Health Savings Accounts - Can Capitalism Deliver Care Better and Cheaper than Socialism?

Prelude: On August 12, 2009, I wrote a blog containing excerpts from a WSJ article by John MacKey, CEO and Founder of Whole Foods, a national food chain featuring home-grown fresh foods. The article’s title was “The Whole Foods Alternative to ObamaCare,” and it suggested (Gasp!) that capitalism could deliver care better and cheaper than socialism. MacKey led off his piece with a Margaret Thatcher quote,

“"The problem with socialism is that eventually you run out of other people's money."

Liberals were outraged. Their bloggers had a heyday. They recommended shoppers boycott Whole Foods. Its owner, they asserted, had passed over to the dark side. Now, of all places,"The New Yorker, the doyen of liberal publications, has published a 9000 word profile on MacKey. It is called “The Food Fighter” in its January 4, 2010 edition.

Here are eight reforms MacKey said would greatly lower the cost of health care for everyone:

1. Remove the legal obstacles that slow the creation of high-deductible health insurance plans and health savings accounts (HSAs). The combination of high-deductible health insurance and HSAs is one solution that could solve many of our health-care problems. For example, Whole Foods Market pays 100% of the premiums for all our team members who work 30 hours or more per week (about 89% of all team members) for our high-deductible health-insurance plan. We also provide up to $1,800 per year in additional health-care dollars through deposits into employees' Personal Wellness Accounts to spend as they choose on their own health and wellness.

Money not spent in one year rolls over to the next and grows over time. Our team members therefore spend their own health-care dollars until the annual deductible is covered (about $2,500) and the insurance plan kicks in. This creates incentives to spend the first $2,500 more carefully. Our plan's costs are much lower than typical health insurance, while providing a very high degree of worker satisfaction.

2. Equalize the tax laws so that employer-provided health insurance and individually owned health insurance have the same tax benefits. Now employer health insurance benefits are fully tax deductible, but individual health insurance is not. This is unfair.

3. Repeal all state laws which prevent insurance companies from competing across state lines. We should all have the legal right to purchase health insurance from any insurance company in any state and we should be able use that insurance wherever we live. Health insurance should be portable.

4. Repeal government mandates regarding what insurance companies must cover. These mandates have increased the cost of health insurance by billions of dollars. What is insured and what is not insured should be determined by individual customer preferences and not through special-interest lobbying.

5. Enact tort reform to end the ruinous lawsuits that force doctors to pay insurance costs of hundreds of thousands of dollars per year. These costs are passed back to us through much higher prices for health care.

6. Make costs transparent so that consumers understand what health-care treatments cost. How many people know the total cost of their last doctor's visit and how that total breaks down? What other goods or services do we buy without knowing how much they will cost us?

7. Enact Medicare reform. We need to face up to the actuarial fact that Medicare is heading towards bankruptcy and enact reforms that create greater patient empowerment, choice and responsibility.

8. Finally, revise tax forms to make it easier for individuals to make a voluntary, tax-deductible donation to help the millions of people who have no insurance and aren't covered by Medicare, Medicaid or the State Children's Health Insurance Program.

Dr. Richard Reece is author, blogger, speaker, and innovation and reform commentator. Dr. Reece’s latest book, Obama, Doctors, and Health Reform (IUniverse.com) is available at www.iuniverse and other book websites. For information on speaking fees and arrangements, call 860-395-1501.