Philadelphia Reflections

The musings of a physician who has served the community for over six decades

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Health (and Retirement) Savings Accounts: Steps To Lifelong Health Insurance
If you are a fast reader, we will begin with a ten-minute summary of Health Savings Accounts. At first, it covers future revenue, then spending projections follow. No matter how medical care changes, cost and revenue must remain in balance.

Introduction: Surviving Health Costs to Retire: Health (and Retirement) Savings Accounts
New topic 2016-03-08 22:42:53 description

Some Pages for a Book on HSA

The Subsidy Issue: Crossing the Line Between Private Sector and Public Sector

Although they seem to have the same design, employer groups don't fit the ACA plan very well. You will notice in current reports of 20% boosts in the individual health insurance contracts because of the Affordable Care Act, there was scant mention of employer groups. Their rates are negotiated privately, and usually at lower rates. They usually pay a different share of subsidies, too. In fact, it can be easier to deal with a plan with no subsidy at all, than with one which requires fitting several partial pieces together. Employer groups are often further subsidized by state and federal income tax deductions, with puzzling circular dependence. Employers make young employees subsidize older ones, while the ACA emphasizes rich ones subsidizing poor ones. (Young employees are seldom richer than older ones, so there's a mismatch, somewhere.) Young employees think of buying protection against unexpected illness, while older employees think of buying necessities at what they hope is a discount.

Some employed subscribers then find they are better off switching to Medicaid, which has historically been quite substandard. Others conclude their health risks cost less than the penalties for having no insurance at all. Some genius may be able to reconcile these issues, but at some point it seems better to start over. An important fact to remember: many poor persons are eligible for Medicaid, but haven't applied for it. That's a job the hospital social worker usually supplied in the Accident Room as they were being admitted. When it was decided to give ACA insurance to poor people, this awkwardness suddenly surfaced, in the form of implicit subscribers who were sicker than was planned for.

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Mixing the subsidy with the service package usually causes trouble, lumping too many sick people with too few well ones. {bottom quote}
In the case of the Affordable Care Act, a fear is raised, a migration away of either subsidized or low-cost clients would raise the premiums of those who remain. The suggested compromise emerges that if government subsidies are resorted to, they should be unwrapped from the service delivery package, and funded independently. So long as the subsidy is distributed by the same criteria for everybody, it might pass muster. To emphasize: mixing the subsidy with the service package usually causes trouble; confusing too many sick people with too few well ones, has often proved to be a disaster.

Since Health Savings Accounts were begun independently of subsidies, they sometimes face the unjustified taunt they "do nothing for the poor man." If equal subsidies were distributed, the subsidy issue could become independent of the type of health care someone happens to have. It's too bad this wasn't examined from the beginning, since it definitely hampers the Affordable Care Act more than it helps it. Competition paradoxically does the opposite, no matter how hard that is to accept.

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If you want to extend the same health subsidy to the HSA as is extended to ACA, go ahead, but stop using the addition of subsidy as a reason to prefer one payment system to the other, or one proposal to another. {bottom quote}
Our culture is reluctant to subsidize poverty, for fear of encouraging it. We are somewhat more willing to subsidize poverty caused by addiction, but prefer to subsidize it less than poverty caused by other diseases, like blindness -- once again, because we are afraid we might encourage self-inflicted conditions. But hierarchy doesn't always stop with different diseases; we might prefer to subsidize one race, one region, or a whole host of other conflicting preferences. Nevertheless, it seems definitely better to subsidize individual poverty -- as such -- than to get into quarrels about the relative shamefulness of causes for health poverty, or the politics of their funding. My present conclusion is: if you want to extend the same health subsidy to the HSA as is extended to ACA, go ahead, but stop using the addition of subsidy as a reason to prefer one payment system to the other, or one political party's proposal to another. Hidden in that preference is the delusion it is easier to control politics than the marketplace.

Perhaps, poverty should be treated as economists treat unemployment -- a net absence of affluence, imitating unemployment as a net absence of employment. That says it might be temporary, which is not implied by saying it's a class of people, or a particular form of thinking. The Biblical description once implied both unemployment and poverty were two classes of society, quite likely permanent ones. But that was hundreds of years ago, and in a foreign land. A small demonstration program in several states might clarify whether this difference of viewpoint might actually lead to an improved subsidy approach. For a long while, I thought eliminating poverty would eliminate the sense of being poor. But it doesn't. Somehow we must get over the idea that the way we were born is the way we must remain, overlooking the plain fact that just about everybody is going to live thirty years longer, and that's generally a good thing. In fact, it's hard to think of anything most people would rather spend money on, than longevity.


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