My post on HSAs earlier this week struck a few nerves, with several coming to the defense of HSA. Some raised good points; others appeared to misunderstand the point of the original post.
Let’s start with an easy one. A reader opined that 20-25% of the uninsured make over $75,000. Not so. The Employee Benefit Research Institute reported that 14% of the uninsured had family incomes over $75k (2006 data).
One noted that they make “health care more affordable for the majority of consumers”; I think the commenter is conflating health insurance with health care. HSA plans may make insurance more affordable, but health care costs are not any cheaper under HSA plans. In fact, HSA plans’ higher out-of-pocket costs may make health care costs less affordable.
Another said “hypocracy (sic) exists with political scientists disbelieving that individuals cannot make wise healthcare buying decisions”; I’m not a political scientist so I can’t speak to that. I do know that the lack of actionable information re physician quality, outcomes, and costs is well-documented and real. And without information individuals can’t make wise decisions.
Yet another claimed “Anyone who pays taxes will make out being in an HSA”. I agree – what the commenter missed was the topic sentence of the original post “The article notes that the “biggest beneficiaries” of health savings accounts “are proving to be well-to-do investors looking for another way to fund their retirement savings.” Everyone benefits, but the biggest beneficiaries are well to do investors. If you disagree, write to the WSJ.
A critic claimed that studies indicate “individual policies that are HSA-qualified cost 20 percent less than non-HSA-qualified plans…They also show about 25 to 30 percent of individuals purchasing HSA-qualified policies were previously uninsured.”
Agreed, at least partially – HSA plans are cheaper than non-HSA plans only if the deductible differential is taken into account. The price difference is because HSAs have more cost-sharing. As to the claim that 25-30% of HSAs were bought by those previously uninsured, I have not found a solid study that backs up that contention. Jonathan Gruber of M.I.T. published a study indicating the number of uninsured may well increase due to the advent of HSAs.
Here’s what Gruber said:
“…currently employers have a large tax advantage in offering insurance, since wages are taxed but employer-provided insurance premiums are not, and this is part of the reason that so many employers provide insurance to their employees. This policy will remove that tax advantage for HSAs, causing some employers (typically small employers) to stop offering insurance coverage to their employees. Only about half of those employees dropped from employer-provided insurance enroll elsewhere, 4 million in non-group insurance (predominantly tax-subsidized HSAs) and 0.5 million in Medicaid. The remaining 4.4 million become uninsured.”
We do know that the percentage of employers in California offering health insurance has declined over the last few years, although we don’t have current data I’m pretty confident this trend has not reversed itself recently.
Comments are always appreciated, but comments that include citations are really much better. If you are going to cite facts or state positions based on a particular “fact”, please cite a source.

Today’s anointed front-runner in the GOP is John McCain (a position he may hold longer than Sen. Obama did on the other side of the aisle). Here’s where the senator stands on health care.
Analysis
The quick take is this: McCain’s plan has some strong points and resonates with Republicans, but most GOP voters aren’t thinking about health care.
While most other candidates are talking about covering the uninsured, McCain is focused on cost. More specifically, the cost of chronic conditions such as diabetes, asthma and CAD which account for 75% of the US’ entire $2 trillion health care bill. McCain is not just pointing out the obvious, he also plans to attack these costs by altering reimbursement – paying providers for maintaining health rather than reimbursing for specific procedures.
Here’s how McCain put it:
“We should pay a single bill for high-quality health care, not an endless series of bills for presurgical tests and visits, hospitalization and surgery, and follow-up tests, drugs and office visits,”
That makes a ton of sense. It is also entirely consistent with the views of George Halvorson, CEO of Kaiser Permanente, outlined in his book Health Care Reform Now (which came out just a few days before McCain’s first major speech on health care). If McCain is reading Halvorson, that’s a good thing.
So far, so good. So far.

Continue reading McCain’s health care plan

I (and others) have long opined that HSAs are thinly-disguised tax breaks for the well-to-do. Touted as a solution to the growing number of the uninsured and cited as the plan of choice for the newly-insured, HSAs have been the darling of the conservative think-tank set.
Now, the Wall Street Journal, that paragon of conservative ideology, has described Health Savings Accounts as “an astute financial strategy for the well-heeled” which “can provide a valuable source of retirement income alongside” other retirement vehicles.
The article notes that the “biggest beneficiaries” of health savings accounts “are proving to be well-to-do investors looking for another way to fund their retirement savings.”
Not the uninsured with modest incomes, not the middle-class families, not the near-poor, but the “well-heeled”.
In contrast, here’s what Grace-Marie Turner of the Galen Institute said about HSAs in 2006:
“Critics contend that HSAs will appeal only to the young, the healthy, and wealthy, but that doesn’t appear to be the case. Forty percent of HSA purchasers make less than $50,000 a year, about half are over age 40, and the biggest share of purchasers are middle-aged families with children.”
To be fair, Ms. Turner’s comments were almost two years ago, and the latest comments from the WSJ were likely based on more recent reports. But Ms. Turner’s comments were misleading even way back then in the early days of CDHPs. Her contention that critics said HSAs were for the young, healthy AND wealthy is a classic strawman. Most of the critics (myself included) based their criticism on the disingenuous marketing of HSAs as a solution for the uninsured when they are clearly not.
And now even the Wall Street Journal agrees.
Instead of mis-representing HSAs, Turner and her ilk should have been working to convince legislators and HSA marketers to alter the plan design to encourage preventive care and management of chronic conditions; income index out-of-pocket limits, and change from a deductible to coinsurance arrangement. I don’t know why these folks haven’t been pushing forward on such ideas, but it could be that these changes, which would certainly make HSA plans more useful and practical, will do little to reduce the tax burden of their wealthy backers.
It is clear that consumerism should be, and will be, a key part of the solution to the health care mess. No thanks to Ms. Turner et al.

Sen. Barack Obama has been taking hits for his ‘non-universal’ coverage approach to health care reform. His latest ads may indicate he is moving in the direction of ‘more’ universal coverage.
Policy geeks will recall the contretemps among the Democratic candidates over the universal coverage mandate. Obama doesn’t want to ‘force’ people to get insurance, while Clinton/Edwards believe a mandate is essential.
Obama’s point has been to focus on ‘cost’ first to reduce premiums, thereby making health insurance more affordable. In reality all three plans have essentially identical approaches to cost control – while Obama claimed his focus was different, the truth is the only meaningful difference was Obama’s plan did not require universal coverage while Clinton/Edwards’ did.
Given Obama’s big win in Iowa, it is clear that the difference did not hurt the Senator.
Or it could be Obama’s last minute TV ads (focused on his health care initiative) convinced caucus-goers that his plan really is universal. Because that is certainly the impression the ads gave.
It isn’t. Most analyses of the Obama plan indicate about 15 million will remain uninsured; while the Edwards/Clinton plans will theoretically cover everyone. (I know, it is highly likely some portion of the populace will always be without coverage – undocumented workers, folks changing plans, recent job or marital changes, and those on the fringes of society. But there will be a lot more covered by the Edwards/Clinton plan than by Obama’s.)
But that’s not the impression Obama’s ads gave.
The ad
— says Obama’s plan guarantees coverage for all Americans – but leaves out the part about not requiring coverage.
— claims it is the best, leaving viewers with the impression that the comparison is to his competitors, when the quote compared Obama’s plan to a single-payer system
— attempts to bolster the cost-cutting position by claiming the plan will save the average family $2500 – a figure calculated by his own advisers, based on a series of assumptions that are awfully similar to those made by Clinton and Edwards.
Unlike Clinton and Edwards, Obama appears to be less comfortable with governmental mandates and requirements. He’d rather encourage people to do the right thing than require them to.
That’s nice, and noble and all, but unrealistic. People don’t buy insurance unless they absolutely have to, and will do almost anything to avoid plunking down their cash (I’m speaking as one who sold insurance for years). Until the poop hits the fan, and then it is the most important thing in the world. And that’s where Obama’s plan breaks down. If everyone doesn’t participate, then payers will get hammered by adverse selection.
From here, Obama’s ads seem to indicate he is starting to recognize that inherent problem.

Among Democrats polled in Iowa who are most concerned about health care, Hillary Clinton has a substantial lead (38% v 21% for Edwards and 18% for Obama). While health care is not the top issue (the economy is), it is for 24% of Iowa Democrats.
And it remains a big issue for the rest of America – a gut issue, one that keeps voters up at night, worried about coverage for their moms, dads, and kids. It bleeds over to the economy and jobs – with health insurance tied to employment, many middle-class voters are keenly aware that losing a job means losing health insurance. This is not an esoteric, remote intellectual issue – it is the neighbor who just lost her job, the “pennies for a cancer victim” tin can at the convenience store, the parent too young for Medicare and too wealthy for Medicaid.
WIth the Iowa race wide open, the gut issue of health care could be a deciding factor.
The caucus environment is one where neighbors talk to neighbors about issues that concern them, and about which candidate is best suited to fix that problem. Yes, Hillary Clinton has her share of detractors, but many are undecided and Hillary owns health care. And that may just make the difference for her in Iowa.

One of the largely-overlooked problems in the health care reform debate is that of exclusions for pre-existing conditions. These exclusions, common in the individual market, essentially limit the insurer’s liability to those conditions that occurred after the insured obtained coverage.
From the insurer perspective, this makes sense – they don’t want to sign up folks who found out a week ago they have asthma diabetes and other expensive conditions, and now need some help paying the bills.
From the insured’s perspective it also makes theoretical sense – individuals will be more likely to sign up for insurance before they get a case of the horribles if they know they can’t get coverage once they are diagnosed. That’s the theory.
The reality is that the older we are, the more likely we are to have a condition or conditions that will require medical attention. Mine is cataracts, a situation that is not a big deal. Those with hypertension, COPD, diabetes, asthma, or cancer are much worse off – in many states they will not be able to get any coverage for those conditions.

Continue reading Fixing the pre-existing problem