SECTION THREE: Classical Health Savings Accounts: Many Surprises
One of the originators of Health Savings Accounts describes their advantages over existing health insurance. Improvements are suggested for the regular HSA. More dramatic cost improvement emerges from a lifetime HSA version, substituting whole-life approaches for pay-as-you-go. Most of this requires legislation, but could reduce health costs dramatically.
Health Savings Accounts: Classical Model
New topic 2015-09-03 22:42:59 description
When I give talks about Health Savings Accounts, there often seems to be some person in the front row who doesn't seem to be listening. But he's usually the first to raise his hand with a question, which goes more or less like this: "Well, what does this do for poor people?" So here's my usual answer.
Poor people are all poor, but they are poor in different ways. For preliminary discussion, let's divide them into three classes.
On Their Way Up. Most Americans came here at the bottom, and worked their way up. Poverty may once have been their condition, but it wasn't their ambition to stay there. Everyone, particularly the newcomers, can see that cheaper means more people can afford something they once couldn't afford. It's the job of Health Savings Accounts to make healthcare cheaper, but if you subsidize more than half of the population, and then set a threshold of 400% of poverty, you tend to hold people in place. You tend to make subsidies hard to surrender, which increases the number of subsidized people, and ultimately makes subsidies too expensive to continue. It may be well-intended, but it makes things worse. The Latin expression Primum non nocere is the medical profession's motto, meaning "The least you can do for somebody, is not make their problem worse." On the other hand, by making healthcare cheaper, more people can afford it, so you've done a lot of good.
Like Tolstoy's Unhappy Families, Poor people are Poor in Different Ways.
Stuck at the Bottom. It's true a dismaying number of people are permanently unemployable. Not just unemployed, but unemployable. The Mayor of my little suburb tells me 8% of the school budget is devoted to "Special education", which mostly means mental defects of one kind or another. In spite of special education, a large proportion of mentally retarded kids will never be able to support themselves. And despite movies about Nobel prize winners with Lou Gehrig's disease, a lot of other people born with neurological conditions will never be self-supporting, either. My profession is working hard to reduce the number of permanently disabled, and quite often it is fiercely expensive to treat them, but we keep doing it. For the most part, these disabilities are easy to recognize, and with few exceptions it is society's obligation to subsidize them indefinitely. But it is not the role of Health Savings Accounts to define, identify or treat these people. In fact, it would injure our performance to take on a non-financial role. Give us the money and we will expand it and then pass it along. We will even contribute toward its cost, but much prefer to have government pay its own bills, and not disguise their taxes as part of our operating budget. Who made it government's duty? Our elected representatives in Congress did, and we try to follow their rules.
Temporary, Borderline and Political. For a while, I acted as a referee on Disability Determination. Let me tell you, it's often pretty hard to tell who is malingering, from who is eligible among a host of different assistance agencies, and who has long since recovered from a disabling condition. It's therefore expensive to administer Disability Determination, and physically exhausting if you take it seriously. It isn't the proper job for a Health Savings Account, which would do it very poorly, dragging down the performance of what else we would really like to do perfectly. Which is to reduce the effective cost of healthcare, by adding an unexploited source of revenue in the financial field.
HSA Proposal for the Poor. The proposal, therefore, is we should start with what is least controversial in almost everybody's mind, which is catastrophic health insurance. This type of insurance comes closest to what everyone would agree we owe all our citizens. No money is expended on the basis of income or social circumstances, it is decided individually at the hospital door, usually by accident room physicians. Its volume of component services would be controlled by an improved DRG, and its retail price should be determined by outpatient costs determined in turn by the marketplace, or by a relative value scale when no comparable outpatient service exists. It may be advisable to reconstitute the PSRO (Professional Standards Review Organization).
It may be desirable to dispense this catastrophic insurance through an HSA, although it is not essential. If it is the only benefit provided, it still would be useful to provide an accordion mechanism for additional services for those who rise from poverty, who are reimbursed through special programs in a variety of ways, or who find ways to supplement the cost themselves. Ultimately, it should provide a vehicle for integration, temporarily or permanently, into the private sector.