I Get a Kick Out of Uwe

By Greg Scandlen

Princeton professor Uwe Reinhardt is a really funny guy. Really. If you have ever caught one of his talks, he will leave you in stitches. Not the medical kind of stitches, but the other kind usually associated once-smoky nightclubs and a lone comic on the stage.

But he tops all of his previous comedic efforts in a single letter to USAToday. He begins by trying to rebut a recent op-ed:

One of the more mindless clichés trotted out in the health care debate is that “one size doesn’t fit all.” In seeking to rebut USA TODAY’s fine editorial on “RyanCare,” a proposal by Rep. Paul Ryan, Ed Haislmaier trots it out once again. He does this in a country whose entrepreneurs discovered a century ago that there are huge economies of scale in the idea that one size does indeed fit all to meet common human needs.

But, then his comic gifts kick in. He just can’t help himself:

KFC, McDonald’s, Burger King, Holiday Inn, Marriott Hotels and many more now global companies all base their business models on the idea that one size fits all. And Wal-Mart might soon teach us that the idea also applies to medical clinics, and someone might show it for hospitals as well.

Wal-Mart as an example of how “one-size fits all?” I know a lot of my liberal brethren would rather be caught dead than be seen inside a Wal-Mart, and there may not be any in the rarified environs of Princeton, New Jersey, but c’mon – are there no photographs in Princeton? Every Wal-Mart I’ve ever seen includes acre upon acre of variety.

And, in case someone doesn’t find anything to his liking in the Wal-Mart, there are thousands of other stores from Dollar General to Saks Fifth Avenue to choose from.

Now, my friend Uwe may prefer the old Soviet-style GUM Department stores for his retail needs, but is that really the model he wants to apply to health care? I can’t wait to hear the reaction once all the Princeton professorate is required to shop only at Wal-Mart.

Fortunately, right below Uwe’s letter is one from a Frank Zoz of Waterloo, Iowa, that is not nearly as funny, but might actually work –

I am absolutely convinced that health care costs will never be brought into control until people are spending their own money, or at least think they are. “RyanCare” changes to Medicare seem to be a step in that direction.

I think the ultimate solution is Health Savings Accounts (HSA) for everyone, with which they pay for insurance premiums and health care. The question is how these accounts are funded.

I am a John Deere retiree and on Medicare. John Deere provides insurance for its retirees. It provides money into an account (similiar to an HSA) from which we can pay for insurance and medical bills. My wife and I happen to have a Medicare Advantage plan and are very happy with it. The HSA covers our premiums and any significant additional costs. We have leftover funds that can be used for emergencies. If the government must be in health care, the best thing it could do is help fund HSAs for everyone.

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HSAs For Illinois State Employees

By Greg Scandlen

Our friend, Jim Porterfield, has written an impressive study for the Illinois Policy Institute called “Health Savings Accounts: A Win-Win for Illinois Public Employees and Taxpayers.”

In it he describes how the state and its workers could save literally billions of dollars by switching to HSAs for state employees. He writes:

When compared to the state’s HMO and Quality Care Health Plan premium costs for fiscal year 2011, properly-structured health savings account reforms could allow the state budget to show a savings every year through 2023. Under the three scenarios examined in this study, Illinois taxpayers could save as much as $18 billion to $27 billion between 2011 and 2023. Moreover, state employees and non-Medicare retirees can also save on FICA and federal income taxes while building savings for day-to-day and unexpected current and future health care expenses.

The study drills down deeply into the numbers to arrive at the calculations. Very likely you could replicate his work for your own state or entice Jim to do it for you.

 

Sacrificing Freedom on the Alter of HSAs

By Greg Scandlen

Our compadre, Bill Boyles, publisher of the Consumer Driven Market Report, argues that ObamaCare is good for HSAs and so repeal would therefore be bad for HSAs.  In a recent e-mail he sent around he said the following:

Repeal Could Hit HSA Market-Wide Definition
Repeal of the health reform act would also eliminate one key provision which expands the definition of all health insurance in the U.S. to include HSA law. The little-noticed section requires that a “minimum essential benefits” package for all insurers include at least the HSA law cost-sharing levels. A national committee at the Institute of Medicine meets this quarter to begin to finalize the details, including several HSA-friendly committee members. The change “Creates an essential health benefits package that provides a comprehensive set of services, limiting annual cost-sharing to the Health Savings Account limits ($5,950/individual and $11,900/family in 2010),” a chart explains. The reform law “Creates four categories of plans to be offered through the Exchanges, and in the individual and small group markets, varying based on the proportion of plan benefits they cover.” Millions would select HSAs.

So, HSA out-of-pocket maximums are the ceiling for all health plans in the proposed Exchanges. That being the case, Bill supposes that most enrollees will choose an HSA level of coverage and the lower premiums that go along with it.

That may be true. But it does not follow that repealing this law would be detrimental to HSAs, for at least two reasons:

  1. The appeal of an HSA level of benefits will hold, with or without ObamaCare. I suppose it is a blessing that ObamaCare allows HSAs to continue, but repealing the reform act would also allow HSAs to continue. And without the reform law, we wouldn’t have to worry about whether there are “HSA-friendly committee members” at the Institute of Medicine. If having HSAs is dependent on the make-up of the IOM committee, what happens next year, or the year after, when those friendly committee members are no longer on the committee? Indeed, what kind of health system is it that depends on the friendship of IOM committee members, or of Kathleen Sebelius, for me to get the kind of health insurance I want to have?
  2. The current design of HSAs is not the pinnacle of consumer-friendly health insurance, to be enshrined for all time. The current OOP limits will be the absolute maximum allowed for any health plan. So, if I decide that I am better served with a $10,000 deductible, I will be forbidden from exercising that option. In fact, one of the foundations of the HSA movement has been that allowable deductibles will be raised over time as the health care system becomes more accustomed to pricing for direct payment by patients and patients build-up balances in their HSAs. That evolution will not be allowed.

I’m afraid that HSAs have become another special interest group, with advocates saying, “we don’t care what happens with health care as long as HSAs are protected.” That is not where I am. I’m an advocate for patients, not HSAs. I am not willing to sacrifice individual freedom on the alter of HSAs, or any other business model.