One Option
Albert Crenshaw wrote an excellent article on High-Deductible Health Plans in the Washington Post yesterday. This strategy aims to introduce more consumer choice into healthcare decisions by pairing Health Savings Accounts (HSA) with high deductible health insurance. Well, it works, for some, but it’s not the perfect answer for all. (Anyone surprised?) But then, why do we have to have a perfect answer? Perhaps this is the first step in our long journey. (I once had a health insurance plan with a $10,000 deductible!) The intent is to shift more of the cost for healthcare to patients and away from employers. The increasingly cost-conscious consumer would then put pressure on healthcare costs. This does work--look what increasing gas prices have done for the SUV market! it also works in healthcare, but not so easily or directly. As Crenshaw points out, however, the net effect on total healthcare costs would probably be tiny, since the big spenders (sickest patients) would not choose this option. (Who said they had a choice??)
One fear is that many would defer “needed” healthcare. However, no one has quite defined what “needed” means or who decides what healthcare I “need.” One cited casualty is preventive care (also not well defined), but surely that is partly a question of salesmanship by the primary care provider, partly incentives ( “if you don’t have your mammogram, your deductible goes up when you have breast cancer”), and partly public health. (Flu shots are free, because it is in the public’s interest for everyone to have one.)
Neglected by Crenshaw (and others) is the downward pressure on prices of even a modest number of price conscious shoppers. I had a this discussion recently with a woman who has type 1 diabetes and would face increased medication costs under this plan. We concluded, however, that her total costs would decrease, because she would shop for insulin by price, and her total expenses would be more than offset by the reduced cost of health insurance.
Comments
HSA's work best for the young, usually healthy people. Their utilization of, and therefore expenditures for, healthcare is limited in the younger age bracket. By the time that they get older and start using more dollars on healthcare, they will have a significant amount of money in their HSA. This money is used tax free if used for healthcare otherwise it is taxed like any other IRA. What is good about this "tax free" portion is that even after they go on Medicare, the monies spent on medical care under Medicare is also tax free from the HSA.
The way I see this building up is that employers will pay for the catastrophic high deductible insurance and the employee's instead of putting money into insurance premiums will have that money deducted from their pay, as is the current custom, but this money goes into their HSA and they "own" it and can move it when they change employers.
HSA's are good for the young workers but us older folk don't have time to build up the HSA to where it needs to be to meet the healthcare cost needs of older Americans.
Posted by: John Harrison, RN, MHSA | May 17, 2006 02:27 PM