by Charles W. Patterson, MD
Health care reform has long been one of my main interests and currently, it seems to be everyone else’s. The President said he thought a single-payer system would be best, but submitted a proposal he thought could be passed. The outcome is in doubt.
Actually, the single-payer system is the second best possible solution. The government would hold the money but would remain vulnerable to political manipulation, bureaucratic inefficiency.
The best system would be a well regulated “Everybody Hold Your Own Money and Pay Your Own Way System.” It would empower patients to deal directly with their caregivers without third-party interference or regulation and lead them to become sensitive to the potential benefit and the cost of their care.
This could be accomplished without taxes and without insurance premiums by a properly designed system of health care savings accounts (HCSAs). These should be funded with pre-tax money from regular automatic savings, like payroll deductions, and everyone should have one from birth. Children’s accounts should be funded by their parents. In only a couple of years, normally healthy people would save enough to stay ahead of their health care expenses. They would save the same money they now pay in insurance premiums, so once in place, the new system would cost less because no money would go to insurance company administration and profit, and unnecessary procedures and tests would decrease because people would keep the money they didn’t spend.
When any account becomes large enough to cover anticipated needs (with, say, 90 percent probability) the extra money could be rolled over into a retirement account, or children’s HCSAs. At death, a person’s HCSA could be rolled over to heir’s HCSAs, after an inheritance tax which would be used to fund HCSAs for the poor and unhealthy. Everyone would keep the money they didn’t spend, so they would not spend it unnecessarily.
Government’s role would become only regulatory. A commission might be needed to determine a fair market value for services and patented drugs, but it is likely that market forces would control these and make the mix of available services more appropriate to people’s needs.
To insure that account money was spent on effective care, and not wasted or stolen by fraud, standards of medical practice should be established with a Wikipedia-style online system to allow each licensed practitioner and researcher to propose, amend and vote on standards of practice in his or her’s field. A true consensus statement would then be available on every relevant standard of practice, which would be more up to date and represent truly effective practice, better than the opinions of a panel of “experts.”
The quality of evidence on any issue varies from one study to the next, and leaves room for differences in opinion about what is good treatment. HCSAs should be allowed to pay for all procedures which received an overwhelming vote of approval, and not for those with overwhelming disapproval. The more money in an account, the lower a procedure’s vote would need to be to have it included. The list of approved procedures would change, and its quality would improve as fast as new evidence and experience accumulated.
Regulations should also end patents for new drug which do the same thing as established drugs, as well as new preparations of established drugs. Advertising of prescription drugs should end, because it leads to unrealistic expectations and misdiagnosis. And these regulations should require saved money to be invested conservatively.
Charles W. Patterson is a psychiatrist.
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{ 32 comments }
“In only a couple of years, normally healthy people would save enough to stay ahead of their health care expenses.”
Thrown under the bus again. I feel like a drain on society.
I would be OK with this as long as I could collect from the patient at the time of service.
Since HSA’s came into being my A/R has hit record highs. This is due to the fact that you have to apply to charges to the insurance company, then they adjust fees and apply to the deductible, then they inform us and the patient what the patient’s responsibility is. Apparently many patients think this number is a suggestion as they do not want to pay towards their deductible.
We have to try to collect many times from patients that insist their insurance is covering things. We tell them the insurance says it is their responsibility. If we could collect while they were there then we would not have this problem.
The only way this will happen is real time adjudication of claims so you collect while they are in the office. The insurance industry has no motivation to do this at this time. It should be possible given how efficient ATMs are at managing our money real time.
You are starting to see some of the insurances offering real-time claims adjudication:
http://www.highbeam.com/doc/1G1-85922705.html
But I agree with you, there has to be real-time claims adjudication for HSA’s to work well. I daresay that to the extent we’re seeing this at all, it’s precisely because of HSA’s. The price transparency, advertising price, or at least making it possible to find out price, HSA’s created the motivation. Except LASIK and plastic surgery, I suppose, as they were outside insurance in the first place.
I would like to suggest that Dr. Patterson and all other MDs engage in a demonstration project. Give up your traditional health insurance for HSAs.
You’re the perfect test group: 1) you have the requisite knowledge to truly discern “over consumption” of health services from appropriate consumption; 2) you can best judge quality of health care providers against the price of their services; 3) you generally are in high enough tax brackets to benefit financially from the exclusion of HSA contributions from income taxes.
So, any and all MDs who think HSAs are a big part of the solution: put your money where your mouths are. Give up your traditional insurance for HSAs. I’ll volunteer to do the demonstration project evaluation. Any takers?
Now that you mention it, I have a HSA for myself, my family and my employees. I got it the first opportunity I had when the law changed. I contribute for myself, my family and my employees. Meaning I pay for the HDHP and fully fund the HSA’s.
We love it. The employees love it. To fund as I described actually costs less than a traditional plan with a $250 deductible.
Lots of flexibility. Tough year, bad economy. I have savings in the HSA, so I can defer contributions until things come around. Employees who leave for any reason have an affordable HDHP to fund if they choose, and may have HSA savings to pay premium while between jobs.
And yes, we shop price with laboratory work, meds, imaging, etc. We do, in fact, have “insider” knowledge, in that we try to gather that information for our patients who have HSA’s or catastrophic coverage.
We gave up traditional insurance five years ago. We love it. Personally, my only regret was it didn’t exist twenty years ago. If it existed when I started practice, I would have enough savings that I would be able to fund the annual HSA with earnings from savings by now. Basically my health coverage in middle age would be about $400 a month for the catastrophic family coverage.
The evidence supports HSA’s. Many HSA-compatible HDHP products went DOWN in price this past year, as they are fetting experience with the product, and they find people do, in fact, shop around and spend money wisely when it’s their own money.
Personally, I say the concern on the left is not that HSA’s won’t work.
The worry is HSA’s WILL work.
I think these are a great idea in a world with rational researching consumers and money.
In practice I think it requires more management -medical and financial- than most people are capable of exercising.
If you have a major illness the cost-containing aspects of this are gone the first week. One scan/biopsy can easily blow through the deductible and put the third-party payment mentality back into play.
Our insurer offered this as an option and in truth, if you had any chance of using the deductible up it’s better to take the other plans. The premiums for the “catastrophic” portion were not that much lower.
I’m for having this kind of thing be a part of the options health reform will offer, but I don’t think it’s appropriate for everyone.
Are you suggesting just the HCSAs with no other back-up? Not even high-deductible low premium plan? If so, there are so many issues with this “solution”.
First, it does not take care of those who make too much to qualify for Medicaid but too little to put money away regularly. Second, at least when I contribute to a health insurance risk pool, there is (at least theoretically) a ready reservoir of money available, should I need it for some catastrophic situation today. If I am the only one paying into an account, I am left in the dust in case of a costly ailment that I cannot cover in the moment. Third, most lay people, when faced with an extremely complex healthcare decision, are not necessarily equipped to make rational decisions about how to allocate their own limited dollars. Fourth, the seemingly egalitarian system of evidence tiering that you propose would lead to nothing other than extreme confusion about what is evidence- and what is income-based (can you imagine a cardiologist admitting that stenting is useless?)
And these are just a few initial thoughts.
Unfortunately there is no solution here. The health care system in America is completely broken, and it appears far too late to fix it. Who would have ever thought that Americans would need to go to Mexico to get quality health care? Mexico! There used to be a jokes about medical schools in South America, now Americans seek out Mexican/South American physcians not only for their affordability but mostly for a better quality of care. The quality of care factor where non-US MDs have US MDs beat easily is in personal attention and taking a minute to talk with the customer. Here in the US it is the norm to take time off work to be at your 2:00 medical appointment. At 3:00 you get moved from the waiting room to the exam room, at 4:00 the doctor comes in and spends a hurried five minutes with you and is then out the door. What other profession gets away with treating its customers in this manner? Not a one. If you live in the USA, even if you have health insurance, your only hope is not to get sick.
Sheesh, what is it with these posters? The HDHP and HSA is no different from a traditional plan, just a bigger deductible.
Marya – Are you suggesting just the HCSAs with no other back-up?
You get so tired of this. NO ONE is suggesting that.
The terminology is HDHP. High-deductible health plan. There are traditional Blue Shield policies with, say, a $250 deductible. My family has a traditional Blue Shield policy with a $5,000 deductible. As you would save to make sure you had the $250, we save the five grand. Easy since the premium savings easily make up for that. With the exception that the money stays in my pocket, as a HSA.
So you have illness, it burns through the annual deductible, then the regular insurance kicks in, same as traditional insurance. A sick year, you break even. No worse. So scrap the entire thing because some just break even instead of winning?
Third, most lay people, when faced with an extremely complex healthcare decision, are not necessarily equipped to make rational decisions about how to allocate their own limited dollars……….
Speak for yourself. Maybe you’re ignorant and need mama government or an insurance executive to make your decisions, that’s no reason to limit others who might want to think for themselves. Limited dollars. Sheesh. Listen very carefully. It’s the deductible. That’s all.
Just. A. Bigger. Deductible.
You get a major medical problem, the deductible gets burned through and the regular insurance kicks in. Blue Shield for me. Before anyone rolls out the old tired “who shops price for cancern surgery”…….sigh…….you don’t. The insurance shops price. It’s called a “network”, same as anyone else with a Blue Shield policy. Or Aetna or whatever insurance you use for the HDHP.
Get over it. This is not rocket science. HDHP’s and HSA’s have grown, double digits, since they were unshackled in 2004. It’s about 20% of the private insurance market now.
Amazing, really. It’s a simple enough concept, it’s scalable, it’s being tried voluntarily, and it doesn’t interfere with anyone else. Listen to people whining, you’d think it was nuclear weapons.
Yet a governmental takeover of the entire healthcare finance mechanisms, destroy entire industries, virtually impossible to undo if it fails, forcing people into it…….and large segments of the population, no one bats and eye.
To DaveV, who said doctors should get Health Savings Account: I am a physician who got an HSA with added catastrophic coverage. I actually prefer it. It is the most reasonable way to cover my family’s medical costs affordably.
Direct payments from patients would definitely slow the rise of very expensive therapies, but the problem with any direct payments from patients is that people just don’t make rational decisions about healthcare spending.
Even as a physician who knows all the reasons for primary care why I am tempted to skip out on the basic primary preventive stuff in order to save money. It isn’t anyone’s fault it is just the nature of how the human brain evaluates risks.
Our brain’s attention naturally focuses pain and immediate threats to life and limb, but just cannot comprehend the concept of problems you cannot feel or processes that kill gradually over years and decades.
People will spend thousands out-of-pocket for a mildly achy back, moving quickly to pricy and unproven alternative therapies if standard medical therapy doesn’t work. People feel strongly about spending hundreds of thousands of dollars on an advanced cancer that has an extremely high probability of killing them even with therapy.
The fact is that people can drastically drop their risks of what kills most Americans (Cardiovascular Disease, Common Cancers, Diabetes, Pulmonary Diseases) with some simple and inexpensive preventive care that has been statistically proven again and again. But it is amazing how many people won’t pay a few dollars of their own for cholesterol screening and cheap blood pressure pills. The brain just can’t grasp that the processes that are likely to kill you are simple and can be in motion even when you feel fine.
Health Savings Accounts would likely exacerbate this problem. Healthcare isn’t cheap and a lot of people would guard the money in their HSA jealously. Which means lots of people would save money by not spending it exactly where it needs to be spent.
Doctor D – Health Savings Accounts would likely exacerbate this problem. Healthcare isn’t cheap and a lot of people would guard the money in their HSA jealously. Which means lots of people would save money by not spending it exactly where it needs to be spent.
Maybe. So far, the evidence is actually not showing that. People with HDHP and HSA’s get comparable rates of preventive care. I’m sure you’d agree, people with full coverage sometimes fail to get the preventive care they need, we have to keep after them, even when the prventive work is covered.
By the way, HDHP = high-deductible health plan.
As so often happens, there are a lot of apples-and-oranges studies out there. Some studies have looked at people with the catastrophic policies and say that’s the same as someone with a HDHP and a funded HSA. Not the same.
I’m sure there are employers who have offered HDHP’s and not funded HSA’s. No, that’s not very good, though I guess if the alternative was no insurance at all, it’s at least a step in the right direction. Other employers may partially fund HSA’s depending on profits that year. An employer can fund anywhere from zero to 100% of a HSA. It can be a combination of the employer and employee, any combination up to 100% of HSA. The 2004 changes under President Bush stripped the poison pills off the HSA’s (formerly called MSA’s under Clinton and the Kennedy-Kassbaum bill), the most important of which was just making them the law of the land, and not “experimental”.
My HDHP is a Blue Shield product made to be compatible with HSA’s. Actually, preventive care is covered on a first-dollar basis with my policy. Mammograms, lipid panels, PSA testing, children’s preventive care, all covered on a first-dollar basis, it did not go to the $5,000-plus-dollar deductible.
It turned out, that’s just thrown in with the particular HDHP I got. I don’t know if there are alternatives, that’s the HSA I chose. I went by price and a good network in my area. It’s the HSA-compatible HDHP
I was the first in my county to get a HSA product for a small group (my medical practice). The insurance company leadership actually drove from the big city to my little rural town, just to sign the deal. Surprised me, too. Before the 2004 changes, it was hard to get group HDHP’s in my state. So I don’t know, I guess I’m putting my money where my mouth is.
“This could be accomplished without taxes and without insurance premiums by a properly designed system of health care savings accounts (HCSAs)….the new system would cost less because no money would go to insurance company administration and profit, …”
It seems to me that the author is advocation for no insurance companies. In order for a high deductible catastrophic plan to work, somebody has to keep track of services provided…which means overhead-which increases prices.
>> “……In order for a high deductible catastrophic plan to work, somebody has to keep track of services provided…which means overhead-which increases prices……”
A simple bank checking account. What’s the big deal? That is NOT high overhead. We spend more complying with idiotic HIPAA rules alone. There is little motivation to cheat the system, it’s the individual’s own money for Pity’s sake. If the person cheated on his own HSA and bought a car, it’s money the individual no longer has for health care. For the individual’s OWN health care, not someone else’s.
Keeping track of expenditures for the purpose od determining when deductible is satisfied is ALREADY done in any traditional or PPO insurance plan. Most of the time it will be irrelevant anyway, as the larger deductible will not be reached.
It just amazes me how many non-problems are brought up with HSA’s, like it’s a manned mission to Mars. But rip out the entire healthcare financing industry in the entire country, impose a single-payer system, that’s simple.
HSA’s are already accepted, they can be started as statewide pilot projects, for the lower income brackets, subsidies could be directed to the HDHP, the HSA, or both. If it failed, the default is back to the insurance system that’s already in place anyway. No, that’s too hard. Let’s create a one-size-fits-all single payer system for the whole country, destroying the current system in the process so you can’t go back in case of failure. Yeah, that’s simple.
You get the feeling that some aren’t interested in financing healthcare as much as they just want political power.
Dave P-
You really do not understand HSAs which are coupled with HDHPs. I have one and it works very well.
The dollar amount an individual contributes to the HSA is an “above the line” tax deduction – meaning it is tax deductible to everyone. You can contribute amounts according to govt limitations. And you can spend those monies on many more approved health services and products – contact lenses, vitamins, even to use (once you turn 65 and forced into Medicare) to pay the Part B (dr part) of Medicare.
Ninguem is s clearly well versed in it. Suggest you read his posts.
Bcs it is my money and I watch it, I have caught insurance company errors, dr triple submissions and approvals — to the tune of hundreds in a given year. As Ninguem said, “the problem is HSAs will work” – and that is exactly correct. HR3200 does away with them. Wonder why? This reform push is ALL about politics – not about truly improving healthcare and lowering its cost.
“A simple bank checking account.”
The HDHP with HSA in my state are administered by insurance providers. The entity paying the amounts over the deductible keep track of what their insured spend-even if it comes out of their checking account. I suppose you could restrict the payments to certain authorized providers but that would mean overhead. Do you really think that when someone else starts paying the bills, there isn’t going to be any overhead?
Without the insurance company-each individual pays cash for their care would eliminate the need for someone to keep track of what is spent. The author of this piece seems to indicate that no catastropic coverage is needed. In fact, he calls it the best solution and doesn’t talk at all about HDHP.
If an HSA works for you, fine. Please don’t accuse me of wanting political power. My medication costs are $5000 a year-without any doctor visits. The bottom line is that I cannot afford to pay for my health care needs. Perhaps it is selfish to want to live a healthly life on someone else’s dime. It is naive to think that we are all going to pay a nominal amount for insurance and get more out of it than we put in.
Your proposal confuses me.
So you’re saying no risk pooling? Everyone for themselves? Surely there will be people who have catastrophic things happen that exceed the amount in their HCSA. What happens to them? What if something happens and you empty your account at age 65? Then you can’t retire?
What about the poor/disabled who have no account or can’t contribute to it? Would your system still keep laws in place that requires the ER to see all comers for “free” if they can’t pay for it? If not, what would keep providers from throwing out anyone with an insufficient HCSA?
The original entities managing the accounts were specialty niche players like HSA bank, in Wisconsin as I recall. Margins were small enough that most banks didn’t even want to get into the game. I used them for a while, lacking a choice, but now the regular banks are in them. So I use the same bank that has my mortgage, regular checking and savings, etc.
So yes, I say again. A. Simple. Bank. Checking. Account. Do you seriously think that accounting of expenditures stops in a single-payer system? Do you seriously think that the government will watch your money better than you will?
I honestly don’t care what anyone SEEMS to be saying. The fact remains that the system with the track record that is being shown to work, five years plus experience now, is high-deductible health plans with Health savings accounts. There is no policy proposal I know of, where the proposal is for someone to fund one’s own ENTIRE healthcare.
>>It is naive to think that we are all going to pay a nominal amount for insurance and get more out of it than we put in.
Just as naive to think that a single-payer system will accomplish the same, with everyone putting in less than they get out. Also equally naive to think that keeping track of expenditures stops with other systems of healthcare financing.
CHDC, consumer-directed healthcare, puts the individual in the position of watching his/her own money. Ther person who cheats, cheats himself. The money won’t be available for one’s own healthcare when needed.
I’m tired of the deliberate ignorance. The system is no longer a policy proposal. It is being done, and is being shown to work. The current administration is deliberately ignoring it. Advocates of CDHC fight to make sure that the government in power doesn’t go out of it’s way to kill off the system. When it’s been shown to work and it is being ignored and deliberately inhibited, one has to wonder if the interest is in getting healthcare properly paid for, or just accumulation of political power.
Robert Bartley’s “Down With Big Business” was written thirty years ago. It was one of the pieces that got him a Pulitzer Prize for editorial writing. I encourage everyone to read it.
http://online.wsj.com/article/SB122728924999048295.html
I don’t like big business or big government. And big business does not necessarily want free enterprise. The political left and the political right both fail to recognize this. Or more likely, they do recognize it and don’t care. Because in the end, they are both more interested in empowering their political faction. Personally, I like to empower individuals by letting them keep, and control, their own money.
Being Frugal
Every organization has some overhead. In healthcare, it constitutes customer service, bookkeeping, record keeping, fraud checks, and so on. Don’t believe that Uncle Sam can do it for less. Do they do anything for less? Look at public education – over half of school personnel are administrative. There is a reason Medicare has such huge fraud rates.
The Social Security TRUST fund is empty.
The Medicare TRUST fund is empty.
The best approach is to have as many options as possible – if one does not work out, then we would have others. Thanks to govt mandates, most states are restricting the number of health insurance providers to a handful – but there are over 1300 of them in America.
BTW, with HDHP coupled with HSAs, they pay 100% after the deductible – typically around $2k per year but you can choose among several deductibles when you sign up.
Just as with restaurants – if you do not like the food, service, price, or quality at one, you can always choose another. We need that with health insurance and we need a la carte choices as to the coverage we want.
Ninguem, I think you may be mistaking some of the discussion here as an attempt to do away with HSA/high-deductible plans altogether. I haven’t heard anyone here propose that. I was not aware that the current bill did that, and if so that measure at least is not wise.
I think what others are pointing out is that such plans alone will not solve many of the pressing healthcare problems in America. These plans work best for well-compensated workers with a good understanding of preventative care. People like you and me. What works well for us cannot always be generalized to assume it will work well for everyone. Many people just don’t have enough employment compensation to allow for such a plan.
As I mentioned before many less educated people who aren’t cognizant of the risk of skipping prevention would often do so, seriously straining the system. You may be correct that this doesn’t happen with the people who currently have HSAs, but if you generalized it to people who would have much smaller accounts you can bet it would be quite prevalent. I’m not sure how any family making 25K a year (well above the poverty level) could have any kind of functional coverage in the system you suggest. The poor and disabled would have no way of creating an account and would therefore be left out.
The issue with HSA / High-Deductable plans is they work very well and therefore remove healthier and higher paid workers from the pool leaving the lower paid and sicker people who cannot maintain an HSA to be pooled into increasingly higher risk groups they cannot afford.
Unless you are willing to let poor people who cannot afford such plans die in the streets of preventable causes, then you have to acknowledge that HSA-style plans will not be a “fix all” for the American Healthcare system.
Like ninquem I begin to suspect that the ignorance on this subject is willful. It is very simple. I have a 5000 dollar deductible insurance policy that I pay for as an individual as I am self-employed. I put 5000 dollars each year into an ordinary bank account called a HSA. I can pay any and all sorts of health expenditures out of that. No one does any administrative oversight. Why should they? It is my money. If I spend it on something that is not healthcare related, that is a matter for the IRS as it would be an abuse of the tax deduction.
I get all the same discounts at providers that everyone else with Blue Cross gets as that is who I purchase the insurance from. I have been covered this way for 8 years now. My insurance agent didn’t know what I was talking about when I asked for this–now they tell me it is their most popular product.
People say it is only good for healthy people. Right after I bought this my wife was diagnosed with diabetes. That and other family issues have meant 3000-5000 a year health expenditures every year. Right under the deductible every time. Worse case scenario, right? Wrong. Counting both the premium and the out of pocket expenditures, I still pay only about 80-85 % of what a top dollar standard insurance policy would cost me. Why? Because I and all the other HDHP/HSA users are more motivated to not waste our health care dollars. We show up at the consultants office with copies of our lab from our PCP so it doesn’t get repeated. We price shop x-rays and lab like any other adult consumer of other services.
I think the source of the willfullness is that some people just don’t like taking adult responsibilities.
My receptionist and medical assistant are paid appropriate for the field, but I wouldn’t say highly paid on the grand scheme of things. I pay the HDHP and I fund the HSA. It still costs me less than a traditional PPO. So the staff get to keep some of the money that would otherwise have gone directly to the insurance company. So where’s the disadvantage to them? Or to me as the employer?
Like I said, deliberate ignorance.
Reminds me of the letter I got back from a politician, I was trying to support HSA’s. Found out I won’t get his support. Not surprised for the individual. He says there are too many problems with them. For example, what happens when the HSA holder dies? What happens to the HSA? Not kidding.
Yeah, can’t figure out how to probate an estate. So let’s create a single-payer system for three hundred million people. That’s easy by comparison. Actually, I’m sure the politician was not really that stupid. The politician is another example of the fear, not that HSA’s won’t work, but that they WILL work.
Like I said, deliberate ignorance.
Now hey, some people are blithering idiots. They won’t get preventive care if was handed on a silver platter. We should not craft public policy to babysit them. We don’t mandate car oil changes. People who fail to change oil and burn out their engines are idiots who need to buy a new engine.
>>Unless you are willing to let poor people who cannot afford such plans die in the streets of preventable causes, then you have to acknowledge that HSA-style plans will not be a “fix all” for the American Healthcare system.
Pardon me while I throw up. Yeah, I want people to die on the streets. ’scuze me while I flog the servants. OK I’m back. CDHC is not one size fits all. No kidding. So let’s create a one-size-fits-all government plan instead. Let’s craft a “public option” with the effect of killing off the private insurance industry and leaving people with no choice but a government plan.
CDHC at least has the advantage of scalability, the option of subsidizing the HDHP, the HSA, or both, for those of lesser means. It makes healthcare contributions a clearly visible line item in employee compensation. And yes, that makes a difference. It has the further advantage of being reversible, if it doesn’t work, you default back to the status quo, which still esixts. HDHP is just a PPO with a big deductible.
The data’s already out there, it’s not just for the healthy and wealthy. The studies are out there. To keep hearing the same old tired lines, to me, it can only be deliberate ignorance.
And YES, supporters of CDHC have had to fight for the continued existence of HSA’s. The proposals for the individual mandate, Mass Connector and now federal proposals, presume a definition of creditable insurance. What is acceptable insurance for the purpose of the individual mandate? Time and again, the attempts are made, behind the scenes, to define the acceptable insurance as one with deductibles far below that allowed by Federal HSA HDHP rules. Lots of interest in getting them killed off. Not just government, either. Read Bartley’s editorial.
There was some discussion on the intent of the author. I just clarified what the author said. I said nothing about government run health care.
A high-deductible health care plan with and HSA is run by a insurance company. Currently the insurance companies pay staff to process claims, CEO………….. the insurance company also costs the provider more money…filing claims, dealing with rejected claim………………You still have doctor contracts and networks……….. If you get rid of the insurance company, you get rid of that overhead. HDHP don’t eliminate the costs of the insurance companies.
Your HSA may sit in a bank with low overhead but you still have insurance after the deductible is met. I suppose if one just goes to the doctor and pays cash-and never files a claim against their deductible-everything is great. Once you involved the insurance company then you have to have someone file the claim against the deductible, someone has to process the claim………….
“BTW, with HDHP coupled with HSAs, they pay 100% after the deductible – typically around $2k per year but you can choose among several deductibles when you sign up.”
BTW, in the state I live, the $2K HDHP doesn’t cover medication and co-payment 10% after meet the deductible. The $2K deductible with drug coverage is limited to $3K in drug benefit and 20% after meeting the deductible. If pay for my medication at $5K and pay my premiums ($108 per month) I pay $6296 per year and all I have is medication. No doctor visits, nothing paid on my deductible. With a comprehensive plan with $500 deductible, a would pay $6130 per year. Premuims at $290 per month, medication (limit $3K), and 5 doctor visits at $30 each…….of course, no insurance company would offer me insurance, HDHP or otherwise…….so perhaps this is a mute point.
So perhaps I should give up Advair and switch to a no carbohydrate diet so an HDHP with HSA would work for me.
>>The issue with HSA / High-Deductable plans is they work very well and therefore remove healthier and higher paid workers from the pool leaving the lower paid and sicker people who cannot maintain an HSA to be pooled into increasingly higher risk groups they cannot afford.
Again, deliberate ignorance. My HDHP is Blue Shield. I’m in a Blue Shield PPO. When I look for a participating physician, hospital, imaging center, lab, physical therapy, I look for the same Blue Shield as everyone else. If you get one of those crazy “rack rate” things where a service is charged ten grand but the insurance really pays five hundred, I’m repriced to the Blue Shield participating rate for……the medical service, the imaging facility, etc.
Same for an Aetna HDHP or a United Health Care HDHP, etc……
I would suggest you talk with an actuary to find out what a “pool” really means from the standpoint of people who really understand insurance. But from what you think a “pool” means, what is the difference between my Blue Shield plan and your own insurance?
My HDHP Blue Shield plan, which is a PPO with a larger deductible for certain services, covers up to two million dollars coverage of medical services…..minus the deductible of five thousand dollars and some change. A “traditional” PPO covers up to two million dollats coverage of medical services……minus the deductible of about a thousand. Four thousand, maybe forty-five-hundred dollars difference out of the risk of two million, and they are not at risk of paying that four thousand or so in smaller claims for a sore throat or hemorrhoid. The hemorrhoid and sore throat are far more likely than the claim dosting millions.
The actuaries price the policy accordingly. My premium check goes to Blue Shield. They invest the money with all the other premium checks they get.
So tell me again about this “pool” again….?
Out of the millions of dollars of risk, premium of thousands of dollars, where I did commit some social faux pas by accepting a higher deductible than my neighbor? The insurance agent offers a plan with some sort of HMO and copay option, or a PPO with a $250 deductible, $500, $1,000…….and about $5000 for a family HDHP, about $2000 for individual HDHP.
At what dollar figure did I pee in the pool and ruin it for society, letting people die in the street? For years, consumer advocates always say to get the highest deductible you can afford for my car insurance, homeowner’s insurance, etc. When did they violate the norms of social justice? Where is the deductible dollar figure?
Ninguem, I think we are talking past each other. I have said I think these type of plans should exist. How can you accuse me of supporting a single-payer government plan?
Perhaps I am misunderstanding you? Your arguments in support of these plans seemed to me to indicate you felt they will save healthcare and negates the need for other reform. To me that makes as much sense as saying IRA’s mean that we can get rid of Social Security. But perhaps that’s not what you are saying?
Are you saying you think HSAs should be allowed to continue? If so we are in agreement.
PS: Good job paying for your employees health coverage. Employers who continue to do this are becoming a minority.
Well, there’s one clown here who thinks we’re two-faced and keeping some sort of gold-plated private policy and advocating HSA’s for others, with a snarky challenge to do…..what I’ve already done for myself, my family, and my employees, for years.
I don’t know if I’m talking past you, or if it’s just over your head. You made a specific remark about HSA’s, HDHP, and insurance “pools”…..remarks that are absolute nonsense.
Frugal: “……If you get rid of the insurance company, you get rid of that overhead [claims processing]……”
This is either deliberate ignorance, or a simply childish understanding of business. Claims are processed one way or another. Under Medicare [for all?], the claims are subcontracted to insurance companies. Administration does it’s bit to make the UK’s National Health Service the third largest employer on Earth.
I have no way of knowing what your state does or does not have. I know I see disability exams all the time, I ask patients who their doctor is, they say they can’t get health care because they don’t have insurance. “Do you know there is a public clinic a mile away that sees all comers on a sliding scale?” Blank look. What medicine do you take? “I’m supposed to get [the following] meds, but I can’t afford them because I have no insurance.” I went through the list. “Do you know you can get [the list of medicines the claimant showed me] every single one of these, for 40 dollars a year (ten bucks a quarter)….it was four diabetes and blood pressure medicine……that’s $160 a year for these medicines, and the sliding scale for the clinic fee. Or you can walk around with your sugars at 500.
Blank look. And I’m in a fairly decent small town. “Look, I’m not supposed to give medical advice at a disability exam, but I can’t keep quiet about this. Just ’cause you don’t have insurance doesn’t mean you can’t get health care. I don’t know you well enough, maybe $160 really is too much for you, but I doubt it (I point to the pack of cigarettes in the pocket), I’m not saying it’s easy, but you’re not even accessing the medical care that’s a mile down the road. I’ll shut up, because regulations say I’m not supposed to give medical advice.”
I figure I’m OK, I don’t think giving directions to the clinic and telling the person the pharmacy fee for metformin doesn’t constitute “medical advice”.
I don’t know what your medical problems are, and I’m sorry you have them. The problem with the high-risk pools are usually the same as with the individual markets. My insurance is kust through a state business association, I’m a member. The only underwriting is date of birth. Usually the problems with the individual market and with the high-risk stuff is the state has screwed them up beyond all recognition.
You give a long description of the HDHP’s not covering drugs. Maybe that’s the case in your state, though I doubt it. I know the drug coverage is an option in my state. Well……I pay for the option. I did turn down dental. I don’t think dental coverage is a good buy. Drug coverage is a different matter.
But het, I agree, that there will probably be a need for government intervention in some with very unusual, very catastrophic illnesses. I’m middle-aged, with a family, we have middle-aged medical problems, Mrs Ninguem has various female problems needing the usual surgeries, nothing out of the ordinary. Biggest hassle is the various providers freak out when we pull out a checkbook to pay for services. “What do you mean you don’t run it through insurance?”
And that IS a problem right now, though it’s slowly getting better. We need price transparency. To the extent we’re getting price transparency, it’s precisely because of HSA’s.
I’m all in facor of multiple options, fine with me. What I’m hearing from the left will take away all the options. Joe Wilson was right, Obama was lying.
And then D up and says “To me that makes as much sense as saying IRA’s mean that we can get rid of Social Security.”
Sheesh. Social Security is a Ponzi scheme. No industrialized nationwould create a retirement scheme like Social Security anymore. I’d love to get rid of Social Security. Replace it with private pensions combined with a private disability policy, we’d be better off. Not only would I be better off, the average working stiff would be better off. We have Social Security now, because we’re stuck with it.
“….PS: Good job paying for your employees health coverage. Employers who continue to do this are becoming a minority…..”
Thank you. I want people to have their healthcare paid for.
We may disagree on how to get there. I really, sincerely, do believe CDHC is the best way to get there, and the data is pointing in that direction. It is, unfortunately deliberately ignored from the left. If I turn out to be wrong (I doubt it), CDHC is reversible. It’s just a PPO with a high deductible and tax-favored savings. A single-payer system, a Medicare, there’s no turning back. Hence, the tea party types, who are as angry with the Republicans as they are with the Democrats.
My employees, by the way……..you know COBRA and all that. Ever get a patient between jobs, develops a medical problem and has no insurance? Maybe there were two months between jobs, the patient took the gamble and lost?
“Why didn’t you COBRA your previous insurance?” Well, you know the answer. “$1,500 bucks a month premium and I don’t have the money, and I’m unemployed.”
My employees have HSA’s and a HDHP. They can COBRA their HDHP for about $200 a month individually, $500 for family coverage. And it gets better. If they have HSA savings, they can pay premium with HSA savings if they are unemployed.
I don’t pay family coverage, I’m not that good. But they can pay into insurance for family coverage, it works out to about five grand extra a year, but about two or three grand is the HSA, which they keep if they have a good year.
It’s not perfect, but it’s a serious step in the right direction.
I am distressed at how many small businesspeople I run into. Restaurants, coffee stands, hairdressers, etc. They often have the catastrophic coverage, and complain they have no coverage for the smaller stuff (like me). I tell them about the HSA’s. They already have the catastrophic coverage, essentially the HDHP. For Pity’s sake, just go to the insurance broker, make sure you have a properly recognized HDHP. Go to the bank, open the HSA. You have a good year, contribute. You have a bad year, work off savings if you need to. That’s what I’ve done, revenue is off because of the economy. Gotta make payroll. But I have HSA savings, so I can cut back contributions. Under traditional insurance, I might have stopped insurance altogether.
I’m chagrined how many small business people don’t know about HSA’s. A light bulb goes off. I’m not playing insurance agent, they usually have put aside savings for the high deductible and expected medical expenses. I am just pointing out they might be able to get a tax break for the money they have already saved. “Now I’ll shut up and take care of your blood pressure.”
My personal philosophy, I’m a free enterprise small business supporter in the Robert Bartley mold. “Down With Big Business” was an editorial pointing out that big business engages in rent-seeking and can be as socialistic as any left-wing government. A strong middle-class is needed for a strong free country.
A couple months ago, I ws invited by the Chamber of Commerce to give a talk at some sort of business benefits meeting. I couldn’t keep my mouth when the subject drifted to HSA’s. Maybe I should accept their offer.
I don’t have a problem with HSAs, and in fact expect to start one for my family this enrollment season. But I guess I’m quite skeptical about how large of an effect they can have on overall health care expenditures relative to the amount of hype they tend to get.
Not all health care costs will respond to price variability the same as others. Some things, people can and will shop around for (preventive care appointments, some elective surgeries). Others, not so much. The things that are difficult or even impossible to price-compare are going to be the bigger-ticket expenditures, and a course of chemotherapy can be a MUCH bigger ticket than an annual physical. So I’m curious what effect price-shopping consumers are expected to have on overall health care expenditures. Even if everyone saves $50-100 annually by shopping around for routine care, maybe a good chunk more for an elective knee replacement or something, that’s kind of a drop in the bucket compared to the really expensive things. How much would costs really drop?
I agree with the concerns about some health care consumers overlooking routine or preventative care to avoid spending that money. You also need to look at the effect that “price wars” would have on the segments of the market that would see the most price shopping. Seems like most primary care physicians already feel pretty squeezed – overworked and underpaid. Do we really want to look for more cuts there? You’ve also got the issue of the traditional doctor/patient relationship where the doctor is acting as a gatekeeper of sorts and advocating for the best interests of the patient. How do the dynamics of that relationship change when you try to make consumers more price sensitive?
I also wonder about the kind of market segmentation that could happen given that certain procedures and therapies are likely to be more profitable than others (see: Lasik). It might be extreme, but I imagine boutique healthcare providers who do more elective and well-paying things like stenting, joint replacements, etc. and skim off the cream of the crop, so to speak. If the “money” cases are being pulled out of the pool like that, is that dangerous to a larger multi-disciplinary center that could use that revenue to support caring for more challenging cases and sicker patients?
Also, while I see how HSAs can exert some pressure on healthcare prices, implementing them doesn’t really expand coverage in any way. At any rate, I don’t see why HSAs and universal coverage need to be viewed as mutually or even partially exclusive. Couldn’t even a public option adopt concepts from HSAs?
-g
LASIK is usually not covered by insurance.
It is also one of the few medical procedures where price has gone down.
Anthem lowered 2009 premium on their HSA-compatible HDHP products. Mine stayed the same. Traditional low-deductible PPO’s went up. How did yours do?
>>How do the dynamics of that relationship change when you try to make consumers more price sensitive?
You mean like maybe the individual deciding that a visit to a good primary care doctor for shoulder bursitis and hypertention might be cheaper than a visit to a cardiologist for blood pressure and a separate visit to an orthopedist for bursitis? Doesn’t matter if it’s a HMO with a ten dollar copay. It does matter when the first five grand of expenditure is under your control.
I am in primary care, I don’t feel threatened. Others want to use the power of government or large insurance to impose “gatekeepers” or “medical homes” on people and force them to see the pee-cee-pee.
I’d rather let the quality of my practice attact people, but that’s just me.
Chemotherapy and other big-ticket items, as opposed to routine medical services…….
The USA spends more on management of incontinence than we spend on renal dialysis and coronary bypass put together. Don’t underestimate the collective effect of the small savings on routine medical care.
Personally, I’m not trying to “hype” HSA’s as much as I’m trying to deal with ignorance so profound I have a hard time believing it’s anything but deliberate ignorance. Ultimately, I agree, let’s see how it actually shakes out. Data from the past five years look promising, lower premium rates and all that. Probably why I see what is either deliberate ignorance or deliberate lies, in an effort to kill it off and impose an irreversible “public option”.
I realize LASIK isn’t generally covered by insurance – that’s why I used it as an example. If you needed some other kind of ophthalmic procedure or treatment, could you get it at a LASIK clinic? Or would they send you someplace else?
I would call my own health insurance situation not too representative of national trends – in a very progressive state working for a large health system, and personal changes make a year-to-year comparison difficult. But my employer’s definitely moving in the high-deductible direction – unfortunately the HSA option seems pretty weak. Aside from the tax benefit of paying up to the deductible/copays/coinsurance through the HSA, there’s very little savings on the premium (most of it paid by the employer in either case). I think insurance companies could really be doing a lot more to make them attractive, and I have to wonder why, if it’s such a beneficial alternative, they haven’t been.
“You mean like maybe the individual deciding that a visit to a good primary care doctor for shoulder bursitis and hypertention might be cheaper than a visit to a cardiologist for blood pressure and a separate visit to an orthopedist for bursitis?”
More what I’m getting at is that people put a premium on having a stable relationship with a provider they trust, and while you set up an excellent comparison where seeing some real costs could steer someone towards the more sensible alternative, it seems like more often than not people would prefer to establish one solid doctor-patient relationship and ride that out rather than continually shop around. Cue all the “between my doctor and me” sign waving and shouting. So aside from the type of comparison you gave us, and maybe that’s more common than I personally suspect, I remain skeptical how much of an effect this shopping-around could have. Patients feel a strong need to develop a trusting relationship with a provider, and price-sensitive behavior would seem to act counter to that. There’s a balance in there somewhere – some price competition being better than none – but I just haven’t seen any thoughtful estimate of where this type of change might take us.
And even with all the lengthy postings, I wouldn’t consider anything you’ve written to be “hype” – the info on HSAs has been informative and even-handed. I just really don’t see huge gains coming from widespread adoption, absent some breakdown of total healthcare costs with regard to price elasticity. Would it help? Absolutely. Just no magic bullet like some would seem to want it to be.
-g
Sounds good to me. We’ll find out……that’s assuming the whole thing doesn’t get killed off in the upcoming healthcare reform.
I am impressed by so much discussion. All the details won’t fit in a short post, but a system of Health Care Savings Accounts presumes payment at the time of service with a check or debit card on the account. People do spend on unimportant products when they have money in their pocket, or bank, so omission of preventive care should not be a concern. The system would have to be used widely to bring costs down, but catastrophic insurance would not be needed. Your account would never run out of money, if you had more expenses than money your account would be supplemented by an inheritance tax on those who die with a balance. The system would need no money above everyone’s regular contributions. The government would hold no money, though it would transfer some.
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