health care system that we're faced with? In fact, you brush aside the big weakness of a move towards HSAs-- they provide a separate risk pool for the healthy and boost the insurance costs of the unhealthy.

If most people want coverage for chronic conditions, then why aren't we making it easier to get coverage for that? Why this pointless talk of HSA, which don't address the problems that actually need to be address? What are you, an HSA salesman?

Posted by: Constantine on January 31, 2006 at 4:50 PM | PERMALINK

Steve, after you have payed the related deductable for the year, your insurance plan will pay for other expenses. HSA doesn't replace insurance. It gives the tax benefits that are available only if you work for certain types of companies to the broader population.

Posted by: aaron on January 31, 2006 at 4:51 PM | PERMALINK

"How and why could a health plan get away with not covering maternity care?)

Posted by: NotThatMo "

They didn't until the last 20 years. When they were not covered, my bill for mother and child was about $250 total (1965-69). The appearance of insurance coverage brought incredible inflation. Economists call it "rent seeking."

Part of the problem (and it's too late to try to fix it) is that predicatble events like childbirth and routine physicals are not insurable. You know you will have them. It's not like a house fire or a car accident. In the old days, actuaries could predict how many heart attacks and how many gallstone cases per year would occur. There hasn't been "health insurance" since the coverage of these elective events became part of the benefit package. The result is that we pay monthly for a lot of services that are not "insured" in the usual sense of insurance. That results in the costs being incurred along with a hefty fee for "administration" by the insurance company that really doesn't insure anything anymore.

The only benefit we get from insurance now is the discount the carrier negotiated with the provider.

Posted by: Mike K on January 31, 2006 at 4:52 PM | PERMALINK

My employer offers 3 levels of health insurance - with varying deductibles and co-pays. They also offer an HSA option - you can choose to set aside up to $1000 pre-tax. While most people choose the max level of insurance coverage, participation in the HSA is very low - less than 20% of employees choose this option - because most people live paycheck to paycheck and are not able/willing to forgo any more of their wages now on the chance that they might need it to pay a deductible down the road. People are not going to get excited about HSA's - they have been around for years and participation is low - just like with 401k's. To most people it is just another deduction from their ever dwindling paycheck - and they are getting nothing in return - not better healthcare, not cheaper healthcare - just another cost shifted from the employer to the working stiff.

Posted by: Jane on January 31, 2006 at 4:55 PM | PERMALINK

If I were to sum up the problem with American healthcare, it would be like this:

We want more healthcare than we are willing to pay for.

Posted by: Yancey Ward on January 31, 2006 at 4:57 PM | PERMALINK

Insurance plans often have different deductable for different types of services. You can find plans with a slightly higher premium that have a lower deductable for chronic healthcare problems, but have a higher detuctable for emergency care.

Posted by: aaron on January 31, 2006 at 5:00 PM | PERMALINK

The flip side of encouraging HSAs is that it will take the healthy people out of the risk pool, effectively preventing large swaths of people with pre-existing conditions from having access to health insurance, potentially bankrupting them, and creating a larger swing-vote constituency for single-payer plans, sending more votes to democrats and boosting support for universal insurance.

Posted by: Constantine on January 31, 2006 at 5:07 PM | PERMALINK
If I were to sum up the problem with American healthcare, it would be like this:

We want more healthcare than we are willing to pay for.

Well, that's certainly a problem with most things in the world, and for most groups of people in the world; its hardly unique to Americans or healthcare.

OTOH, I don't think it captures, at all, the unique problems with American healthcare that have America paying vastly more (per capita, or per GDP) than many other developed countries, while, by most measures, getting worse results.

Wanting more than you are willing to pay for doesn't, at all, explain why you are paying more and getting less than other people, even if it was true that they didn't want more than they were willing to pay for just as much as you do.

Posted by: cmdicely on January 31, 2006 at 5:11 PM | PERMALINK

Why would HSAs take healthy people out of the risk pool? They can leave now and haven't. HSA will only increase the risk pool, by giving more people access to insurance.

You can't get insurance for a pre-existing condition now.

You are probably right that HSA could be a step towards universal health care, but not for the reason you think.

Posted by: aaron on January 31, 2006 at 5:14 PM | PERMALINK

cmdicely,

For those who have healthcare, I don't think anyone has demonstrated that Americans get worse results. Health is not solely controlled by the medical care one gets, but is a combination of factors, most of which are lifestyle and culture related. The most commonly cited "poor outcome" is the expected lifespan, but to what extent is Americans' shorter lifespan a function of healthcare and to what extent is it a function of things like a lousy diet, or more car fatalities, more homicides, etc.?

However, my point was this: people will consume more of what they don't think they are paying for. Sure, we want lot things for which we are unwilling to pay, but normally it is not an option to get it without paying. Americans seem to think healthcare is an exception- you get what you want, and someone else foots the bill. It will be interesting watching what the reaction is to the tax increases that will be required for single-payer healthcare. It is only then that Americans will realize that medical care costs something more than a $5 copay, or some deductible they had to pay before the insurance company took over.

Posted by: Yancey Ward on January 31, 2006 at 5:34 PM | PERMALINK

Aaron,

If my company gave to me the money it spends on my healthcare, I would leave the traditional insurance market in a heartbeat. I would try to find a plan that had a very high deductible on the order of $10K to $20K per year, but had a very solid coverage on expenses over that amount. I might even find insurance that would cover the deductibles to some extent, should I develop a chronic condition that, year after year, caused me to spend $20K. So, yes, I could see that HSAs would cause healthy people to opt out of the low deductible health insurance market. The reason is simple- healthy people pay for insurance now, but don't consume healthcare. Given a choice, they will reclaim a good part of that money.

Posted by: Yancey Ward on January 31, 2006 at 5:45 PM | PERMALINK

Since we already have HSAs, I'd say the Dem response to whatever tweaks he proposes should be, "that's nice, George, but what difference does that really make?"

Unless he proposes changing them in ways that go well beyond tweaks, of course. But I'm sure the real beneficiaries of any such proposal would be the insurance companies, or the HMOs, or somebody like that - and it wouldn't do a damned thing for people who take the standard deduction on their taxes. So pointing that out would be the response.

Posted by: RT on January 31, 2006 at 5:47 PM | PERMALINK

This is just a small problem, but I think it's also worthwhile to note that the tax provisions attached to HSAs create major tax avoidance opportunities. HSAs exclude capital income AND initial deduction, unlike when you have FSA or employer health insurance payments excluded from your income tax. Because of this kind of double tax preference, the tax rate actually becomes negative - i.e. leads to subsidies. Again, very tiny part of the problem, but should be mentioned.

Posted by: llia on January 31, 2006 at 5:50 PM | PERMALINK

Everyone I know who has health insurance spends lots of time at the doctor.

Everyone I know that doesn't have health insurance is peculiarly healthy.

I go to the doctor for a broken bone, or serious stuff. Everybody I know with health insurance thinks they need to get their moneys worth or something - so every time they get a cold, they are on prescription drugs.

We are self employed and don't have health insurance. And I cannot remember the last time any of us were in a doctor's office.

Oh, yes, my daugther needed warts removed. the demotologist was used to bleeding the insurance companies for 5 six visits before he would administer the real cure...

I told him on the 3rd visit to stop the IV drip on my bank account - that I was paying for this - and that if he didn't stop - I wouldn't pay my bill.

I looked him right in the eye and said - now - remove the fucking wart. He did.

So I guess people want more healthcare than they can pay for. If they must pay for it - they don't seem to get as sick as often.

My family ranges from 2 years to 83 years and few of us ever see the inside of a doctors office.

What cured me was having too many doctor friends.
It was an anesthesiologist who told me how to deal with the dermotologist.

And how bout those oncology guys with second mortgages.... makes for lots of false positives.

I had dinner with a surgeon on his property in Tennessee - where he was building his dream house.

After half a bottle of Crown Royal - he admitted he looked at healthy gall bladders in a whole new way. Ditto for apendixes.

See- if you know doctors - eat, sit, drink and smoke with em - you know they are snake oil salesmen first - and healers waaaaaaay way down the list.

they are entrepreneurs - not gods.

And I narrow my time with them to restaurants and patios.

Posted by: Ashley on January 31, 2006 at 6:34 PM | PERMALINK

Yancy, the high deductable, low premium insurance doesn't remove you from the pool of risk. It changes the timing of when you pay. The same companies provide the insurance that currently do and use the same methods of calculation.

Would you opt for less coverage if you had a choice? That would be leaving a risk pool.

Posted by: aaron on January 31, 2006 at 6:59 PM | PERMALINK

So Kevin has already thrown in the towel on this one eh?

Can't say anything bad about this fake health care fix, cuz, gosh darn, it has such nice apple pie, take-care-of-mom sound bites, we just can't fight this.

Posted by: lilybart on January 31, 2006 at 7:13 PM | PERMALINK

To clarify, if healthy people left for low premium, high deductable policies, what would happen is that the deductibles would climb higher and higher so that the insurance companies make the same profit on those healthy people as they do with everyone else.

Posted by: aaron on January 31, 2006 at 7:17 PM | PERMALINK




 

 

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