POLICY: HSAs here and there, in theory and in practice. (with UPDATED link later afternoon Monday)

The HSA debate is an interesting one. Most of my comments have tended to focus on whether they can in fact be put into practice both on the consumer side, and on the physician side. This comes down to two questions, are there designated accounts that can consumers easily locate accounts from trusted sources to sign up for which will make the HSA accounting transparent? The answer there is "not yet"–I know as I’ve been trying to create one without success as yet, although I do have an application in to a tiny bank in Wisconsin that puports to be ready. But presumably this whole process will take some time but should eventually be doable–but it has now been 4 months already.

The second and more challenging question is, will providers be able to get their act together to create understandable pricing structures that makes sense for consumers? Given the massive challenge I’ve been having trying to get a cash-only surgeon to pre-price a procedure I"m about to have, I suspect not. After all, presumably a cash-only physician should be able to deliver that pricing already. But the end result from my interactions is that the surgeon would not guarantee rates for different procedures, and wouldn’t even be able to give me alternatives based on different likely outcomes. The end result is that I went to a different surgeon who’s group had already had that negotiation with Blue Shield. Of course the new surgeons office has a different pricing schedule for the uninsured, and when I was in their office last week I overheard a conversation between the clerk and an uninsured patient who was totally confused by different bills from 4 separate sources (surgeon, anesthetist, lab and hospital). So I still believe that we’re a long long way to go till we arrive at the point-of-care consumer nirvana. This is the reason that several free-market advocates of the Enthoven and Abramovitz schools believe that HSAs won’t be a big deal.

Paul Ginsburg seems to agree. In a recent HSC commentary, he writes

    So what impact will these new accounts have on physicians, hospitals and other providers? The short answer: Not much in the near term because HSAs are unlikely to reach the critical mass needed to spark significant changes in healthcare delivery. Initial interest is likely to be confined to the individual insurance market under the current requirements.

In other words it’ll be people like yours truly who already have high deductible insurance and know that they are going to have high health care expenses who’ll want the HSA in order to reduce their tax bill. Ginsburg goes on to say:

    Even if the accounts have great success in getting people to increase health cost-sharing, they are unlikely to be the magic cost-containment bullet. Since a small proportion of insured people with medical expenses higher than HSA deductibles account for a large proportion of healthcare spending, even widespread adoption would address only a portion of the cost challenge."

I’ve been commenting about this for a long time (mostly over at the MedRants postings). In a nutshell, HSAs won’t do anything to contain costs, as the vast majority of the money is spent on people who’ve blown through their deductible and are also not in the position of being prudent shoppers at the point of care, often because they’re price unconscious–literally!

But there is one deeper question about the whole HSA theory. If you allow people to contribute to their own accounts rather than pay into an insurance pool, what happens over time to that pool? The Kennedy-ites will tell you that as the healthier and wealthier "withdraw" their money, and the poorer and sicker make more demands on the pool, it will run out of money and need to go back to the taxpayer for more. In other words it will not succeed in creating a sustainable insurance model.

While this may be theory in the US, it is now demonstrated fact in the place in the world that has the greatest experience with things that look like HSAs, and that place is the pleasant, but draconian in parts, city-state of Singapore. So last week the local Singapore Straits Times reports essentially that the insurance pool system that backs up Singapore’s compulsory MSA system has run out of money. Don Mcanne (in his single-payer advocating daily "Quote of the day" email) describes the situation accurately:

    "Singapore has a Medisave program which is composed of individual MSA-type accounts, a MediShield program which covers catastrophic, life threatening disorders, and a Medifund program that serves the poor. What has become evident is that coverage for non-catastrophic illnesses is clearly needed. Their current system leaves many without affordable access to essential but non-catastrophic health care services."

But of course, just because we have some data from abroad doesn’t mean we’re going to pay much attention. And as this is the US, HSAs aren’t going to be a big enough deal to really affect the whole system….probably.

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