Why health care savings accounts should play a larger role in reform

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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