Exploring the Eclipse of Equality

Health Savings Accounts: Coming to a conversation near you

In Uncategorized on March 1, 2010 at 2:06 pm

If you have to read one opinion piece today, I would recommend that you turn to the Wall Street Journal to see an idea coming out of Indiana from its governor Mitch Daniels that is likely to represent some large portion of what we will be talking about for the next few months.  The idea he discusses is Health Savings Accounts and is not new, but his use of it is masterful and it is linked with a nice set-up piece in the New York Times that will get more readers than would otherwise come.  Mitch Daniels claims that the use of Health Savings Accounts is working in Indiana to provide coverage and better than that, it is lowering the rise of health care costs in the state.

The way the plan is purported to work is fascinating and it will be really appealing to middle America. Basically, the plan looks like single payer coverage for expenses beyond $8,000 with the bonus that if you use no coverage, you can make $2750 for the year. This means that you get to bargain with your provider so that you save money until you face something catastrophic. You can make money if you are really abstemious and you only stand to lose a maximum of $5250  in cases where you need a lot of care. The clever use of market logic to get people to bargain for most of their routine care is intended to appeal to those who are uncomfortable with the “government takeover” of health care that the Obama administration is said to propose.

The devil of all such plans is in the details. I have not yet checked to see how families are treated and how people with different kinds of pre-existing conditions fare, and the expected limits payoffs can be easily manipulated to fool the unaware . I suspect that on the social science side, there are real problems in making the claims that the governor does. One assumes that younger and healthier people have opted into the plans and the before treatment comparisons are potentially difficult to control for. There could also be selection differences in terms of how assertive the people are who have opted to bargain for their care.

Whatever the science suggests (I am more than a bit suspicious of the plan. Daniels among his other accomplishments managed to hand over a free road to a foreign toll company), the timing and force of this argument trigger all my signals that this debate is going to get hot. The plan sounds brand new and it has evidence behind it of the kind that you would want to promote it. What the Republicans have convinced the people with so far is embarrassingly thin in comparison to this. Finally, the Republicans will now be able to claim that they have a plan to actually bend the cost curve rather than extend a kind of entitlement plan that we cannot afford. The fact that this sounds like a single payer plan for catastrophic insurance is smuggled in and is almost surely not true, so that aspect will have to be clarified.

Read up on this thing and learn to debate it if you care about health care in the U.S. Even if you are thinking about options in other countries you should think about this, because if the Republicans win this battle, in Republican ranks the idea will become like a light to the world from a city upon a hill.

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