Though I saw it all around
Never thought I could be affected
Thought that we'd be the last to go
It is so strange the way things turn

Thursday, August 20, 2009

HSAs and the Ownership Society in Health Care Policy - ie. Get Everybody Out of the Way (but pay us first)

One of the ideas in Health Care reform is to introduce "market forces" into the health/medical industry. Because, you know, the market can do anything.

Basically, what they're proposing is a series of Heath Care Savings Plans. That's an individual savings account that can only be used for medical expenses backed up by a high deductible plan (like $5,000 deductible, some higher, some lower - as an FYI my current insurance plan which is considered good has a $2000 deductible). The argument basically goes along the lines that since the consumer isn't actually paying the cost of the treatment, the consumer over indulges. All you naughty people actually using your health care willy nilly driving up the costs for everybody else. To fix it then what we'll do is have the consumers drive down the costs by being selective. Unlike any other first or second world country.

The unfortunate thing is it has absolutely no chance of working to drive down costs. Except the cost to the employer and insurance company.

First off, it's a continuation of the drive away from the mutualization of the industry and leads us to an "every man for themselves" market. Which, for health care, won't work. Just look at what we have now, it's a step toward that. Has it had any effect on driving prices down? Just the opposite. What the proponents of this plan are saying is that we just didn't have enough faith, so we should go farther.

Demand, consider the supply. Everybody who goes to their doctor, signs in, and gets right in (excluding emergency) to see the doctor who is waiting in the room for them, would you please stand up. Everybody still sitting down? Okay, now, everybody who goes into their doctor's office that has a few people in the waiting room and when they finally get back into the exam room has to wait at least ten minutes, you all can keep reading. Everybody still with us? Yep, see, that's what's known and demand outstripping supply. Think that you as the consumers are going to be able to negotiate prices?

See, insurance companies bring the power of their groups to bear to negotiate prices. Take a look at your last insurance claims statement. Now look at those lines of "What your provider charged" versus "Fair and Reasonable" (ie. what the insurance is going to pay against). Without the insurance, you're paying the former costs.

Now, what will really happen.

People won't use the money in those health savings plans. They'll save up thinking that 1) they'll just get better or 2) it's not as bad as they think. So they won't get preventative treatment like check-ups, blood tests, colorectal scans, etc. Because, they cost, and you never know what you might need near the end of the year. So they won't go right away. They'll delay care. And you know what happens then? You end up paying even more for expensive acute care through the emergency room.

Don't believe me. Where do all those uninsured people go? See, they're experiencing that kind of system right now. They could go see the doctor when they first start experiencing symptoms (if we covered it through "social insurance" it would be cheapest to treat then which also would have better outcomes). So we have a model right there. All the studies I could find on HSAs don't address outcomes or quality of care (even though we've been experimenting since 2003). At most they say, "more research is needed." Since most of these are industry funded, that means "we found something, but can't release it."

This fall we're going to see H1N1 return. The best advice is if you're sick, stay home or go see the doctor. But that'll cost you time and money. At this point the CDC is making a major push to tell people to stay home if they're sick because people don't. It costs too much. So they go to work and school sick because, after all, "it's not that bad." Can you see the economic model for epidemic now? Add in the "but anti-virals are so expensive" and it's a recipe for disaster.

Consumers shop for price right now in their purchase of insurance. See, the cost of what you use is baked in. If you have a small group and lots of sick people your costs are higher (see, insurance companies charge your company to cover your costs, only if you're in a pool do those cost get spread even more).

And how can I say it. If the best way to control costs are through HSAs the insurance companies wouldn't be making a profit. No, really, they wouldn't. And insurance companies are making tons of profit. In the US administrative costs range in the 17% area. For Medicare/Medicaid and most other countries' administrative costs are around 5% (Medicare and Medicaid are 3% IIRC). When was the last time you saw an insurance company go out of business or file for bankruptcy? Which industry is bankrolling most of the anti "Public Option" campaign? Yeah. Begin to see the problem now?

As a final problem for me, HSA screw the poor and the sick. And unless we, as a community, are willing to say, "Let them die" and refuse to treat them (and that is the option here) we, the ones who aren't either poor or sick will continue to pay for those that are through our taxes and higher medical costs (currently estimated to be $3500 per family per year - this includes the uninsured and the "make up costs" for all the medicare and medicaid patients).

Health care is not like buying a car or fast food (although personally I would like to see "price charts" in doctors' offices). You don't negotiate the costs, especially for emergency care. Only through large groups of patients' buying power can you prenegotiate better rates. This is also why "co-ops" won't work. Starting from scratch they have no purchasing power.

I know I'm probably rambling and leaving out whole arguments here. I hope it's coherent. But all of the above is why I support a "Public Option." Failing that, my solutions would be completely untenable (insurance must be non-profit, must accept all comers at a consistent rate of premium, can not drop coverage for prior conditions, and must cover all medical costs). If you think a "Public Option" would be bad, the other solutions that have an actual chance of working would drive "free-market" people howling mad. The Public Option is the compromise.

KFF - HSAs and High Deductible Health Plans: Are They an Option for Low-Income Families? Read the key findings including the market dynamics of how HSAs will increase other insurance types' costs - this is an HTML version of a PDF
CBPP - HSA's Unlikely to Significantly Reduce Health Care Spending
NEJM - HSAs - the Ownership Society in Health Care
How American Health Care Killed My Father which I come to different conclusions that the author about how to fix the problems he identifies but discounts the actual solutions as unworkable - his father's death may (note, may) have been prevented by something called aseptic technique - it's something my wife teaches nurse trainees - and frankly it's criminal that doctors don't practice this consistently - which is an argument against tort reform as a way to introduce cost controls


Rick said...

I'm so disappointed in Obama and the Democrats and the Republicans et al. They all blame everybody else so all the people get are forums are venting but no action. This is going nowhere except endless debates.

I've got to find a real party to vote for, and it's not going to be either one of the current major parties and their government options, HSA's and the rest. People are debating this all over the internet and all we'll end up with is a watered down nothing from Obama or whoever else these two parties elect.

Where's Genghis Khan when we need him?

Steve Buchheit said...

Rick, yes, much of the "political debate" this summer went between sides who didn't do much listening. And Khan has left the building.