The president made health care a focus of his State of the Union tonight. In particular, he's trying 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. This is edited from a couple of diaries I made recently here at DailyKos, but commenters on those diaries asked me to repost, since HSAs are going to be especially timely tonight. Forgive the redundancy if you've read this before. Also, since my accountant stopped by over the weekend, I've updated this with the actual numbers for my particular expenses, which I had previously reported off the top of my head.
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 - 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 mine works.
My deductible, $2,700 per year, goes into my health savings account (a money market account that earns about 3.25%, compounded quarterly, no fees), and I pay my routine expenses from debit card withdrawals from that account. My expenses ran about 375 dollars per year. The required premium for my high-deductible insurance policy (shop for one that suits you
here), a required companion to a health savings account, is about 48 dollars a month, or 576 dollars per year. Entering my third year of this kind of account, the accumulated
interest alone is more than my routine health care expenses. By the end of year five, at which time I'll be 36 years old, the accumulated
interest will be more than my insurance premiums, too. And finally, by the time I'm 40, the accumulated
interest will be more than my annual deductible. The worst that can happen in any given year is that I'll have to spend my deductible - but whatever has accumulated in the account is free for me to spend on any medical stuff I like (with a few exceptions such as cosmetic surgery - if I decide I want a facelift, I'm on my own). When I retire, I can pocket the whole accumulated pile and spend it on whatever I like. It's a bit like a 401K in that regard.
Also like a 401K, there's a here and now tax advantage - every time I make that $2,700 annual deposit, I get a tax break worth, to me, about 1,000 dollars. With annual health care expenses (insurance premiums and routine costs) of about 1,000 dollars, thanks to Mr. Bush,
I made money on my health care in year one - a few bucks of tax advantage over what I paid out, plus another hundred bucks or so of interest in the account. The tax
As near as I can tell there is no auditing. I am theoretically allowed to use my HSA debit card on aspirin but not on toothpaste, but I'm perfectly sure that if I walked into my pharmacy they'd just ring it up.
This is my reward for being in the 35% tax bracket in George Bush's America - I make a profit on something that bankrupts people who aren't as fortunate. Note to self: avoid getting sick. Avoid getting old too.
Now I don't know what, or even if, George Bush thinks, but it seems to me that this is unfair, and borderline immoral. Like the proposed social security reforms, the Republicans are pretending to offer me more control and opportunity, but what they're really offering is the opportunity to eat all the risk myself. I can probably do that, but my situation is very rare. 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.
HSAs might make sense as a national system if we consumed too much health care. But with so many of us uninsured, it's absurd to assert that we, as a nation, have too much health insurance. It's palpably obvious that we have heartbreakingly too little.
We need to let doctors provide the health care, and make the decisions with patients about what's needed. But we need to share the financial risks among all of us together, and that means private medicine with public financing. Governments don't always excel at providing services, especially when Republicans run them, but they can manage writing checks reasonably well.
The question we must always ask ourselves is "Is our country better off?" and never "Am I personally better off?" Because the policies the Republicans pursue are designed to separate and isolate us from one another, and I don't want to live in that kind of America. I want to live in an America not where everyone has the same amount of money, but where the amount of money you do have doesn't matter as much. 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. It's a great idea if you're young, healthy, and rich. If you're missing one item from that list, it isn't.
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 are generally not themselves physicians, able to diagnose their own ailments. They're us. They're Americans.
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. There's a good plan circulating in the California Senate described
here, and it's not a bad start. I would make one significant change to it, however. Rather than having the financing come out of a new payroll tax, I'd like to see it done as a surcharge to the income tax. This would be less regressive, broaden the tax base to include more non-wage income, and make the fund less volatile to ups and downs in employment. I don't see how that would lead to rationed care, but even if it did,
I'd rather have rationed care than AUCTIONED care, which is what we have now!
- 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 car insurance 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. But will it cost us less in the long run? Certainly. And a single payer system offers the opportunity actually to target mental health resources to the rare exceptions I mentioned above.
- 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 a patchwork alternative that didn't achieve universal coverage. Imagine - running against universal health care as a Democrat!
- 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.
- Finally, there's a tremendous savings in administrative costs. In Medicare, administration takes up 2% of spending; in the private system, it is over 20%. And that 2% in the Medicare system is 2% of an older, sicker population. Much of the administrative cost of the private system is to pay for people who tell patients what they can't have. Remarkably, it costs more to say "No" than to say "Yes."