Monday, March 1, 2010
Health Savings Accounts - Savings Achieved Through Health Savings Accounts
"In Indiana's HSA, the state deposits $2,750 per year into an account controlled by the employee, out of which he pays all of his health bills. Indiana covers the premium. The intent is that participants will become more cost-conscious and careful about overpayment and overutilization. HSA Options have proven highly popular. This year, over 70% of our 30,000 Indiana state workers chose it.".
Mitch Daniels, Governor of Indiana, “Hoosiers and Health Savings Accounts,” Wall Street Journal, March 1, 2010
"In the long run, the only way to spend less on health care is to consume less health care. Someone, sometime, has to say no. But the incentives under our current health system perversely encourage everyone to say 'yes.' "
Michael Tanner, “The Case for High-Deductible Health Insurance," Real Clear Politics, March 1, 2010
As Julius Ceasar said, “Beware the Ides of March!”
On this first day of March, 2010, health costs are dragging down the U.S. economy and driving up the U.S. deficit. No silver bullet looms on the horizon. You can introduce Obamacare with government controls on costs. You can drive out “fraud , waste, and abuse." And you can reform malpractice, shop comparatively through exchanges, and stress preventive care. Through all of this, costs will be guaranteed to continue to rise.
Ultimately to control costs, you have to come to grips with reality. The reality is: costs will only come down and government will only save money, when consumers are spending their own money.
As long as people are spending other people’s money for care – government or private insurance- they will consume more care. Today only 13 cents of every dollar is spent by the person consuming the care. Because of this, patients and doctors are unaware of what health care actually costs.
Sometimes, as with the seemingly intractable problem of containing health costs, the solution is right in front of our nose. The solution is Health Savings Accounts (HSAs).
HSAs are popular. In Indiana, only 3% of state employers reverted back to PPOs after experiencing HSAs. The state savings of 11% were solely due to the HSA option. In 2009, workers with HSAs visited ERs 67% less frequently, they used generic drugs more often, they were admitted to hospitals half as often as colleagues in PPOs.
Furthermore, says Governor Daniels, his state’s HSA experiment proves, “Americans can make sound, thrifty decisions about their own health. If national policy trusted and encouraged them to do so, our skyrocketing health care-costs would decelerate.”
Present House and Senate bills veer the opposite direction. Consumer share of spending declines to ten cents of every dollar, and policies with HSAs and high deductible are virtually eliminated. These policies, if enacted, will ensure relentless rises in costs.
Finally, a plug for my two most recent books.
One, in Innovation-Driven Health Care (Jones and Bartlett, 2007), I have a 17 page chapter on HSAs from the employers, physicians, and consumers points of views. All these HSA participants endorse HSAs.
And in Obama, Doctors, and Health Reform (IUniverse, 2009), I feature an interview with Greg Datillo, a health care agent in St. Paul, Minnesota, who says once employers and employees experience HSAs, there is no going back. Money is saved, access is expanded, the employed uninsured become insured, and consumers take responsibility for their health and their own money.
In my words, “When health consumers spend their own cash, they ask what things cost and do nothing rash.” Consumers, in short, are very smart people. They know how to negotiate with doctors, how to save money in the short term, and how to set aside money for their retirement.