Articles recently published claim that high deductible health plans and HSA’s are potentially bad for your health and that they only benefit middle and upper income individuals. Could there be truth to this fact? Possibly. But more than likely NOT. They cite incentives for persons to not receive care under these formats. However, they offer no real proof of negative outcomes other than the fact that those surveyed said they did not seek care for minor ailments. Isn’t this this kind of patient based responsibility we have been asking for in trying to curb overutilzation of services? Doesn’t this put the patient back into the responsibility equation? Does this not ask for patients to exercise common sense about their ills, aches and pains? And since when is it a crime for a plan to be of benefit to middle and upper income individuals?
The bottom line is this . . . the real culprit in all of this, which is described by the writers, but somehow overlooked, is the insurance companies and their rules on COVERAGE. They continue to deny coverage to those with pre-existing conditions – they continue to deny insurance coverage to so called high risk individuals – they continue to deny coverage based on THEIR definition of the word family – they continue to drop insureds who “overutilize” services (in other words have the temerity to actually get sick) – they continue to rate small groups and others to maximize premium retention and minimize benefit payout.
Please, lets focus on the real issues and not utopian, idealistic solutions to our health care problems. Denying working families of some means, in other words the middle-class and others, of benefiting from common sense use of health services is not the answer. Forcing health insurers to return to their core business, which is overall risk sharing among the total population insured is much more of a solution along with elimination of their practices to limit and deny coverage . . . obi jo
When Insurance Is Bad for Your Health
Some health insurance plans are structured in a way that actually discourages patients from seeking medical care, writes Walecia Konrad in the latest Patient Money column. The investment firm Fidelity recently surveyed employees at various companies who had opted for a high-deductible health plan linked to a health savings account. About half of those workers said they or a family member had chosen not to seek medical care for minor ailments as many as four times in the past year to avoid paying the out-of-pocket expenses . . .
The Many Hidden Costs of High-Deductible Health Insurance
Is your medical insurance bad for your health? If you have a high-deductible plan, the answer may be yes. High-deductible health plans are essentially insurance policies that charge lower monthly premiums than traditional plans because the consumer is responsible for paying the first $1,000 to $5,000 or more in medical bills before the insurance kicks in. The plans, sometimes called catastrophic insurance, are often used in conjunction with a health savings account . . .
When Insurance Is Bad for Your Health – http://well.blogs.nytimes.com/2009/05/29/when-insurance-is-bad-for-your-health
Tara Parker Pope – http://well.blogs.nytimes.com/author/tara-parker-pope
The Many Hidden Costs of High-Deductible Health Insurance – http://www.nytimes.com/2009/05/30/health/30patient.html?_r=1
Families USA – http://www.familiesusa.org
Fidelity Investments – www.fidelity.com
www.condron.us
www.blogburst.com
You shine a light into yet another quagmire in the larger discussion about health care. Here is another example of how the incestuous symbiotic relationship between insurance and medicine confuses the consumer.
For starters, Health Savings Accounts and Medical Savings Accounts are not the same but the two terms are often used interchangeably. Both are variants of purported “tax shelters” for customers, calculated to pipeline even more money into the system by making it appear that account holders are saving money by spending it. I’m reminded of the shopper who comes home with an armload of stuff on sale, having spent hundreds of dollars that would otherwise not have been spent, beaming with satisfaction because of how much money had been “saved” by buying stuff “on sale.”
The entire argument rests on two misconceptions, the tax savings angle and the “costs” angle.
Taxes first. There was a time when medical deductions for American tax payers had meaning. If medical expenses during the tax year exceeded a small percent of AGI the amounts were deductible for those who itemized deductions. For most people the percent was modest, even after adding dental and eye care and other incidentals, so the standard deduction was still better than itemizing.
Then came “flex-plans” whereby employers were allowed to give employees a break by making their portion of group insurance premiums “pre-tax.” Amounts saved by the taxpayer are trivial compared to the trade-offs (job lock, status changes not allowed except for a short “open enrollment” scheduled for accounting convenience rather than employee life events).
Over time the percent of AGI allowed by the IRS for medical deductions have risen to the point that anyone with that much income spent for medicine, premiums, and other expenses is not likely a good candidate for insurance anyway. In fact, anyone with medical expenses over 7.5% is not apt to be a taxpayer much longer either because he will soon be bankrupt, too ill to work, dead or all three.
As for the “costs” issue, as long as bills for medical procedures and medicine are based more on what the market will bear than actual costs plus a reasonable profit for the provider, no rational individual will seriously expect to compete with institutional players in vain attempts to negotiate reasonable prices for services, equipment, tests or medicine. Bills and expenses from providers and vendors to insurance companies, Medicare, Medicaid, uninsured individuals and patients who offer to pay cash are all over the map. And in no case are those bills derived from accounting rules that make any sense.
Why would I want to use hard-earned money from a savings account to pay the same or higher prices as companies with volume discounts? What? Bills are lower for individuals than for institutions? Then why are the institutions getting soaked?
For “medical” or “health” accounts to have real meaning, they would be managed (like IRA’s) by financial institutions, not insurance companies with a conflict of interest. Better yet, a simple return to the old one percent of AGI would eliminate the whole pile of administrative smoke and mirrors and give taxpayers a better deal altogether, allowing them to meet medical catastrophes without an added layer of confusion.
Thank you for this excellent comment loaded with insightful thoughts. Rather than reply to each item here, we plan a commentary (actually it has been on the to do list for this week) on some of these issues, particularly the convoluted role that tax policy plays in health care economics. Thanks again. Keep ’em coming . . . and keep reading !
NOTE FROM WESTERN US COMPANY CEO: Good article, we implemented HSA’s 3 or 4 years ago and have seen no evidence that employees are skimping on needed healthcare (and we specifically watch for that). We have however seen much more employee satisfaction with the broad range of choices that the HSA opened for us.
NOTE FROM DC LOBBYING INSIDER: Interesting commentary. Ideally health reform should have room for all sorts of new, and some old, ideas. But that may not be the way it goes.