A Weblog of Centrist Voices in American Politics
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A Weblog of Centrist Voices in American Politics | |
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April 20, 2005Health Savings Acounts: Not Gonna Do it!As part of his plan to improve health care President Bush has signed legislation creating Health Savings Accounts (HSA's). These are tax-free saving accounts that when combined with a high-deductable insurance policy are supposed to help improve access to health care coverage. Well, as suspected, a recent study by the Commonwealth Fund suggests they won't solve that problem. The major purported advantages of HDHPs are that they will a) lower health care costs by causing patients to be more cost-conscious, and b) make insurance premiums more affordable for the uninsured. This report, based on the Commonwealth Fund Biennial Survey of Health Insurance (2003), finds that such plans are unlikely to have a substantial effect on either costs or coverage.Among the many points against the viability of HSA's as a solution are For insured adults who are ill, having higher deductibles would mean they would be more likely to have difficulties paying medical bills or accumulate medical debt: 59 percent of sick adults with deductibles of $500 or more would experience medical bill or debt problems, compared with just 24 percent of comparatively healthy adults with a lower deductible.The report points out many problems with HSA's and to be fair does make some suggestions as to how to make HSA's more workable. However, the study concludes they won't substantially address the problem of the uninsured. Let's face it, health care is expensive. There's no "cheap" way around it. Expensive problems require dollars. Read my lips, someone's gonna have to use the "T" word. Posted by c3 at April 20, 2005 11:42 PMComments
The logical flaw of your opening paragraph is duplicated in the study itself. You ask if Health Care Savings accounts will *help* improve access to health care, and conclude it won't *solve* that problem. See the mismatch between the question and answer? It is as flawed as saying that something only helps a problem, if it solves it totally. It is quite common for a government program to help a problem, without solving it totally. Sometimes this is the best that can be hoped for. Sometimes several partial solutions are needed to address a problem, each helping a bit. That doesn't mean each one in turn should be rejected because they are not total solutions by themselves. Now check out the cited study. It says (pg. 17) that the tax breaks from Health Care Savings accounts won't *help* increase access coverage to the uninsured, because a majority of the uninsured do not pay taxes at all. Isn't that funny? HSA's are supposedly an unhelpful bad idea, because they don't address a problem which they were never intended to? Isn't it really absurd to judge the effectiveness of a tax break, based on its ability to help those who do not pay taxes at all? If the issue is the poor and unemployed, then provide a seperate program and money for them. Don't use the poor as political cover for universal health care for everyone, which insures the trivial and catastropic alike. Ah, the lure of something for nothing socialism. Bush has a seperate tax credit proposal to offset insurance premium cost for low wage earners, which the authors of the study reject because this help does not result in a completely free lunch health care. Much of study is spent contrasting high-deductable vs low-deductable coverage. For many small businesses and taxpayers targetted by HSA's, that's not the choice they face at all. The spiraling costs of low-deductable insurance is right off the table. HSA's can help some small businesses and taxpayers move from no insurance to high-deductable. The most maddening paragraph is on page 16, which says high-deductable/HSA plans would increase at the same rate as low-deductable plans. This is directly contradicted by the RAND study they cite themselves, which found that higher-deductable plans result in "lower total health spending" with "minimal or no effects on health status for the average enrollee". This is exactly why high-deductable plans make sense. They somehow dismiss these conclusions by saying that health cost inflation increased despite these plans increasing popularity. They don't consider the possibility that cost inflation would have been far higher still without them. Our need for medical care is not fixed in stone. People have ailments ranging from trivial to catastrophic. Some are very serious, but some can be resolved with OTC medicines at a pharmacy, or a phone call to a doctor. When someone else is paying, and prices to consumers are reduced to 0, even the most trivial problems end up swamping doctors offices and emergency rooms. Lower cost can radically increase demand. When people pay a significant amount of their own bill, they prioritize their visits more appropriately. This is why High deductable plans are better at controlling costs than low-deductable plans. Some people say government can "bring down the cost of health care". When is the last time the government reduced the cost of anything? What they really mean is that government can impose price controls. If prices are kept lower than they would be under supply and demand, you have shortages, rationing, quality deterioration. Which means long waiting lists, doctors leaving the field and country, etc... This is reality in Britain, Canada, and so on. Posted by: Susan at April 21, 2005 05:07 AMSusan's, got a good point. HSA aren't a panacea....and I don't think they were really billed as a panacea. They are a small factor in helping to address a very large problem. What they really do is ease the financial burden of medical costs a bit on people who already have insurance but know thier insurance won't cover everything or has deductables (pretty much all insurance plans) by letting them pay for it with pre-tax dollars. I believe there already was a very similar plan in place (forget what it's called) that let you set aside pre-tax dollars to pay for medical expenses. The only problem with that was that if you didn't use that money in a calendar year, you lost it. Which was a disincintive to people who didn't know ahead of time what thier expenses might be for the year. I don't think HSA's will seriously influence many people to switch to high deductable plans. What they will do is allow people who are already paying for the most appropriate plan they can reasonably afford (and lets face it most of us have very little choice in what plans to take) to save a little more money at the end of the year (taxes) which they can use to take the kids out to Denny's. I think HSA's are a really good idea. I don't think they are a magic bullet... and I don't think they are expected to be. Posted by: cengel at April 21, 2005 12:24 PM |
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