It is a vicious cycle. The fewer people who are insured or the more it costs insured people to be stay insured because the hospital pass this on to the insurance companies who pass it on the members and employers. So, rates go up, and fewer employers offer insurance or offer high deductible plans.
In Feb08, health care inflation was 4.5% and the CPI was 4.0%. The major factor in health care inflation is Hospital Care (8.2% inflation). Further Inpatient Hospital Care was 8.1% and Outpatient Hospital Care was 9.8% during the same period of time. (Source: Health Inflation News).
I maintain my original position. All Americans are morally entitled to health care and health insurance.
I agree with this to a degree. I think its a disgrace that many americans don’t have access to quality health care. I think most people would agree with that. The debate usually arises when we discuss who is going to pay for providing medical care to those who are currently uninsured. Most of those who claim to be horrified by the current situation point their finger at someone else when we discuss who’s going to pay the bill ( ie: make the insurance companies pay, tax the rich, or the government should pay, as those these ideas were somehow the magic solution.). If we want this problem solved then everyone is going to have to be willing to pay.
musicmommy - 26 April 2008 07:22 PM
When debating parties begin parsing details like immigration rates, specialists vs. PCP’s, low salaries for MD’s etc, they are really just defending the indefensible status quo. Seeing the health care systems in Europe clearly is difficult if not impossible for many Americans who are used to thinking of money first and as the most important component of anything. So if European medical schools are full of potentially underpaid doctors, that says more about the writer of that statement than about the needs of those same doctors. Obviously the doctors either don’t need as much money as American doctors do or they must feel valuable in other intangible ways that are more meaningful.
There are many reasons why European doctors may be willing to accept less money, not the least of which is the fact that they don’t have to pay the $200,000 plus that American medical students have to pay just for medical school. They go for free, and in many cases their undergraduate education is free or a lot less expensive. Graduating medical school with that kind of debt burden and monthly loan payment is a huge burden. It also has to do with expectations to some degree. American medical students made the choice to go to medical school expecting they would get a certain payback for their steep debt load and lost years of income. If that changes there will still be plenty of kids going to medical school, it just won’t be the best and brightest. They will start choosing other careers in greater numbers.
musicmommy - 26 April 2008 07:22 PM
The truth is that higher taxes pay for medical care there, and it is “free” at time of visit in most of Europe. In America, we have some strange notion that taxes are basically unjust and we forget that taxes are the government’s way of ensuring the safety, health, education and welfare of its citizens.
Your right about this. As I stated above though. Everyone is all for government programs as long as someone else is footing the bill. Would you be willing to pay another 15% of your income to have universal health care?
musicmommy - 26 April 2008 07:22 PM
Comparing the 2 systems without being thoroughly versed in the completely different systems is useless, and the comparisons will suffer as a result because of unconscious pro-America prejudice.
I agree that you should know your subject before you discuss it, but no one is ever going to know everything about any subject. This is a bit of a defeatist approach to the problem. Are you saying we shouldn’t discuss any issue unless we are the world expert on it. I am by no means an expert on the European system, but I have researched it a bit too discuss it intelligently and am happy to learn more from those who have experience with these systems ( Isn’t that what these forums are about, we all learn from each other by discussing interesting or important issues and share what we know). I am much more versed in the American system having worked in it for 20 years, and am happy to offer my expertise here.
Thank you, macgyver, for the comments. I think that in general, most Americans do not understand what living in a collective society really means. By this I mean that the distinctly American attitude of disdain for those who cannot be self-sufficient in every way, perhaps stemming from the original need of those intrepid pioneers who settled our country to be so self-sufficient, this attitude of only being responsible for oneself and perhaps one’s family carries over to this day. Poor levels of education, particularly with regards to history, political science, global studies, and government, result in a populace who do not know how our country differs from the rest of the world and therefore do not have other models to use for comparison and improvement. We see the results of this myopia on many topics, not just health care- environment, immigration, global trade, etc. But we have been taught to “take care of ourselves”. I for one would be more that happy to pay higher taxes as a citizen who would then be guaranteed a certain level of safety and comfort, including health care, old age security, etc. The short-sightedness and ignorance that abounds and is fostered by corporate entities who profit from lax regulation is the result of deliberate manipulation which has worked for the corporations and the upper class. But it does not work in a society that wants long-term stability, and by long-term I mean more than the lifetime of one or two generations. Really providing decent health care to all Americans would necessitate not only a change in levels of taxation but a change in attitude, that we are all here to help take care of each other. Americans like to believe that they feel this way, but when it comes to paying for it, we suddenly revert to selfish, moralistic preachers of self-sufficiency- that is, until we ourselves become the one in need.
Thank you, macgyver, for the comments. I think that in general, most Americans do not understand what living in a collective society really means. By this I mean that the distinctly American attitude of disdain for those who cannot be self-sufficient in every way, perhaps stemming from the original need of those intrepid pioneers who settled our country to be so self-sufficient, this attitude of only being responsible for oneself and perhaps one’s family carries over to this day. Poor levels of education, particularly with regards to history, political science, global studies, and government, result in a populace who do not know how our country differs from the rest of the world and therefore do not have other models to use for comparison and improvement. We see the results of this myopia on many topics, not just health care- environment, immigration, global trade, etc. But we have been taught to “take care of ourselves”. I for one would be more that happy to pay higher taxes as a citizen who would then be guaranteed a certain level of safety and comfort, including health care, old age security, etc. The short-sightedness and ignorance that abounds and is fostered by corporate entities who profit from lax regulation is the result of deliberate manipulation which has worked for the corporations and the upper class. But it does not work in a society that wants long-term stability, and by long-term I mean more than the lifetime of one or two generations. Really providing decent health care to all Americans would necessitate not only a change in levels of taxation but a change in attitude, that we are all here to help take care of each other. Americans like to believe that they feel this way, but when it comes to paying for it, we suddenly revert to selfish, moralistic preachers of self-sufficiency- that is, until we ourselves become the one in need.
I don’t think that most people know that they are already in this type of system. If you are part of almost any type of health insurance you basiclly are paying for someone else’s healthcare. Insurance companies generally make money on males from there teens to mid-30’s and women from their early 40’s-50’s. It is these people who keep the insurance system afloat (again generally speaking). These are the drivers who never get into car accidents then pay for the insurance claims for other drivers. Most states require that all drivers have auto insurance, why not require this of health insurance?
Thank you, macgyver, for the comments. I think that in general, most Americans do not understand what living in a collective society really means. By this I mean that the distinctly American attitude of disdain for those who cannot be self-sufficient in every way, perhaps stemming from the original need of those intrepid pioneers who settled our country to be so self-sufficient, this attitude of only being responsible for oneself and perhaps one’s family carries over to this day. Poor levels of education, particularly with regards to history, political science, global studies, and government, result in a populace who do not know how our country differs from the rest of the world and therefore do not have other models to use for comparison and improvement. We see the results of this myopia on many topics, not just health care- environment, immigration, global trade, etc. But we have been taught to “take care of ourselves”. I for one would be more that happy to pay higher taxes as a citizen who would then be guaranteed a certain level of safety and comfort, including health care, old age security, etc. The short-sightedness and ignorance that abounds and is fostered by corporate entities who profit from lax regulation is the result of deliberate manipulation which has worked for the corporations and the upper class. But it does not work in a society that wants long-term stability, and by long-term I mean more than the lifetime of one or two generations. Really providing decent health care to all Americans would necessitate not only a change in levels of taxation but a change in attitude, that we are all here to help take care of each other. Americans like to believe that they feel this way, but when it comes to paying for it, we suddenly revert to selfish, moralistic preachers of self-sufficiency- that is, until we ourselves become the one in need.
Let me offer the following propositions as postulates. They are unprovable but self-evident.
1. Primary care (including family medicine, internal medicine and pediatrics, and the nurses, nurse practitioners and physician assistants we supervise) is the force that holds health care together worldwide.[1] Try to imagine the most tolerant of your specialist colleagues dealing with the worried well, the demanding executives and the crying babies you manage daily. You can’t. They are absolutely dependent on us. In contrast, we can always find a specialist.
2. The supply of primary care physicians is dwindling because of purely economic factors. If you are temperamentally suited and well trained, the long-term relationships of primary care can be professionally and emotionally satisfying. But the reimbursement differential with the specialties is so large that fewer medical students are signing up for primary care,[2] and we can’t blame them.
3. The economic differentials are established and maintained by the congressionally mandated Centers for Medicare & Medicaid Services, which established the Resource-Based Relative Value Scale, which is updated by the AMA’s Relative Value Scale Update Committee (RUC), which essentially sets Medicare’s relative value units, which determines payment rates. The RUC has always been dominated by procedural specialists, and there is no change in sight. Many private insurers have adopted the path of least resistance and base their fee schedules on the work of this self-serving committee.
4. Primary care will slowly strangle under the present paradigm - no matter how effectively we reinvent ourselves - because the RUC is not interested in, much less impressed by, our reinvention.
So what are we to do?
If these four postulates are correct, we’d better spend some time thinking outside the box. Here’s a start:
Scroll back to August of 1996. Bill Clinton was our president, elected on the promise (among others) to rein in “fraud and abuse” in health care. By that he meant Medicare, of course, because that was the area of health care on which he could bring the big guns of politically appointed federal prosecutors to bear.
We now think of the Health Insurance Portability and Accountability Act as a privacy statute. But in 1996, HIPAA (then known popularly as Kennedy-Kassebaum) was notable for its sharp teeth. For the first time, a physician could be prosecuted criminally for fraud. That meant jail, not refunds.
Some time in 1997 I saw a Medicare patient complaining of chest pain. I administered a treadmill in the office and found ST depressions characteristic of ischemia. She was referred to a cardiologist, who found significant stenosis on catheterization. He in turn referred her to a cardiothoracic surgeon, who performed a successful bypass.
A couple of months later I got a letter from Medicare asserting that my treadmill was unnecessary. I appealed, sending as evidence the reports of my consultants. My appeal was denied, and I refunded the money to Medicare. It was cheaper than hiring a lawyer.
Then I became acquainted with the felony provisions of Kennedy-Kassebaum. They were crystal clear, though buried in 150,000 pages of Medicare regulations. Had my patient suffered injury during my “unnecessary” treadmill, I could have lost my license and gone to jail.
Not long after, federal agents swept into the office of a family physician down the road, confiscating all of her office records. Although she was found innocent of wrongdoing, I imagine she had some difficulty getting her reputation back.
That was enough for me. I resigned from Medicare - and therefore Medicaid and CHAMPUS (now TRICARE). It was a package deal.
The authors of HIPAA thought the threat of losing the ability to participate in federal programs was a terrifying prospect for physicians. And, in fact, it is for some physicians - specialists.
It took me awhile to get the picture. The feds thought they had me over a barrel. In exchange for a reimbursement level that barely covered my overhead, given the complexity of problems with aging patients, they retained the privilege of tossing me in the clink if I screwed up. What a deal!
I hated to part company with my older patients, many of whom were friends. About a quarter continued to see me, paying cash for their office visits under the private contract provisions of HIPAA. (Their labs, X-rays, procedures, consultations and hospitalizations were still eligible for Medicare reimbursement.) I also decided to provide charity care for a few who really needed it. As for the others - well, I found out how much they valued a “medical home.” My services would have cost them fifty or a hundred bucks a year over what they would have paid under Medicare, but they moved on.
So I lost some patients who didn’t think my work was worth much, and my bottom line took an immediate jump to the north thanks to less red tape and more room in my schedule for patients with better-paying plans.
It certainly makes you wonder: What would happen if primary care resigned from Medicare?
Send comments to .
References
Starfield B, Shi L, Macinko J. Contribution of primary care to health systems and health. Milbank Q. 2005;83(3):457-502.
Match Summary and Analysis. Leawood, Kan: AAFP; 2007. Available at: http://www.aafp.org/match. Accessed Oct. 22, 2007.
I am a little late in recommending this paper, and forgive me if it’s to be found elsewhere on the site, but I just finished reading it and thought it was very interesting and may be helpful for others to read. Feedback, anyone?
Thanks for the link music. Its an interesting article, but I think it is flawed. I had never heard the term before, but The Moral Hazard is not a Myth. The author quotes an expert who claims this is a myth and then goes on to say that people don’t consume medical care like they consume other items. He says people only go to the doctor grudgingly. That is probably true for the majority of the population, but there is a fairly significant minority of “worried well”. These people are a small portion of the total, but make up a disproportionate part of the doctors schedule. The worried well show up at our door with every scary News report. They want whole body CT scans “just to be sure everything is OK”. They want antibiotics for every sniffle, and they want every ache or pain explained. In addition, if a doctor is even the least bit personable, there is a significant portion of the elderly population who literally go to the doctor as a social activity either to socialize with our staff, other patients, or with the doctor. Its sad but true.
Eliminating all costs to the patients will over time increase the cost of the system because people will, and do, grab “the free Pepsi when they’re not thirsty” and waste medical care. While I am all for some form of universal health care, the form it should take is something worthy of a good debate. I am a big fan of medical savings accounts. They force people to take some responsibility for their own choices in terms of lifestyle ( to smoke or not), when to go to the doctor ( is it worth it to see the doctor for a cold he can do nothing about), the care they receive ( do I really want to demand a head CT for this headache or accept the doctor’s professional opinion that its a sinus headache and try an inexpensive antihistamine for a week or two), and the medications they take ( should I demand the latests and greatest -and most expensive- medication for a particular problem, or accept the tried and true older medicine that’s available as a generic and costs 1/100th the price).
Human nature being what it is, when things are free we do waste them. Maybe not everyone, but enough people to increase costs for all the rest. Copays, deductibles, or medical savings accounts, whatever the system, there has to be some cost to the patient even in a universal health care system or eventually the costs will spiral out of control again.
Lets’ just assume that what you say is true, that the “worried well” will consume far more than their share of our health care services. This is your opinion and not fact, particularly so with regard to numbers, and I suspect your opinion derives from a basic belief in the ineptitude of government-run programs as well as a belief that people are basically greedy, both of which contain some truth and some fiction. Even if you are correct, one advantage of a government-run universal system would be that certain unnecessary and expensive services (eg- a request for a full-body scan for a hypochondriac) could be refused. This makes sense, as it correctly puts the burden of deciding on the shoulders of doctors, who are in the best position to make medical judgment calls anyway. Many doctors just give in to these types of patients now because they are afraid of ridiculous lawsuits. Tort reform would be necessary, but that would eliminate lots of other waste, no? And just to be argumentative, let’s say that a certain amount of unnecessary and costly procedures continue. Whatever waste occurs because of this will, although not welcomed, be seen as an unfortunate yet necessary side-effect in a system where everyone can at least get basic and humane care. What entity, business, family, corporation, etc. doesn’t have its share of waste? I consider the incomprehensible salaries of insurance and drug company executives to be incredibly wasteful, don’t you?
Medical savings accounts will only be useful for reasonable people who have enough foresight, ego strength, and money to be able to use them. How would it be determined which of us would be eligible for MSA’s? By income level? State residency? Age? What should happen to those who are either not eligible or have the means but can’t or won’t save anyway? So we’re back to true universal coverage. In my opinion, the only reasonable way to proceed. Thanks for listening!
I wouldn’t overestimate the effect of the “worried well”. After all, universal healthcare at this point is not some far-off hypothetical. It’s working very well in Europe and Canada. And while I’m sure there is some residual hypochondriac effect, overall their systems are significantly more efficient than our own. Indeed, any system of medical insurance has the same problem of the “worried well”, and insurance companies deal with these problems in different ways, e.g., as you note, by instituting co-pays, by needing doctors’ referrals to send you to a specialist, etc. Any universal system could use the same procedures. (Even a slight reduction in fees for non-smokers, etc.)
Medical savings accounts cannot be the full solution. Firstly, they would only work for people who have the money to save. Secondly they would not work for people who have grave illnesses while still young, before they’d had the chance to save any money. Thirdly they would give people the illusion of having “saved up” some money by the time they were old. This means that the people who had relatively healthy, uneventful lives would perhaps want to recover “their” money from the system. If so there would be no way to distribute payment of services over a broad population, as any insurance system must do. One reason that universal healthcare is so much the best option is that insurance becomes more efficient as larger percentages of the society are included: the well end up subsidizing the sick. That’s as it must be in any insurance system.
Further, any universal system can distribute preventative care over the largest possible percentage of the population. As things are now, the uninsured or under-insured tend to only see healthcare workers at the emergency room, which is the least efficient manner of care. Were they to have fully subsidized access to preventative care, the total cost to the system per person would go down.
Lets’ just assume that what you say is true, that the “worried well” will consume far more than their share of our health care services. This is your opinion and not fact, particularly so with regard to numbers, and I suspect your opinion derives from a basic belief in the ineptitude of government-run programs as well as a belief that people are basically greedy, both of which contain some truth and some fiction. Even if you are correct, one advantage of a government-run universal system would be that certain unnecessary and expensive services (eg- a request for a full-body scan for a hypochondriac) could be refused. This makes sense, as it correctly puts the burden of deciding on the shoulders of doctors, who are in the best position to make medical judgment calls anyway. Many doctors just give in to these types of patients now because they are afraid of ridiculous lawsuits. Tort reform would be necessary, but that would eliminate lots of other waste, no? And just to be argumentative, let’s say that a certain amount of unnecessary and costly procedures continue. Whatever waste occurs because of this will, although not welcomed, be seen as an unfortunate yet necessary side-effect in a system where everyone can at least get basic and humane care. What entity, business, family, corporation, etc. doesn’t have its share of waste? I consider the incomprehensible salaries of insurance and drug company executives to be incredibly wasteful, don’t you?
Medical savings accounts will only be useful for reasonable people who have enough foresight, ego strength, and money to be able to use them. How would it be determined which of us would be eligible for MSA’s? By income level? State residency? Age? What should happen to those who are either not eligible or have the means but can’t or won’t save anyway? So we’re back to true universal coverage. In my opinion, the only reasonable way to proceed. Thanks for listening!
I don’t necessarily disagree with you on this, but my opinion is based on 20 years practicing medicine. Since the introduction of managed care, I have noticed that there has been an increased use of services for rather minor problems. When you only have to pay $15-20 for an office visit or CT scan, people start coming in for minor problems that they would have taken care of on their own before. I don’t think this wasteful use of medical care for minor problems iis insignificant. Its just a rough estimate, but I would say that 20-30% of the office visits I see in a given day are for things that could easily be taken care of with over the counter remedies or a little patience. Over use of office visits is just one problem. I think the two biggest sources of wasteful use of medical care are the over use of medical tests to protect against lawsuits and the use of expensive drugs for non-life threatening medical problems. People now demand drugs like Nexium ( at over $5/pill) for their heartburn when most of the time a 5 cent Tums would do the job. Thats a fairly common occurence. There are many other conditions where the same problem arises. The interesting thing is that when people are paying out of pocket they are more than greatful if I find a generic drug they can use, but when the insurance company is paying for it they want the latest and most expensive drug available. I think its just human nature and something that has to be taken into account when we design a universal healthcare system.
As far as doctors giving in to patients because of fear of lawsuits, that is true but only part of the explanation. Doctors are also in ‘business’ and need to keep the patients happy or they won’t come back. This is unfortunate but true and so many doctors give the patients what they want. I have found that this is not actually the best practice. If you give in to these demands over time you end up with very demanding patients. In my practice I have a philosphy that may sound a bit paternalistic, but I think it has merit. We give the patient only what they need, not what they want. A patient may come in with a cold and want an antibiotic, when what he really needs is an education on the difference between viral infections and bacterial infections and the proper way to treat a cold. Unfortunately due to time constraints ( decreasing reimbursements mean doctors have to see more patients in less time - its faster to write an Rx for a patient than to educate him) and fear of losing the patient, many doctors just give him the antibiotic he wanted.
As far as MSA’s only beinig for the wealthy, or for those who can afford it, I guess I should have explained what I meant. MSA’s can work for everyone if they are implimented properly. An MSA is basically a catastrophic health insurance plan with a large deductible ( say $3,000 per family). To cover the deductible the individual then has an account to which he can contribute pretax dollars and take the money out as needed to cover medical expenses until the deductible is met. If the money isn’t used you can roll it over into the next year. It can even be used as an extra retirement account since the money can be withdrawn at retirement and used for any purpose. If the universal health insurance included such a plan the government could subsidize the MSA for poor people while higher earners would contribute to that account from their earnings on a sliding scale basis. Its just an idea, but I think any plan that doesn’t include a measure of personal resposibility to limit the overuse of medical care will suffer from overuse. This is a subject for a whole other post, but rationing of some sort will also be a necessary part of any plan that is going to be succesfull over the long haul. Like I said, given its enormous complexity, this whole subject would require a lot of discussion and thought before anything is done, but I firmly believe some type of plan has to be implemented. Our current patchwork approach is a disgrace.
I wouldn’t overestimate the effect of the “worried well”. After all, universal healthcare at this point is not some far-off hypothetical. It’s working very well in Europe and Canada. And while I’m sure there is some residual hypochondriac effect, overall their systems are significantly more efficient than our own. Indeed, any system of medical insurance has the same problem of the “worried well”, and insurance companies deal with these problems in different ways, e.g., as you note, by instituting co-pays, by needing doctors’ referrals to send you to a specialist, etc. Any universal system could use the same procedures. (Even a slight reduction in fees for non-smokers, etc.).
You are correct Doug. I am not disagreeing with you. Whether its some kind of copay ( high enough to discourage patients from going to the doctor for a runny nose) or an MSA there needs to be some sort of patient contribution/responsibility for each visit. In fact a number of the universal health care systems in other countries do this, but not all. Some of the systems suffer long wait times and are starting to suffer from increasing costs partly because there is little or no cost to the patient.
dougsmith - 25 May 2008 06:43 AM
Medical savings accounts cannot be the full solution. Firstly, they would only work for people who have the money to save. Secondly they would not work for people who have grave illnesses while still young, before they’d had the chance to save any money. Thirdly they would give people the illusion of having “saved up” some money by the time they were old. This means that the people who had relatively healthy, uneventful lives would perhaps want to recover “their” money from the system. If so there would be no way to distribute payment of services over a broad population, as any insurance system must do. One reason that universal healthcare is so much the best option is that insurance becomes more efficient as larger percentages of the society are included: the well end up subsidizing the sick. That’s as it must be in any insurance system.
I don’t think this is entirely true ( see my explanation to musicmommy). I would be interested to hear your comments
dougsmith - 25 May 2008 06:43 AM
Further, any universal system can distribute preventative care over the largest possible percentage of the population. As things are now, the uninsured or under-insured tend to only see healthcare workers at the emergency room, which is the least efficient manner of care. Were they to have fully subsidized access to preventative care, the total cost to the system per person would go down.
I agree 100% with this. Preventive care is an effective way control health costs.
Re. MSAs, I see the same problems I outlined in my other post. That is, MSAs appear to me to be a poor solution to what amounts to a problem of insurance. The economics of insurance are different from those of a savings account. Insurance works by having the healthy subsidize the costs of the sick. It’s the same economics for medical insurance, flood insurance, auto insurance, etc. This is done each year, so there is no implicit promise that moneys are being “saved up” so that they can be “withdrawn”. (In fact, political rhetoric aside, this is also how Social Security works. The government does not save money year-to-year. It uses the payments of the working people each year to fund the retirements of the elderly). If one allows withdrawals, then one will need to finance them by having higher up-front costs to everyone, and the insurance will work less efficiently. The healthy will be subsidizing fewer costs of the sick. Indeed, if one allows withdrawals of ALL the money that the healthy don’t use over their lifetimes, then the insurance will break down—nobody will be paying extra costs to cover the sick who cannot afford treatment on their own.
And this does not necessarily mean we’re talking about the indigent. How would a person pay for cancer treatment if he were to get cancer at 10 years old? He wouldn’t have any savings. What about at 30? Similar problem if the cancer were very bad.
The general problem here is that savings accounts are not going to work to distribute funds efficiently over an entire population of both sick and well, poor and wealthy. Doing so is the only way to assure that everyone pays a fair share into the pot, and that there are funds to cover all illnesses, whether the sick person be indigent, young or old.
I don’t think it helps anyone’s understanding of the situation that these accounts are called “medical SAVINGS accounts”. People then assume they are saving their own money, just like a bank savings account, for future use. There are many sneaky was of using words to imply something different than their actual meaning, and this one’s message is that as an American you are not financially responsible for anyone else’s medical problems but your own. If you ascribe to the idea of MSA’s, supposedly you can then save for yourself guilt-free and fault everyone else who doesn’t do so, you don’t have to feel responsible. After all, if you took care of yourself, then the next guy should have done so also. But the reality is that you will pay dearly anyway for those who can’t or won’t save, in myriad ways- from overcrowded emergency rooms to lowered ambulance response rates, just to name 2. How about reduced aid for schools? The list is endless but is not spoken of because the more well-to-do among us are not affected as much.
Re. MSAs, I see the same problems I outlined in my other post. That is, MSAs appear to me to be a poor solution to what amounts to a problem of insurance. The economics of insurance are different from those of a savings account. Insurance works by having the healthy subsidize the costs of the sick. It’s the same economics for medical insurance, flood insurance, auto insurance, etc. This is done each year, so there is no implicit promise that moneys are being “saved up” so that they can be “withdrawn”. (In fact, political rhetoric aside, this is also how Social Security works. The government does not save money year-to-year. It uses the payments of the working people each year to fund the retirements of the elderly). If one allows withdrawals, then one will need to finance them by having higher up-front costs to everyone, and the insurance will work less efficiently. The healthy will be subsidizing fewer costs of the sick. Indeed, if one allows withdrawals of ALL the money that the healthy don’t use over their lifetimes, then the insurance will break down—nobody will be paying extra costs to cover the sick who cannot afford treatment on their own.
And this does not necessarily mean we’re talking about the indigent. How would a person pay for cancer treatment if he were to get cancer at 10 years old? He wouldn’t have any savings. What about at 30? Similar problem if the cancer were very bad.
The general problem here is that savings accounts are not going to work to distribute funds efficiently over an entire population of both sick and well, poor and wealthy. Doing so is the only way to assure that everyone pays a fair share into the pot, and that there are funds to cover all illnesses, whether the sick person be indigent, young or old.
Doug, I think you’re missing the point. The MSA is only there to cover the deductible. You still have insurance in the form of your catastrophic policy which covers everything after the first $3000. The savings plan isn’t meant to cover major loses. It’s just for the day to day simple things - Annual check ups, eye glases, strep throat - that people see the doctor for. Since a family only needs to have $3,000 in your savings account ( everything else is covered by the catastrophic plan), this could be covered through payroll deductions, or as in the case of ndigent or working poor, the governement would subsidize the MSA ( ie. they could either put money in the account for them, or just make the deductible smaller depending on your income).
As far as allowing withdrawals, that is the way current MSA’s work so that individuals who enter the medicare sytem ( or leave one emplyer and its health plan for another) can get their money out. Again we are only talking about the money in the MSA, not the money used to pay the premiums for the catastrophic coverage, so there would be no effect on everyone’s premiums. In a national universal health plan no one would ever leave the plan to go into another plan so there really wouldn’t be any need to ever withdraw the money in the MSA.
