HSAs…Wise? – One of the central pieces of President Bush’s healthcare reform package is HSAs.
This experiment in coverage has been slowly, but surely gaining momentum over the past few years, despite many critics cries that they are the wrong answer for our health system.
Now I don’t know if they will have the cost lowering effects that the President claims they will have, but I do think that they will continue to grow in popularity and that they will have a positive impact on our health system.
I believe HSAs will grow because of one unavoidable fact about the employer-based system. While employers derive benefits from covering their workforce, it is the individual who is ultimately interested in her own health. Early adopters have shown that people are willing to take their healthcare spending decision into their own hands. Critics may argue that it is the wealthy and healthy that have opted for HSAs. This may be true, but there hasn’t been a critical mass of employers offering these plans as of yet. As more employers offer these plans, the less wealthy and healthy will have the opportunity to weigh the costs and benefits for themselves. I think critics will be surprised at the choices that people make. While there will certainly be some apprehension about converting to an HSA (they are new and different), the incentive to “take the risk” is substantial. Instead of the employer paying a premium to an insurance company (a benefit the employee may infrequently use and almost certainly undervalues), the employer would be paying the employee to manage their own health. Something more and more of our citizenry want to do anyway. And how will HSAs benefit our health system? I actually see HSAs as an evolutionary change in health coverage. Again, critics claim that high healthcare utilizers won’t choose these plans. That conclusion makes two assumptions. The first is that the current coverage options will be available. There is no guarantee of this. Insurers have been developing consumer-driven plans like mad and it is only a matter of time before employers start offering them and before HSAs start replacing plans that are higher cost to employers. This is going to change the calculus of health care coverage. When a full-coverage PPO is not an option, then the good old “it’s covered” approach to healthcare decisions won’t be sufficient anymore. The “risk” of HSAs may look a little different in this light. A second assumption is that employers have an obligation to subsidize healthcare costs (and therefore always will). To the surprise of some, my strongest reason for supporting HSAs is not that they create a more efficient market-driven healthcare system. I think that there could be benefits from a more market-driven healthcare system, but I have a firm belief that, as a society, we have become too dependent on someone else paying our healthcare bills. If I utilize healthcare services, I should pay for them. They benefit me and my family. This doesn’t mean that I believe a heart surgery should put a family in the poor house, but lets recognize who is truly responsible for the paying the cost of care – the individual who utilizes it. To the extent that they benefit my employer and my employer wants to help subsidize the cost, great. To the extent that society is improved when its members (especially those with less means) are healthy and productive, then let the government chip in with our tax money. To the extent that the cost of catostrophic risk can be minimized through high-deductible risk pools (i.e. - insurance), then lets do that.
I believe the time of corprately micro-managed healthcare decisions is coming to an end. HSAs make the patient the payer and the ultimate decision maker. That is how it is in almost all other facets of our life and that is how it should be in healthcare. There are certainly other fixes our health system needs, but this is a re-alignment that needs to happen.