> The emergency allowed states to serve as “laboratories of democracy,”
Honestly, I've never liked that metaphor much, because it's missing the most essential attribute of a laboratory: actual experiments.
A real experiment is designed, run, completed, and evaluated, but "laboratory of democracy" policies always seem to be missing those last two crucial steps. When's the last time you heard of a state allowing an experimental policy to sunset, or taking a hard look at its results and honestly, openly concluding that it turned out to be a failure?
> Rather than asking, “How can we increase coverage?” we can ask, “How can we provide better health to more people at lower cost, year after year?”
It's good to see people starting to see through the conflation of health *care* with health *insurance.* One of the strongest criticisms I remember being raised against the Affordable Care Act when it was still just a proposed bill was that you can't fix a problem by making it worse: the insurance system is responsible for so much of the problem with the health care system, so why feed tens of millions of Americans who've successfully evaded it thus far into its maw?
A proven solution that actually succeeds at lowering costs is what's called "restaurant pricing." It has two parts. 1) Every medical facility (hospitals, clinics, etc) publishes a public "menu" of every product and service they sell and what that product or service costs. 2) Everyone gets charged the price on the menu, regardless of how they're paying for it.
This simple, common-sense solution has a proven track record of driving medical costs down pretty significantly and improving care, through the basic market forces of transparency and competition. So of course hospitals and insurers fight tooth-and-nail against it whenever the idea comes up. But if we could get restaurant pricing instituted as national policy, it would go a long way towards fixing health care problems in this country. It wouldn't magically fix everything, but it's probably the single biggest improvement we could make.
All right. It looks like your main concern in the various pieces is that the pricing transparency in part 1 of restaurant pricing could enable higher prices through tacit collusion, (ie. having the same effect as collusion without any need to formally conspire together to raise prices,) by hospitals looking at each other's prices and raising them together.
I can see how that could be a legitimate problem — it does exist in other areas — but I have three objections to its applicability here, two theoretical and one empirical.
1) Hospitals already have a decent idea what their competitors are charging, because their competitors have negotiated deals with the same insurance companies that they have, and the deals are likely to be pretty similar. It wouldn't be as precise as the information they'd get from pricing transparency, but unless someone somewhere in this very high-stakes-big-money game somehow ended up bringing some seriously inept negotiators to the table, the information they have is likely to be "good enough."
2) Insurance will still be around. Point 2 of restaurant pricing means that they can't really raise rates much, because if they charge more than insurers are willing to pay, the insurers will stop covering their procedures.
3) The track record. As I mentioned, the reason I like restaurant pricing is because it has a long history of working well in practice, driving prices down, not up. It was very disappointing to see a representative of the Surgery Center of Oklahoma arguing against this basic fact, when he works at one of the prime examples of just how well this principle works in real life!
Tacit collusion is ONE concern, but it’s not the only one. On (1) Hospitals have a “decent” idea of what others are doing is by no means the same as knowing with certainty, because the prices are posted. On (2) insurers are happy to raise rates if they presume that regulators will jack up the premiums. These prices are not set independently. Plus, Medicare and Medicaid play a monster role in setting prices. (3) My good friend Greg Scandlen wrote a wonderful piece on why restaurant pricing has almost zero applicability to the healthcare market: https://www.healthworkscollective.com/gawande-s-kitchen/. Keith Smith of Surgery Center of Oklahoma is transparent because he WANTS patients to know his prices. He also knows that the big hospitals and insurers do NOT want patients to know their prices. So, the big hospitals and insurers will spend big bucks on lobbyists to write transparency-in-name-only regulations that will wreck Keith’s business but sail smoothly though big organizations that have sufficient capital to pay lots of accounts to bury the truth beneath an avalanche of paperwork, as per the regulations. You’re asking the government to solve a problem that the government created.
1) Fair enough. Since you seem to know this area pretty well, how big would you estimate the margin of error typically is on their "decent idea" guesses?
2) Yeah, this is why I've seen other analysts say it would be a good idea to implement restaurant pricing: if we can get the typical 70-80% price reduction across the board, the claim goes, that alone would fix the massive problems we have with Medicare and Medicaid costs blowing up our federal budget. (And yes, that "if" is doing a lot of heavy lifting. While I'm skeptical that we'd achieve quite that much, I do believe we'd get a fair amount of the way there.)
3) That doesn't appear to be an article on applying restaurant pricing to health care, but rather on applying principles of restaurant *operation*. And for the record, I agree with the points Greg makes there.
> So, the big hospitals and insurers will spend big bucks on lobbyists to write transparency-in-name-only regulations that will wreck Keith’s business but sail smoothly though big organizations that have sufficient capital to pay lots of accounts to bury the truth beneath an avalanche of paperwork, as per the regulations.
Perhaps. This is the standard "regulatory capture" argument, and it holds true in a lot of cases, but I feel I have to counter with the words of computer science pioneer Tony Hoare: "There are two ways of constructing a software design: One way is to make it so simple that there are obviously no deficiencies, and the other way is to make it so complicated that there are no obvious deficiencies."
This really feels like a "so simple there are obviously no deficiencies" plan. If the price on the menu says "this procedure costs $300," and the number on my bank statement doesn't say $300, it's obvious that something's wrong. That's simple enough that your average John Q. Citizen can immediately see the problem and raise a stink about it. (And yes, I am talking about numbers on your personal bank statement that can be easily checked. A big part of the goal is to make insurance far less relevant by driving down the costs of most medical care to the point where you can afford to pay for it yourself, rather than through an intermediary with all the monopsony and principal/agent issues inherent to such a model.)
> You’re asking the government to solve a problem that the government created.
Yes. Or in other words, to clean up their own mess. I'd ask the same of anyone who makes messes. (See also: Dobbs vs Jackson Women's Health.)
2) 70%-80% off of what? I'm skeptical that mandatory transparency would save anything. My assumption is that it would likely increase unit costs and perhaps overall costs.
3) I don't think this would be simple at all. What is to be transparent? 600,000 codes for individual slices of each procedure? Price for a suture? Price for a minute of RN time? Price for the bed? Or are you going to bundle--as most transparency folks suggest? In that case, you effectively build a system of tying arrangement, allowing providers to further jack up prices. Keith Smith can price as he does because the particular services he offers are relatively predictable in cost. He can absorb the variances from that price. (This is a conjecture. You'd have to ask him whether he agrees.) But what about services that can vary widely in cost, depending on dozens of factors? Are you going to give ONE single price for such a procedure, knowing that the provider might be forced to absorb huge residual risks? Or in such services, will you charge by the hour? Which creates a whole different set of transparency problems.
I don't see any real possibility that transparency mandates would clean up the government's mess. They would add an extra layer of complexity atop the mess that is already there. Sounds like a good idea, but ...
In the classic film, “The Magnificent Seven.” Vin (Steve McQueen) was a gunslinger hired to defend an impoverished village. After a pivotal battle, he was captured by the bandit Calvera (Eli Wallach), who asked him why he had accepted such a hopeless job. Vin responded, “It’s like a fellow I once knew in El Paso. One day, he just took all his clothes off and jumped in a mess of cactus. I asked him that same question, ‘Why?’” Stunned, Calvera asked why the man had done so. Vin responded, “He said, ‘It seemed to be a good idea at the time.’”
Another thoughtful post with great ideas. Your question “How can we provide better health to more people at lower cost, year after year?” Is truly the better question. I would also offer “How do we shift away from the idea that health is something purchased from experts toward a society that knows as individuals we are our own primary care providers through the actions we take every day?” When each one of us makes decisions about what we eat and how we live, expecting someone to later give us a pill or do surgery to correct the damage done seems the wrong way around. Certainly there are diseases and incidents that cause harm beyond our own reasonable control, and experts come in handy when that happens. But there are many other ways we can lead healthy lives without extremes in diet or activity, and if we did that there would be more available to treat the other stuff.
All reasonable, but the question is, of how much practical use is the observation? Many of our health problems (e.g., obesity) exist primarily because we choose other things (eating a lot, avoiding the gym, etc.) over being thin. We know the tradeoffs, we know the damage the condition does, and we do it anyway. (That's known as "rational obesity," and it accounts for a large majority of the cases of obesity in the U.S.) Some people expect the government to fix it, but to some extent, the government caused the problem in the first place. Then there are the "nudge" fans, who insist that restaurants post calories on menus, convenience stores not sell large cups, etc. It doesn't really work, and the most significant effects are to expand the enforcement bureaucracy and raise costs. I'll recommend a superb book on the topic--"The Fattenign of America," by Eric Finkelstein and Laurie Zuckerman.
Perhaps 30 years ago, I wrote a public health policy for Robert Blank, then a leading Poli Sci expert in that field.
Part of the 35- or so - page paper was a suggestion for extending HSA type insurance to many possible clients who didn't work for companies that had the capacity to do so.
Briefly, I believe that the feds could randomly sort, say, 50-100,000 potential individuals/families that are either on Medicaid or uninsured/underinsured and have insurance companies bid to sell the government HSA + catastrophic health insurance for that group. In addition, for very poor individuals/families, the feds could create and fill the HSA accounts up to equal the copays/deductibles. Just like regular HSA, anything left over for the year could go into a pre-tax investment account. I understand that not all would understand that last part, but still . . . And you could put into the account on a sliding scale, like the idiotic ACA up to maybe 4 times the poverty level.
I don't have the numbers any longer, and they would be dated anyway, but back then the cost was way less than the cost of Medicaid and the management of Medicaid. Plus it would save resources of hospitals and doctors' offices.
Please think about that, in a fleshed out form.
I got an A for the paper, and Prof Blank loved the idea, but said it would never get passed due to rent seeking. I agreed, but I still think it would work.
I've never been as excited about HSAs as a lot of friends of mine are. I remember ideas like this, but the costs were scored as prohibitive. It still doesn't deal with catastrophic costs, as no HSA is going to cover the costs of vastly expensively procedures. And, as your prof said, it isn't goign to get passed. Especially if there's a chance that it will work.
Odd. Mine, to date, has covered a cervical spine vertebra replacement, a five vertebra lumbar fusion, an emergency gallbladder removal, a robotic prostatectomy, radiation treatment following that, and a bunch of regular stuff over the past 10 year. Total billed cost well north of $600,000, negotiated cost about $450,000. My total out of pocket less than $10,000. And that came out of my HSA account. Plus when I retired and moved to my wife's HSA I had $10,000+ in the HSA investment account that was all pretax dollars to spend on future medical costs.
The cost to me of the insurance was about $50/mo from my paycheck, and I filled my HSA, which was allowed $4400/yr pretax dollars since I was over 55.
The cost to my employer was the $600 they put in my account every year plus about $3500 for their share of the catastrophic insurance costs. Prior to that, at least in 2010, their average cost per employ for pretty regular 80/20 coverage was just over $7000.
They cut their costs by about 40% in my case. I 'saved' probably $90,000 in copays, and I had no "network" to be in. I could go anywhere I pleased for health care.
So I was putting in (counting the employer $600) about $5000yr pretax which meant I was saving about another $1500 in federal and state taxes.
I fail to see how that is even close to prohibitive. ANd of course it deals with catastrophic costs, that why the insurance is called "catastrophic insurance". ;)
Since one of my regular courses was Local Public Budgeting I looked the numbers over very carefully.
Of course, it really only works for the insurance company when it s spread over large numbers of insured, but that's easy to do.
The advantage to doctors and hospitals is relatively quick payment (usually the insurance money hit in less than 6 weeks), dependable payment, and paid more than the negotiated Medicaid price.
We have the example in organization HSA plans. It would require political will to apply it to Medicaid patients and the poor, but if it were, it would both work, and save lots of money.
That's kinda my point. Your HSA gives you the incentive to be frugal with less than $10,000 of your spending. It doesn't give you any incentive to be careful about the remaining $450,000 or $600,000 or whatever. You have the incentive to shop for the lowest co-pays, and not the lowest-cost procedures. And even that small part doesn't give you much incentive. Are you going to quibble over whether one provider will mean $9,500 out-of-pocket versus another provider, where the co-pay will be $9,750? My guess is that you'll pay far more attention to the provider's reputation, the convenience of the facility, whether someone you know has used this provider, etc. I doubt that the savings would be substantial. IMHO of course. :)
Actually, I'm frugal to start with. I grew up poor and never rose above lower-middle class until I was 50. I'm just pointing out that the frugality is systemic when properly constructed and used. I was in excellent health when I first used it, and it was still a good deal for everyone concerned.
When I suddenly needed more medical attention, it was available and I didn't need to worry about the 20% copays bankrupting me.
Sure, we might have to train and encourage proper usage, but are we pretending poor people are too stupid to learn? My paper was quite lengthy and addressed that problem. In brief, govt 'fills' the HSA up to the limit (around $2600 for a single person, rising to maybe $10,000 for a large family). At the end of the year half of any unused HSA money can be used by the insured to spend, untaxed. The rest goes into an investment account managed by pros (I used HealthEquity, and they're excellent) that can only be accessed upon retirement or death.
I'm not trying to be rude, but I've studied and used this for a great many years and I have difficulty seeing how it's not overall better than other actual alternatives. For one thing it makes fraud by health care providers much harder.
Perhaps you could consider an entry here that you deliberately bias in favor?
I admit there are lots of moving parts, but it's only complicated, not complex. The difference between understanding how to maintain and repair a gasoline V-8 versus understanding the complete physics of why the engine produces energy at all.
Benefits I have not really mentioned? You get to choose any doctor you want, and doctors know they will get paid appropriately and quickly. Visits to crowded ERs for minor problems ill drop a lot. Poor people tend to use the ER as their Personal Care Physician, and that doesn't work well.
Reduced paperwork because you don't have to deal the the govt health care bureaucracy. Less emotional stress because you know you can get necessary treatment when needed.
I am obviously a booster, for sure. Were I a bit younger and still teaching, perhaps I would research how many people with HSA + catastrophic insurance are unhappy with them and why. I was unable to find any such in the relatively few I knew (perhaps 25) at my university. My wife's employees ALL get HSA+. They originally hated the idea. It was made their only choice. Now there appear to be few if any complaints (after 5 years +) from the 400 or so insured.
I'm not opposed to HSAs. I've had HSAs and HRAs. I never had any complaints about using them. I just disagree with those who assume that they will or can push total healthcare spending down by a significant amount. Only a small fraction of overall hc spending is covered by HSAs, and the direction of impact on total spending is ambiguous. They create an incentive to shop around, so that would seem to encourage LESS spending in dollar terms. But by relieving patients of out-of-pocket spending, they encourage MORE overall spending. I have no idea which of these two effects dominates. HSAs have many virtues, but I've never heard a persuasive argument that they will reduce national health expenditures (currently $4.3 trillion) to any meaningful degree. I'm strongly in favor of hammers, despite the fact that they're not useful for sawing wood. I'm strongly in favor of HSAs, despite the fact that they're unlikely to have a major impact on total hc spending. No inconsistency in either case.
People spend for health care because they can. (I mean of course someone pays for it.) In that sense how it's paid for probably doesn't have much effect. But dealing with, say, Blue Cross/Blue Shield appears to give much less bureaucratic overhead than the various govt bureaus involved with Medicaid. I tend to think profit motives matter here. And vulnerability to some kind of punishment for getting it wrong.
So I would certainly settle for better health care for the same amount of expenditure even if it didn't lower expenditures overall.
Oh. And being frugal with the $10,000 (actually $4800/yr) automatically leads to being frugal with the rest. That is, you only get the big stuff when it's necessary. Otherwise you try to keep your (and thus the insurer's) costs down.
That's true for a small increment of healthcare spending. But once you have exhausted your HSA, that beneficial effect ends. Meaning that a huge, heaping portion of healthcare spending won't be touched. And again, that is not an argument against HSAs. Just an argument against betting that they'll be game-changers in total hc expenditures.
And I didn't mention one other potential effect. If you spend less on services A, B, C, and D and have some extra HSA funds left over, that does create an incentive to use those funds to buy E and F, which you wouldn't have bought otherwise. And again, I'm not saying that's a bad thing. But I do recall the use-it-or-lose-it warnings near the end of the fiscal year, at which time everyone ran out and bought extra pairs of designer glasses and such. Again--I'm not judging the merits of such extra spending. (I bought some of those extra designer glasses.) But it won't cut total healthcare spending.
> The emergency allowed states to serve as “laboratories of democracy,”
Honestly, I've never liked that metaphor much, because it's missing the most essential attribute of a laboratory: actual experiments.
A real experiment is designed, run, completed, and evaluated, but "laboratory of democracy" policies always seem to be missing those last two crucial steps. When's the last time you heard of a state allowing an experimental policy to sunset, or taking a hard look at its results and honestly, openly concluding that it turned out to be a failure?
All good points. But the phrase is out there, so what the heck? :)
And it's kind of a "natural experiment" and sometimes that's all we have.
> Rather than asking, “How can we increase coverage?” we can ask, “How can we provide better health to more people at lower cost, year after year?”
It's good to see people starting to see through the conflation of health *care* with health *insurance.* One of the strongest criticisms I remember being raised against the Affordable Care Act when it was still just a proposed bill was that you can't fix a problem by making it worse: the insurance system is responsible for so much of the problem with the health care system, so why feed tens of millions of Americans who've successfully evaded it thus far into its maw?
A proven solution that actually succeeds at lowering costs is what's called "restaurant pricing." It has two parts. 1) Every medical facility (hospitals, clinics, etc) publishes a public "menu" of every product and service they sell and what that product or service costs. 2) Everyone gets charged the price on the menu, regardless of how they're paying for it.
This simple, common-sense solution has a proven track record of driving medical costs down pretty significantly and improving care, through the basic market forces of transparency and competition. So of course hospitals and insurers fight tooth-and-nail against it whenever the idea comes up. But if we could get restaurant pricing instituted as national policy, it would go a long way towards fixing health care problems in this country. It wouldn't magically fix everything, but it's probably the single biggest improvement we could make.
Well ... by chance, this very day, I'm working on a post on the idea of mandating price transparency and why that would likely be ineffective or even counterproductive. Here's a paper I co-authored a few years ago on the subject: https://www.mercatus.org/research/research-papers/price-transparency-healthcare-apply-caution. Here's a shorter piece: https://insidesources.com/the-problem-with-transparent-health-care-prices/. And an article where I'm interviewed on the subject: https://dailycaller.com/2020/10/15/health-care-costs-price-transparency-not-solution/. And another: https://heartlanddailynews.com/2020/09/hospitals-insurers-must-post-charges-court-decides/. Hopefully, you'll see my new piece at Bastiat's Window in the next week or two.
All right. It looks like your main concern in the various pieces is that the pricing transparency in part 1 of restaurant pricing could enable higher prices through tacit collusion, (ie. having the same effect as collusion without any need to formally conspire together to raise prices,) by hospitals looking at each other's prices and raising them together.
I can see how that could be a legitimate problem — it does exist in other areas — but I have three objections to its applicability here, two theoretical and one empirical.
1) Hospitals already have a decent idea what their competitors are charging, because their competitors have negotiated deals with the same insurance companies that they have, and the deals are likely to be pretty similar. It wouldn't be as precise as the information they'd get from pricing transparency, but unless someone somewhere in this very high-stakes-big-money game somehow ended up bringing some seriously inept negotiators to the table, the information they have is likely to be "good enough."
2) Insurance will still be around. Point 2 of restaurant pricing means that they can't really raise rates much, because if they charge more than insurers are willing to pay, the insurers will stop covering their procedures.
3) The track record. As I mentioned, the reason I like restaurant pricing is because it has a long history of working well in practice, driving prices down, not up. It was very disappointing to see a representative of the Surgery Center of Oklahoma arguing against this basic fact, when he works at one of the prime examples of just how well this principle works in real life!
Tacit collusion is ONE concern, but it’s not the only one. On (1) Hospitals have a “decent” idea of what others are doing is by no means the same as knowing with certainty, because the prices are posted. On (2) insurers are happy to raise rates if they presume that regulators will jack up the premiums. These prices are not set independently. Plus, Medicare and Medicaid play a monster role in setting prices. (3) My good friend Greg Scandlen wrote a wonderful piece on why restaurant pricing has almost zero applicability to the healthcare market: https://www.healthworkscollective.com/gawande-s-kitchen/. Keith Smith of Surgery Center of Oklahoma is transparent because he WANTS patients to know his prices. He also knows that the big hospitals and insurers do NOT want patients to know their prices. So, the big hospitals and insurers will spend big bucks on lobbyists to write transparency-in-name-only regulations that will wreck Keith’s business but sail smoothly though big organizations that have sufficient capital to pay lots of accounts to bury the truth beneath an avalanche of paperwork, as per the regulations. You’re asking the government to solve a problem that the government created.
1) Fair enough. Since you seem to know this area pretty well, how big would you estimate the margin of error typically is on their "decent idea" guesses?
2) Yeah, this is why I've seen other analysts say it would be a good idea to implement restaurant pricing: if we can get the typical 70-80% price reduction across the board, the claim goes, that alone would fix the massive problems we have with Medicare and Medicaid costs blowing up our federal budget. (And yes, that "if" is doing a lot of heavy lifting. While I'm skeptical that we'd achieve quite that much, I do believe we'd get a fair amount of the way there.)
3) That doesn't appear to be an article on applying restaurant pricing to health care, but rather on applying principles of restaurant *operation*. And for the record, I agree with the points Greg makes there.
> So, the big hospitals and insurers will spend big bucks on lobbyists to write transparency-in-name-only regulations that will wreck Keith’s business but sail smoothly though big organizations that have sufficient capital to pay lots of accounts to bury the truth beneath an avalanche of paperwork, as per the regulations.
Perhaps. This is the standard "regulatory capture" argument, and it holds true in a lot of cases, but I feel I have to counter with the words of computer science pioneer Tony Hoare: "There are two ways of constructing a software design: One way is to make it so simple that there are obviously no deficiencies, and the other way is to make it so complicated that there are no obvious deficiencies."
This really feels like a "so simple there are obviously no deficiencies" plan. If the price on the menu says "this procedure costs $300," and the number on my bank statement doesn't say $300, it's obvious that something's wrong. That's simple enough that your average John Q. Citizen can immediately see the problem and raise a stink about it. (And yes, I am talking about numbers on your personal bank statement that can be easily checked. A big part of the goal is to make insurance far less relevant by driving down the costs of most medical care to the point where you can afford to pay for it yourself, rather than through an intermediary with all the monopsony and principal/agent issues inherent to such a model.)
> You’re asking the government to solve a problem that the government created.
Yes. Or in other words, to clean up their own mess. I'd ask the same of anyone who makes messes. (See also: Dobbs vs Jackson Women's Health.)
I, for one, would like to be able to 'shop' my health care purchases by seeing listed prices.
Nice if you can, but I'm skeptical of governments imposing requirements of this sort.
1) No idea
2) 70%-80% off of what? I'm skeptical that mandatory transparency would save anything. My assumption is that it would likely increase unit costs and perhaps overall costs.
3) I don't think this would be simple at all. What is to be transparent? 600,000 codes for individual slices of each procedure? Price for a suture? Price for a minute of RN time? Price for the bed? Or are you going to bundle--as most transparency folks suggest? In that case, you effectively build a system of tying arrangement, allowing providers to further jack up prices. Keith Smith can price as he does because the particular services he offers are relatively predictable in cost. He can absorb the variances from that price. (This is a conjecture. You'd have to ask him whether he agrees.) But what about services that can vary widely in cost, depending on dozens of factors? Are you going to give ONE single price for such a procedure, knowing that the provider might be forced to absorb huge residual risks? Or in such services, will you charge by the hour? Which creates a whole different set of transparency problems.
I don't see any real possibility that transparency mandates would clean up the government's mess. They would add an extra layer of complexity atop the mess that is already there. Sounds like a good idea, but ...
In the classic film, “The Magnificent Seven.” Vin (Steve McQueen) was a gunslinger hired to defend an impoverished village. After a pivotal battle, he was captured by the bandit Calvera (Eli Wallach), who asked him why he had accepted such a hopeless job. Vin responded, “It’s like a fellow I once knew in El Paso. One day, he just took all his clothes off and jumped in a mess of cactus. I asked him that same question, ‘Why?’” Stunned, Calvera asked why the man had done so. Vin responded, “He said, ‘It seemed to be a good idea at the time.’”
Please see my entry. It's brief, but I think you'll see the implications.
Another thoughtful post with great ideas. Your question “How can we provide better health to more people at lower cost, year after year?” Is truly the better question. I would also offer “How do we shift away from the idea that health is something purchased from experts toward a society that knows as individuals we are our own primary care providers through the actions we take every day?” When each one of us makes decisions about what we eat and how we live, expecting someone to later give us a pill or do surgery to correct the damage done seems the wrong way around. Certainly there are diseases and incidents that cause harm beyond our own reasonable control, and experts come in handy when that happens. But there are many other ways we can lead healthy lives without extremes in diet or activity, and if we did that there would be more available to treat the other stuff.
All reasonable, but the question is, of how much practical use is the observation? Many of our health problems (e.g., obesity) exist primarily because we choose other things (eating a lot, avoiding the gym, etc.) over being thin. We know the tradeoffs, we know the damage the condition does, and we do it anyway. (That's known as "rational obesity," and it accounts for a large majority of the cases of obesity in the U.S.) Some people expect the government to fix it, but to some extent, the government caused the problem in the first place. Then there are the "nudge" fans, who insist that restaurants post calories on menus, convenience stores not sell large cups, etc. It doesn't really work, and the most significant effects are to expand the enforcement bureaucracy and raise costs. I'll recommend a superb book on the topic--"The Fattenign of America," by Eric Finkelstein and Laurie Zuckerman.
Concur with all your points. I also share your reticence about more government involvement. Will check out the book you recommend as well. Thanks!
Perhaps 30 years ago, I wrote a public health policy for Robert Blank, then a leading Poli Sci expert in that field.
Part of the 35- or so - page paper was a suggestion for extending HSA type insurance to many possible clients who didn't work for companies that had the capacity to do so.
Briefly, I believe that the feds could randomly sort, say, 50-100,000 potential individuals/families that are either on Medicaid or uninsured/underinsured and have insurance companies bid to sell the government HSA + catastrophic health insurance for that group. In addition, for very poor individuals/families, the feds could create and fill the HSA accounts up to equal the copays/deductibles. Just like regular HSA, anything left over for the year could go into a pre-tax investment account. I understand that not all would understand that last part, but still . . . And you could put into the account on a sliding scale, like the idiotic ACA up to maybe 4 times the poverty level.
I don't have the numbers any longer, and they would be dated anyway, but back then the cost was way less than the cost of Medicaid and the management of Medicaid. Plus it would save resources of hospitals and doctors' offices.
Please think about that, in a fleshed out form.
I got an A for the paper, and Prof Blank loved the idea, but said it would never get passed due to rent seeking. I agreed, but I still think it would work.
I've never been as excited about HSAs as a lot of friends of mine are. I remember ideas like this, but the costs were scored as prohibitive. It still doesn't deal with catastrophic costs, as no HSA is going to cover the costs of vastly expensively procedures. And, as your prof said, it isn't goign to get passed. Especially if there's a chance that it will work.
Odd. Mine, to date, has covered a cervical spine vertebra replacement, a five vertebra lumbar fusion, an emergency gallbladder removal, a robotic prostatectomy, radiation treatment following that, and a bunch of regular stuff over the past 10 year. Total billed cost well north of $600,000, negotiated cost about $450,000. My total out of pocket less than $10,000. And that came out of my HSA account. Plus when I retired and moved to my wife's HSA I had $10,000+ in the HSA investment account that was all pretax dollars to spend on future medical costs.
The cost to me of the insurance was about $50/mo from my paycheck, and I filled my HSA, which was allowed $4400/yr pretax dollars since I was over 55.
The cost to my employer was the $600 they put in my account every year plus about $3500 for their share of the catastrophic insurance costs. Prior to that, at least in 2010, their average cost per employ for pretty regular 80/20 coverage was just over $7000.
They cut their costs by about 40% in my case. I 'saved' probably $90,000 in copays, and I had no "network" to be in. I could go anywhere I pleased for health care.
So I was putting in (counting the employer $600) about $5000yr pretax which meant I was saving about another $1500 in federal and state taxes.
I fail to see how that is even close to prohibitive. ANd of course it deals with catastrophic costs, that why the insurance is called "catastrophic insurance". ;)
Since one of my regular courses was Local Public Budgeting I looked the numbers over very carefully.
Of course, it really only works for the insurance company when it s spread over large numbers of insured, but that's easy to do.
The advantage to doctors and hospitals is relatively quick payment (usually the insurance money hit in less than 6 weeks), dependable payment, and paid more than the negotiated Medicaid price.
We have the example in organization HSA plans. It would require political will to apply it to Medicaid patients and the poor, but if it were, it would both work, and save lots of money.
IMHO of course.
That's kinda my point. Your HSA gives you the incentive to be frugal with less than $10,000 of your spending. It doesn't give you any incentive to be careful about the remaining $450,000 or $600,000 or whatever. You have the incentive to shop for the lowest co-pays, and not the lowest-cost procedures. And even that small part doesn't give you much incentive. Are you going to quibble over whether one provider will mean $9,500 out-of-pocket versus another provider, where the co-pay will be $9,750? My guess is that you'll pay far more attention to the provider's reputation, the convenience of the facility, whether someone you know has used this provider, etc. I doubt that the savings would be substantial. IMHO of course. :)
Actually, I'm frugal to start with. I grew up poor and never rose above lower-middle class until I was 50. I'm just pointing out that the frugality is systemic when properly constructed and used. I was in excellent health when I first used it, and it was still a good deal for everyone concerned.
When I suddenly needed more medical attention, it was available and I didn't need to worry about the 20% copays bankrupting me.
Sure, we might have to train and encourage proper usage, but are we pretending poor people are too stupid to learn? My paper was quite lengthy and addressed that problem. In brief, govt 'fills' the HSA up to the limit (around $2600 for a single person, rising to maybe $10,000 for a large family). At the end of the year half of any unused HSA money can be used by the insured to spend, untaxed. The rest goes into an investment account managed by pros (I used HealthEquity, and they're excellent) that can only be accessed upon retirement or death.
I'm not trying to be rude, but I've studied and used this for a great many years and I have difficulty seeing how it's not overall better than other actual alternatives. For one thing it makes fraud by health care providers much harder.
Perhaps you could consider an entry here that you deliberately bias in favor?
I admit there are lots of moving parts, but it's only complicated, not complex. The difference between understanding how to maintain and repair a gasoline V-8 versus understanding the complete physics of why the engine produces energy at all.
Benefits I have not really mentioned? You get to choose any doctor you want, and doctors know they will get paid appropriately and quickly. Visits to crowded ERs for minor problems ill drop a lot. Poor people tend to use the ER as their Personal Care Physician, and that doesn't work well.
Reduced paperwork because you don't have to deal the the govt health care bureaucracy. Less emotional stress because you know you can get necessary treatment when needed.
I am obviously a booster, for sure. Were I a bit younger and still teaching, perhaps I would research how many people with HSA + catastrophic insurance are unhappy with them and why. I was unable to find any such in the relatively few I knew (perhaps 25) at my university. My wife's employees ALL get HSA+. They originally hated the idea. It was made their only choice. Now there appear to be few if any complaints (after 5 years +) from the 400 or so insured.
Anecdotal, but real.
I'm not opposed to HSAs. I've had HSAs and HRAs. I never had any complaints about using them. I just disagree with those who assume that they will or can push total healthcare spending down by a significant amount. Only a small fraction of overall hc spending is covered by HSAs, and the direction of impact on total spending is ambiguous. They create an incentive to shop around, so that would seem to encourage LESS spending in dollar terms. But by relieving patients of out-of-pocket spending, they encourage MORE overall spending. I have no idea which of these two effects dominates. HSAs have many virtues, but I've never heard a persuasive argument that they will reduce national health expenditures (currently $4.3 trillion) to any meaningful degree. I'm strongly in favor of hammers, despite the fact that they're not useful for sawing wood. I'm strongly in favor of HSAs, despite the fact that they're unlikely to have a major impact on total hc spending. No inconsistency in either case.
People spend for health care because they can. (I mean of course someone pays for it.) In that sense how it's paid for probably doesn't have much effect. But dealing with, say, Blue Cross/Blue Shield appears to give much less bureaucratic overhead than the various govt bureaus involved with Medicaid. I tend to think profit motives matter here. And vulnerability to some kind of punishment for getting it wrong.
So I would certainly settle for better health care for the same amount of expenditure even if it didn't lower expenditures overall.
Oh. And being frugal with the $10,000 (actually $4800/yr) automatically leads to being frugal with the rest. That is, you only get the big stuff when it's necessary. Otherwise you try to keep your (and thus the insurer's) costs down.
That's true for a small increment of healthcare spending. But once you have exhausted your HSA, that beneficial effect ends. Meaning that a huge, heaping portion of healthcare spending won't be touched. And again, that is not an argument against HSAs. Just an argument against betting that they'll be game-changers in total hc expenditures.
And I didn't mention one other potential effect. If you spend less on services A, B, C, and D and have some extra HSA funds left over, that does create an incentive to use those funds to buy E and F, which you wouldn't have bought otherwise. And again, I'm not saying that's a bad thing. But I do recall the use-it-or-lose-it warnings near the end of the fiscal year, at which time everyone ran out and bought extra pairs of designer glasses and such. Again--I'm not judging the merits of such extra spending. (I bought some of those extra designer glasses.) But it won't cut total healthcare spending.