Thursday, November 18, 2004
Faulty logic: We are hearing more about health savings accounts - something Bush was promoting during the presidential campaign. We won't go into all the details or our objections to them, but it's useful to read what Bush said about them in the third presidential debate. He said: (emp add) There is a -- look, there's a systemic problem. Health care costs are on the rise because the consumers are not involved in the decision-making process. Most health care costs are covered by third parties, and therefore, the actual user of health care is not the purchaser of health care. And there's no market forces involved with health care. It's one of the reasons I'm a strong believer in what they call health savings accounts. These are accounts that allow somebody to buy a low-premium, high-deductible catastrophic plan and couple it with tax-free savings. Businesses can contribute, employees can contribute on a contractual basis. But this is a way to make sure people are actually involved with the decision-making process on health care. First, knock down the assertions: - The "consumers" of company provided health care are the companies. They care about the costs and do what they can to find, or bargain for, low rates.
- There are "market forces" involved with health care (see above).
Bush is selling the idea that if each person purchased health care, he or she would shop around for the best deal. Sort of like looking for the best value for a can of beans in the supermarket. But there are problems with that model. First of all, individuals are unlikely to be skilled at choosing the right plan. Staff at a company, staff dedicated to handling the health care of employees, will be better at it than an individual and make better choices. Second, the notion that moving from centralized purchasing to diffuse one will mean lower prices is absurd. Why is Wal-Mart so successful? Because they can negotiate with strength. Bush is saying the opposite, that multiple small buyers will do better. Third, health care is not like a can of beans. It doesn't correspond well to an idealized market (many suppliers, many purchasers, trading all the time, transparency, etc.) Health care often has limited choices, and it has "stickyness" (rules about preexisting condition), to name a couple of problems.
posted by Quiddity at 11/18/2004 01:39:00 PM
8 comments
Another point -- there is no such thing as a "low cost" premium available. Health savings are a very bad idea.
I agree. In fact, the "business of insurance" was exempted from the regulation of interstate commerce by Congress in the McCarran-Ferguson Act of 1946 and subject to state regulation. All insurance is price regulated albeit the prices are fixed by the industry through group price fixing pools. Exempt from the antitrust laws by this exemption as well as a number of other antitrust exemptions, like the Noerr-Pennington First Amendment lobbying exemption,, the industry is goiven wide latitude to fix the prices for health care and the premiums for insuring it. Bush's fix is total mockery of American ignorance and impotence. I have the health care savings plan for my business and since I have no alternative excep price gouging HMO's and alternative plans, there is no choice but to be gouged.
Crap! I would buy those between employers before there was COBRA -- or when COBRA was way too expensive -- or when an employer didn't start paying for insurance for 60 days. They are only good for a real disaster.
And last time I spent 2 days in the hospital it was 25K. Who can afford a big deductable on that kind of cash?
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