Monday, February 06, 2006

The Sky is Falling! (Part 2)

Many years ago, the then-President of Blue Cross/Blue Shield of Ohio (now Medical Mutual) published a little tome warning that MSA’s would be the ruin of the health insurance industry, and our country’s health care system in general. Frankly, I can’t even recall this fellow’s name, but obviously, his fears were – to say the least – unfounded. And so we fast forward 15 or so years, and find that “la plus ca change, la plus le meme chose” (literally: same stuff, different day).
I actually agree that, if every single healthy person chose an HSA (or other consumer driven product) , and every unhealthy person chose a more “traditional” one, the current system would be thrown into havoc.
Fortunately, that eventuality seems unlikely.
First, it’s necessary to understand the underlying premise of Consumer Driven Health Care: personal accountability and responsibility. The current system discourages both: since a 3rd party (either an insurer or the gummint) pays the bulk of the costs of health care, and few people pay the full cost of their insurance, most of us are disconnected from the actual expenses we incur. That is, we go to the doc because we have a fever and a cough, or to the local imaging center for a mammogram, or the ER to have our broken leg set. We pay a few dollars (or even a few hundred dollars), and we’re out the door. But the provider isn’t through yet: eventually we get an EOB (Explanation of Benefits) form that show how much the insurance company paid. “That’s nice,” we say to ourselves, “thank goodness I don’t have to come up with that $3,000!” But, you see, we already have: in premiums, in co-pays and deductibles, in taxes. It’s just that we don’t see these expenses in discrete, obvious “chunks;” they’re deducted from our paychecks, or the swipe of a credit or debit card. But they’re real, and they add up.
Back in 1977, Sir Freddie Laker, a British entrepreneur, came up with a low-cost, no-frills airline that offered great rates, without peanuts and pretzels and movies. Called SkyTrain, Laker’s idea was to make air travel affordable to “the masses,” by cutting out all the extra’s that added cost, but not necessarily value. Within five years, it had gone bust, but it’s successors live on: SouthWest, AirTran, and the like all owe their existence to the man who said “perhaps they were spending too much money on aeroplanes and not enough getting the aeroplanes in the air for the right number of hours.” In other words, they weren’t focusing on their real mission: to get people from Point A to Point B safely and quickly, but not necessarily luxuriously.
And that’s part of the problem with our system today: we all want the absolute best care, with no (or very little) expense to ourselves.
The other two primary arguments made by those who believe that HSA’s will be the ruin of civilization as we know it are:
■ Only the young and wealthy will buy these plans, and/or
■ It won’t solve the “problem” of the 46 million folks currently uninsured
Well, the first argument is interesting primarily because those who make it never quite define “wealthy.” And yet, over 40% of those who purchase these plans make less than $50,000 a year . I don’t think that most of those folks consider themselves “wealthy.”
And almost half, by the way, are over age 40.
As to the second argument, well, it’s kind of disingenuous, as well. There is a great deal of turnover in that “46 million;” in other words, most of those who are uninsured today will be covered tomorrow, as a new batch comes in to take their place. It’s also specious to equate “uninsured” with “unable to access health care.” This is simply smoke and mirrors.
I agree that HSA’s alone won’t solve the problem. But I am unaware of any serious proponent of them who makes any such claim. Rather, they are but one tool in the box.
We’ll wrap up with a look at President Bush’s plans in Part 3. (Part 1 is here)
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