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

As we head into the election year, we’re going to be inundated with claims, counter-claims, accusations and puffery from candidates at all levels. To separate truth from fiction, I strongly recommend subscribing to FactCheck.org.
To date, some of the most outrageous claims have been about health care. Here’s a few examples pulled from FactCheck’s research.
— Pres. Bush’s veto of the SCHIP bills were based on his claims that the legislation would result in governmental funding of health care for kids in families making up to $83,000 a year. Not true. He also claimed SCHIP was for poor kids – it isn’t – Medicaid is.
–Meanwhile, Congressional Democrats were taking credit for a bill that they claimed would lower Medicare drug costs by allowing HHS to negotiate with drug companies. Yes, Sec. Leavitt could negotiate, but the bill gave him no leverage and prohibited exclusion of some drugs.
–Sen. Edwards claimed that he would force Congress to pass universal coverage or he would take away their health care. But he has no authority to do so, making his claim an empty threat.
–While Edwards was taking credit for what he would do (but can’t), Hillary was falsely taking credit for something she didn’t do – providing health care coverage to National Guardsmen and reservists. (To be fair, she did help expand their coverage and access to same, but her role, and the result, was not nearly as broad as she implied.)
–GOP candidates weren’t spared. Rudy Giuliani butchered statistics in his claim that prostate cancer victims in England had a survival rate of 44%, due to the country’s socialized medicine system. He not only conflated England with the UK, he also used completely false data to make his claim.
–Rudy G gets the award for most bizarre claim; if 50 or 60 million individuals bought their own health insurance, the price of health insurance would be cut in half. That’s just a stunner.
–Mitt Romney, he of the Massachusetts health care reform plan, claimed that “HillaryCare” would be socialized medicine, while his Mass plan is not. Leaving aside the question about what exactly is socialized medicine, what is clear is both plans share a lot more similarities than differences.
— (this isn’t specific to health care, but nonetheless telling) – The US Chamber of Commerce falsely claimed that abusive lawsuits cost the average family $3500 a year.
The net – be very suspicious of politicians bearing categorical statements.

It was all I could do to not steal his idea.
Bob Laszewski and I were catching up yesterday when he told me about an interview he did with an LATimes reporter. The reporter was working on a story about how several of the GOP candidates’ would likely not be able to get insurance if their health care platforms actually became law.
Fortunately Bob posted on it today, ending my temptation.
The net is this – four of the GOP candidates have had bouts with cancer. In most states, none could get affordable coverage in the individual market today, and their ‘reforms’ would make it even less likely.
And all of them are calling for the free market to solve the coverage problem, including Romney who is actually stumping for less regulation of the insurance market. Makes you wonder if they have any idea what they’re talking about…

In a reminder of just how disconnected some of us (i.e. me) are from most Americans, a New York Times poll recently came out with all kinds of detailed stats about which candidates are favored by whom how much and why. I was buried in the article, pulled this way and that, contemplating implications and potential campaign changes, looking for new information, subtle implications, analyzing details and pondering away.
And at the end of the piece this priceless line smacked some sense into me:
(the poll) “also found that 45 percent (of Republicans) were unable to say what Mr. Romney’s religion was.”
Yes, health care is important. So is Iraq, and abortion and gay rights and education and taxes and the economy. But most Americans are not paying attention, at least not yet.

Bob Laszewski reviews Mike Huckabee’s health care position over at Health Policy and Markets. The net is there’s nothing much different from the other GOP candidates’ positions.
As Bob (and I, and others) have noted previously, there’s just a lot more to the Democratic candidates’ positions on health care than their GOP opponents. Edwards, Clinton, Obama, Richardson all have pretty detailed proposals, while Giuliani, McCain, Romney and Huckabee stick with lists of principles or concept.
There is nothing inherently wrong with either approach, although the public’s high level of interest in health care reform might reward a candidate who appears more interested in the issue. Conversely, the details put out by the Dems may be their undoing.
Any detailed proposal has more vulnerabilities than a ‘policy’ that is limited to general statements.

A strong dose of consumerism will solve the health care cost crisis because people will be more careful in spending their own money than they are when bills are paid by great big insurance companies. That’s the theory behind the latest ‘innovation’ in health insurance – consumer directed health plans (CDHPs).
Unfortunately, that theory doesn’t work very well in the real world.

Continue reading Consumerism’s big problem – reality

I’ve been following with interest the political slap fight surrounding the Obama v Clinton/Edwards positions on mandated coverage. And just when I was getting ready to wax eloquent yet again, into the mailbox arrives Maggie Mahar’s well-written, comprehensive, thoughtful and adult discussion of the subject.
Dammit, she’s hogging all the good stuff.
And I have nothing to add. At least not now.