Thursday, February 28, 2008

HSA, RATIONAL ALTERNATIVE FOR HEALTH CARE

Congressional efforts to pass S-CHIP in this, the second most important issue in the election, continue to fail. At the state level, one after another the states are finding the cost more than their budgets can tolerate. Among the presidential candidates, the subject, if it comes up, is Hillarycare: universal, probably single payer—failures where it is used.. “I can think of parallels in wartime, but I have trouble coming up with a precedent in our peacetime history for such broad and centralized control over a sector of the economy,” the Wall Street Journal editorialized on February 2-3.

Discussion of alternatives does not exist. The public is led to believe that universal is the only kind. The best alternatives, Health Savings Accounts and FEHBP (Federal Employes Health Benefit Program), are not even mentioned. HSA introduces motivation. Not a third party, but the patient, pays the bills. HSA is permitted in all but four states.

The large corporations that pay the health-care premiums for their employees are enjoying huge savings with Health Savings Accounts. Whole Foods, one of the first to adopt HSA five years ago, puts $1,000 in each employee’s special savings account each year ($2,100 if a family). The employee can use those funds to pay doctors’ bills and save the rest. At the end of the year, the amount not spent goes into the employee’s account for the next year. What is different about HSA is that the employee is motivated to keep spending low. He asks the doctor what the cost will be.

Meanwhile, costs are rising fast. To control them, Senator Hillary Rodham Clinton announced seven-points in her September 17, 2007, speech in Des Moines :

--Ensure better preventive care.

--Modernize record-keeping.

--Streamline care for the chronically ill.

--Create large insurance pools.

--Start a “Best practices Institute” to finance research.

--Control prescription drug costs.

--Revise medical malpractice system.


The electronic record-keeping is not likely to happen before 2015, nor is it likely to be available to all doctors because of the high cost of its equipment.

There are other changes that could be made and would have an effect on costs. Individuals could buy insurance with tax-free dollars as are now available to employers who provide their employees with insurance. Doctors could be allowed to practice outside their state. Individuals could be allowed to buy insurance in a state other than their own. There are wide differences among states.

Senator McCain has ideas: promoting generic drugs “and biologics” (what are they?); walk-in clinics at unconventional locations like Wal-Mart stores; shifting some care to nurse practitioners; protection of doctors through tort reform; “using the bully pulpit” to promote disease-protection by healthy diets and exercise.

The cost of health care needs to be taken very seriously. It now costs 16 percent of gross domestic product. By 2015, it is projected to rise to 20 percent. The Congressional Budget Office projects that spending on Medicare and Medicaid alone will eat up a fourth of Gross Domestic Product by 2050.

An important reason for high cost is that people are required to be insured for things they do not want. Thus Texas requires that insurance include in vitro fertilization, acupuncture, marriage counseling, and fifty other features. Four states require obesity treatment; ten require wigs; four, naturopaths; four, massage therapists. The total of mandates has gone from 1,901 to 1,960 in one year. New categories have been created: to cover people under someone else’s policy: grandchildren, legal aliens, domestic partners, elderly parents. Some states require insurance be given to anyone who applies, regardless of health condition. Those costs are passed on to consumers (if they keep their insurance). In Massachusetts , people with high deductibles are required to switch to more expensive policies in order to meet the state’s definition of deductible.

One has to wonder why Hillary is not deterred by rising costs. Her primary concern is universal coverage. Those are the choices: cost vs. coverage. Senator Barack Obama was initially concerned that (only) children be insured. His plan is somewhat different. He speaks of reducing premiums. He contemplates enlarging the present system of Medicare and Medicaid by making available to the public an existing plan, FEHBP, Federal Employees Health Benefits Program. Hillary has twice made passing reference to this plan though not by name.

Congress established FEHBP long before Medicare and Medicaid for all Federal employees. FEHBP, like Medicare, overrides state laws, and no one eligible to join can be excluded. FEHBP offers federal employees a choice of 240 different private plans (none of which is government run) which means 240 companies compete with each other in innovations. FEHBP covers prescription drugs which were not originally included in Medicare.

The Government pays a portion of the FEHBP premium. Each year, the insured have a few weeks in which to switch from their existing plan, if it no longer serves their needs, to another. Some 85 percent of those insured with FEHBP find it very satisfactory. FEHBP has been able to control costs. Over two decades, insurance cost has risen by 6.5 percent annually, compared to 9.1 percent for all health-care insurance.

What should we consumers do? John Stossel has advice. He says buy a policy with a big deductible ($1,000, $2,100 for family). Pay the small doctors’ bills out of pocket. Let the insurance company handle cancer and heart attacks. Now that we have to pay, we will start asking questions about prices, which will help slow their rise.

by Natalie Sirkin
c2008
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