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POLICY: HSAs for Medicaid–cost-shifting to the poor by Theora Jones

Policy analyst Theora Jones has been a little quiet at THCB lately, but the news that South Carolina is going to be giving all its Medicaid recipients HSAs got her a little riled up.

THCB recently pointed out that if the government could risk-adjust perfectly, we’d have no need for insurance companies, (Well I didn’t quite say that but close enough, MH) which is why this recent story from SC is so confusing–call me crazy, but I don’t think they’re out to replace the insurance industry.

So golly gee, what’s behind this? Does SC they think the private sector can control costs better? There’s no evidence of that. Do they think that people on Medicaid will get better care? Well, they’re not proposing any case management or disease management or quality measures, so…no. Wait, I think I’ve found the nut graph:

"South Carolina would cap how much it will spend on a recipient, and if health care costs more than the account will pay for, then the low-income people would have to make up the difference themselves or go without."

Ah, rationing. That’s neither new nor radical.

Please note that in order to qualify for Medicaid (2003 numbers), a mom in a family of three has to earn less than $7,510 a year. Disabled and blind folks have to earn less than $12,120 ($9k if they’re single). The old folks can pull down a cool $16,362, and kids can be covered even if their family of 3 is rolling in cash–up to $22,890! With disposable income like this, I’m SURE they’ll be able to make up the difference on that triple heart bypass. Or the asthma medication.

Legislation like this confirms my greatest fears–that HSAs are going to have a worse impact on the health care system than managed care ever did. Their effect on the health care system will be more pernicious and long-lasting–they will exacerbate the fragmentation and the injustices in the current system, and they will stymie the effects of reformers who are trying to achieve clinically focused quality improvements, greater access, and efficient financing.

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victor2008Jack E. LohmanDrGrumpyspikeRick Recent comment authors
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victor2008
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victor2008

Medical providers levy higher charges on private insurers to compensate for low Medicare and Medicaid reimbursement rates, adding a cost burden of more than $900 per private family plan per year.
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Victor
South Carolina Alcohol Addiction Treatment

Jack E. Lohman
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I would ask Ron: how much of the HSA costs are going to offset salesmen salaries and marketing costs? That’s patient money that isn’t going to patient care.

DrGrumpy
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DrGrumpy

Children, children…please play nice together. And please play somewhere other than the living room so that the adults can have a discussion about important things.
Thank you

Ron Greiner
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Ron Greiner

dan, You wrote, “Still no answer to the main question – because Ron doesn’t have one: how do HSA’s cover people with preexisting conditions? Medicaid covers that now.” Come on dan I answered that question with, “The state of Florida just passed making HSAs an option for state employees, just like the Federal government did last year, and there is no medical underwritting, sorry.” If you are asking if medically underwritten individual health insurance will insure people who have uninsurable conditions, the answer is no. But this is a good thing dan. If this is what you mean you should… Read more »

dan
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er…
still not answering the question eh? What does your great HSA insurance do for the people who currently, on medicaid get coverage but who you REFUSE to sell insurance to because they’re sick??
You’re proposing HSA as a replacement for Medicaid. Lots of ppl on Medicaid are sick or disabled. So how do you cover these people? And why do you keep refusing to answer the question?

Ron Greiner
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Ron Greiner

Sorry Dan,
Goldenrulehealth.com link didn’t work above. But just go there and look at their covered expenses if you are going to make wild accusations, you should know what you are talking about.

Ron Greiner
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Ron Greiner

dan, Go look at Blue Cross of MN HSA plan (Your company), it covers these things you say HSAs won’t cover. The state of Florida just passed making HSAs an option for state employees, just like the Federal government did last year, and there is no medical underwritting, sorry. Plus, every HSA plan in America pays 100% of covered expenses after the consumers’ choice of maximum Out-Of-Pocket, it’s Federal law. I notice that your insurance company, Blue Cross of MN, is selling short term health insurance. Right on their web-site they say that consumers can only have the coverage for… Read more »

dan
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Still no answer to the main question – because Ron doesn’t have one: how do HSA’s cover people with preexisting conditions? Medicaid covers that now. Ron, how many of your policies to you sell to kids who have had heart surgery? Or do you tell them they’re screwed? Is that what your friend Jeb is going to tell them too? And I have told you over and over what policy I have and how much it costs – I posted it just earlier today. It’s not employer paid for, but it is a group plan. I pay for it myself.… Read more »

Ron Greiner
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Ron Greiner

Spike, the state makes an HSA deposit into the Medicaid person’s HSA.
Plus, the insurance and the HSA are two different things. Where you come up with a 75% refund of premiums means nothing, trust me.

spike
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spike

as an addendum to above: The fourth way for Medicaid plan to reduce costs is to shift more expenses to the beneficiary, which HSAs most certainly WILL do.

spike
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spike

I’m familiar with how insurance works. The point is that if you don’t get into a car accident, the auto insurance company doesn’t then refund 75% of your premiums. If they did, they’d go out of business, just like HSAs will (unless they severely restrict coverage the way Dan’s post suggests).
It’s simple, the only ways to reduce costs are to reduce utilization, reduce administrative overhead/insurance profit, or reduce the allowables to providers. HSAs do none of these and therefore will not reduce costs.

Ron Greiner
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Ron Greiner

Spike, You write, “That means that if such a person got bone cancer, the $2000 premium was paid against the $500,000 costs that later arrive. So that person cost the state $507,000. If you want to say “well, the insurance company is the one losing the $500,000″. Fine, but then what insurance company in their right mind would sponsor this plan?” That’s the way all insurance works spike. You pay for auto insurance then if you cause a $500,000 accident the insurance company pays the bills less your deductible. The rest of your thoughts are so confused that I’m not… Read more »

Ron Greiner
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Ron Greiner

Dan, You wrote: “4. Your numbers are changing. First you say “The average cost for group health employee plans is over $10,000 a year and Medicaid costs even more”. Now you say that IN New York, the cost is $10,000 for Medicaid (not “even more”), but in Florida, which is the only place you have an insurance quote for, you now say the cost is “$6,700”. How is that “even more” than $10,000?” You are correct my numbers did change, they went down for HSA insurance. At the top of this thread I said the example family in Lansing was… Read more »

dan
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OK I’ll try to whittle this down Ron, 1. Calm down. I realize you sell HSA-eligible insurance plans, and are obviously a big fan of them. I’m not trying to knock them down. I think high deductible insurance is a good choice for a lot of people, and it’s certainly better than nothing. 2. I have previously answered your questions about my child’s insurance, and you responded to the post so I know you read it. (here: http://matthewholt.typepad.com/the_health_care_blog/2005/08/physicians_how_.html) 3. You have clarified that you are talking about ONE specific HSA-eligible plan in Florida, with a $5200 or $3200 deductible. Fine… Read more »

spike
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spike

“Spike if a person gets bone cancer, like one of my current HSA clients, after the deductible the insurance pays 100% of covered charges. I bet his costs will hit $500,000. The money above the deductible is paid by the insurance company.” OK. So when you run through all your math, you say “Medicaid costs New Yorkers 10K per family. HSAs cost 7K.” Well, that 10K per family includes the $500,000 charges that occasionally come up. So, if a person is covered by an HSA the state spends $2000 on insurance and $5000 on deductible, right? That means that if… Read more »