I've read that the president is going to make health care the focus of his State of the Union speech on 31 January. In particular, the word is that that he'll try to sell Health Savings Accounts, or HSAs, in a big way.
As it happens, I've had an HSA for two years and, as a surgeon, I think about health care matters often. Sometimes, that's from the business side, sometimes from a patient care perspective, but health care is my profession, and occupies my mind frequently. Here's my perspective on what I think the good and bad sides of the HSA program are.
(Personal details below the fold)
First of all, I need to reveal a few features about myself. I'm a single woman, aged 33, who is a serious recreational athlete. I have absolutely no health issues of any kind, except an occasional tendency to amenorrhea secondary to low body fat. My health care costs are about as low as they can possibly be - Seasonale for birth control, a twice yearly dental checkup that in practical terms winds up being more like every eight months, and that's pretty much all. I monitor my cardiovascular fitness as part of working out, know my own body pretty well, and wouldn't be shy or foolish about seeking care if I had an issue. As an MD, I'm earning pretty well, and thus could readily pay for any medical care I needed. On the other hand, I was raised to be very thrifty, and don't like spending that I can avoid.
I started an HSA in January 2004. Here's how they work.
An HSA has two parts - a bank account and a high deductible health care policy. The bank account has a maximum deposit per year of up to the deductible of your policy. The idea is that you pay for your policy every month, and deposit cash in the interest-bearing account to be used as the need strikes during the year. What's interesting is, and this is distinct from the "Flex spending accounts" that many people have, that there is no "use it or lose it" feature. My annual spending is substantially below my deposit, and so the money accumulates, with interest, in the account until I take it out. With the interest rate where it is in my bank, I am pretty sure that sometime between twelve and fifteen years from now, I'll be able to cover my deductible with the interest alone in the account. And in 32 years, when I'm sixty-five, I can just pocket the balance, and spend it on whatever I like. Both employers and employees can contribute to these accounts, although I take care of mine on my own.
Financially, this is a great deal for me. My catastrophic insurance policy costs me about fifty dollars a month, which puts it down there above cable TV and below shoes, etc. It covers me 100% if I do need surgery or anything suddenly, and I never have to spend more than one year's deductible, no matter how much is in my HSA. Meanwhile, HSA savings can be put to a bunch of uses that would never be covered under a regular policy. I have a little debit card that I use to buy anything that is more or less health related, even over the counter at the pharmacy, such as some nutritional supplements, aspirin, etc. You can shop around for a high deductible policy that suits you here, and I went for a high deductible because I'm very healthy, can afford the increased deposits, and saw that the difference in premiums for the lower deductible policies was about the same as the amount of money you'd have to put into the bank account. I figured I'd rather have the extra cash than Blue Cross (sorry guys, don't cancel me). So my savings portion is the equivalent of 250 a month, although I lump sum it at the beginning of the year.
The best part of this comes at tax time, when I can take my HSA contributions off of my income. I save something like 35 percent of my deductible while building an additional tax-free retirement savings account, which is a bit over 20% of my 401K. So from my perspective, I'm getting an extra tax-free retirement account on money I would be spending anyway, and a big reduction in my taxes right now. It's a very sweet deal for me.
And I am so atypical of the standard American health care consumer that portraying HSAs as a national solution is ridiculous to the point of absurdity.
To be honest, I don't really need health insurance at all. I'm healthy enough that I don't have any issues, and prosperous enough that I wouldn't have much trouble taking care of things if I did have some mishap or other. I am probably the last woman in America that needs to be given incentives by the government to pay for her health care.
I think reality is a little different, because most health care consumers are not like me. They have children, or untended-to problems, or aren't 33 years old, or need to lose a few pounds or whatever. They have chronic issues related to age or infirmity or bad teeth or diet. They have real lives and real concerns that mean that time and money to go see the doctor whenever the feel like it is not easy. They're us. They're Americans.
And that's the real issue with being in an HSA-based system. I don't want a health care system that is good for me - I want one that's good for everybody including me. Because the question should never be "Are YOU better off than you were six years ago?" but "Are WE better off than we were six years ago." An HSA-based program is a step in the direction of a crushing, polarizing, atomizing individualism the sole virtue of which is its consistency with everything else the Republican Party has done to us over the last several years.
As a nation, we need to decide a couple of things, and with our eyes open about it. I don't think "socialized medicine" is a bad word, necessarily, but I don't think that Britain's NHS is the best approach either. But there are several decisions that we should make.
- Is health care something that we want to be a form of social insurance, or a form of actuarial insurance? In the former case, the idea of insurance is to spread out the financial risk between the healthy and the sick. In the latter case, your costs depend on your individual history and situation. I unabashedly favor the former model, just like all the other large industrial countries. When I was seventeen, I had the use of a little red sports car, and loved whizzing around town in it. But when I got two speeding tickets, my father insisted that I pay the difference between what the premiums were and what they had been before I was foolish enough to drive irresponsibly. But that was my fault. Health care emergencies aren't the patients fault, by and large, and they shouldn't be treated as if they were.
- With the rare exception of hypochondriacs and Munchausen's patients, no one actually likes going to the doctor. By making health care more broadly available to people, will more people seek health care? Of course they will! They have untreated illnesses in many cases. It's widely recognized that timely care now avoids expensive and life-threatening care later.
- Why in the world does health care wind up so linked with the issue of employment? As a partner in a surgical practice, I have to be in the health care business with respect to our own employees, and frankly, I'd rather not be. I'd like to see an America where everyone has basic health care, but that business may also compete for staff by offering improved health care packages if they choose to. And the last thing in the world I want to do is have to make a call between two prospective employees based on which of them would be the cheaper to insure, which is something we faced last month with a new hire. After all, not everyone has a job. But everyone has a body.
- Here's some language the Republicans will understand - our lack of universal health care is hurting us economically. Businesses saddled with aging workforces have increasing difficulty competing, domestically and abroad.
- Clinton was dead right in 93 when he said he'd veto any plan that didn't offer universal coverage. And Gore was dead wrong, as much my admiration and respect for him pain me to say so, when he tried to demagogue Sen. Bradley's universal coverage plan during the 2000 primaries, and offered an alternative that didn't achieve universal coverage. Imagine - running against universal health care as a Democrat!
- Finally, where's the money? The deduction of employer premiums for health insurance costs the treasury two hundred billion dollars a year. That's more than any other tax deduction, including mortgage interest. That's five thousand dollars for each uninsured American every year. We could do a lot with that. I'd say "let anyone who wants to buy in to Medicare," means-test the "buy-in" premium, and use the employer premium savings to pay for the difference. Employers would purchase policies for their staff, if they wanted to, to make up the difference between basic Medicare and what the previous coverage was, which would cost somewhat less because they'd cover fewer services. Maybe Medicare isn't the best plan - some people like the Federal Employee Health Care Program, or the military's Tricare program, but the basic idea probably has something to it, and a good actuary could probably determine what the buy-in premiums needed to be for a variety of income levels. We'd still have a multi-tier health care system, where the wealthy get the very best, but at least the uninsured wouldn't be stuck outside in the cold with their noses pressed against the glass windows of a health care system that systematically excludes them.