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POLCY: HDHPs, employer insurance and regulation the Cato Way | SignalHealth

Over at Signal Health Tom Hilliard has been having an entertaining time with Mark Pauly and the boys from Cato. Go over there and take a look at the latest round of back and forth. Suffice it to say that if Mark Pauly had to buy his insurance in the individual market rather than receiving from the Ivy League Ivory Tower he sits in, I suspect that he would be rather more concerned about the way the individual market works, particularly the 20% he acknowledges doesn’t work well.

Meanwhile, Eric Novack and I are both reading Cato’s Michaels Cannon and Tanner’s latest work which is out today. (I had planned on a pre-publication review but then again…) We’ll be discussing it in another podcast sooner or later, but you’ll get the basic idea from the SignalHealth discussion.

Meanwhile, Health Affairs has some numbers out about the rise of the HDHP and the HSA.  You can see the full article here. But here’s the abstract pull:

Almost 4 percent of employers that offer health benefits offer one of these arrangements in 2005, covering about 2.4 million workers. Deductibles, as expected, are relatively high, averaging $1,870 for single coverage and $3,686 for family coverage in high-deductible health plans with an HRA and $1,901 for single coverage and $4,070 for family coverage in HSA-qualified high-deductible health plans. One in three employers offering a high-deductible health plan that is HSA-qualified do not contribute to HSAs established by their workers.

The last line is by far the most significant (hence my bolding it).  Even though the HSA is supposed to be the employees benefit, in fact in a third of the cases setting up a HDHP is straight cost-shifting to the employee. You were getting something and now you’re getting nothing to deal with the first chunk of medical expenses. So at least those employers have figured out how not to screw over their own risk pools (assuming that they keep some of that money that would have ended up in the HSAs in reserve to cover the expensive cases). You know that the rest of them will go down that path too — in fact a survey that was covered in this THCB article confirmed it a while back. Oh, the joys of a "jobless recovery".

And of course employers are getting out of the game of providing insurance anyway.  Another Kaiser Foundation survey this morning confirms that the percentage of employers offering insurance has gone from 69% in 2000 to 60% in 2005. In effect the HDHP over time offers the employer a way to get out of the game without having to bear the shame of leaving the field completely.

This of course continues to boil the frog….

Finally, it does make me chuckle that in the comments to this post about Medicare Part D, Eric Novack is apparently appalled that a combination of lobbying from drug companies, PBMs, health plans and providers mixed in with the endemic scratch my back corruption of the current Administration and its leaders in Congress ended up with a welfare plan for them all called Medicare Drug Coverage. But it’s a little weird that he thinks that the water-carriers for the Administration over at Heritage are actually surprised. The guys from Cato might be forgiven for being true believers, but Heritage, AEI and the rest sold their souls long ago, and know exactly how they’re dealing with.

CODA: I hate to link to Tech Central Station given how dishonest it is in its lack of transparency, but if the funny Cato boys will insist on writing there, then this one from Randy Balko is worth a chuckle.

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Ways Of making money At homegadflyMatthew HoltBrian KlepperBob Recent comment authors
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Ways Of making money At home
Guest

No matter if some one searches for his vital thing, so he/she needs to be available that in detail, so that thing is maintained over here.

gadfly
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gadfly

//a shrinking physician workforce//
It would be in society’s interest to train more physicians, yet we keep buying the line that there is a “surplus” of expensive physicians. The physicians are expensive because this society has allowed the development of a highly exclusive, over-priced physician-education system. We deserve the parasitical elite we’ve created.

Ron Greiner
Guest
Ron Greiner

I called Brian, Brian was unaware that 40% of HSA clients had no previous health insurance. I explained that most people use our stats, including the Bush administration. Brian implied that the Bush administration using our stats means nothing. Brian sounds like Matthew, huh? Brian had to go quickly, figures, but he said he would call me right back, sure. I know why Matthew wants community rating because so do the Blue Cross plans in PA. We fight against this and support the PA Governor’s plan instead. Just go here Brian and become more informed about the real issues. http://www.assuranthealthpolicy.com/corp/legal/govrel/

Ron Greiner
Guest
Ron Greiner

Brian, you are correct that group health employee plans are losing market share rapidly but unlike you, I think this a good thing. Employers should not choose the health insurance on the children of their employees. Employers should not fire sick employees and put them to COBRA for insurance termination just to save a dime on their health insurance premiums. You write//In my view, the HDHPs – and particularly the 1/3 of employers who don’t contribute to the HSAs – are simply the first real cracks in the levee.// Levee cracks huh? Could you be more specific? You say you… Read more »

Ron Greiner
Guest
Ron Greiner

Matthew it makes no difference what you seek. You are not going to get national community rating, what a joke. This has been tried in some states and the costs have exploded and people are paying 200% to 500% more because they believed your advise. Bob, there is no FICA tax on employer HSA deposits for the employee or the employer. We call it compensation without taxation. So the 1/3 of employers who don’t make HSA deposits just had poor people explaining it to them. I waited to see if anybody would correct the tax issue but of course no… Read more »

Brian Klepper
Guest

Eric, I beg to differ. I learned a long time ago that a difference is only a difference when its significant. Health care professionals can complain all they want that the system’s failing them, but they keep telling their professional associations to stonewall and to avoid thge very changes that are necessary predicates to the way out. We don’t know each other, but I promise you that I have dealt almost exclusively with industry leaders for the last several years. To my knowledge, with the exception of a very few folks around the country with some power, there is little… Read more »

Matthew Holt
Guest

Great comments all. Essentially Brian and I agree on “what”, he’s just a little more pessimistic on “when”, than I am. Eric, we also agree on much. But the state and your mortgage company both say that you must have auto and house insurance respectively. So it’s essentially compulsory (even if hard to enforce) which health insurance is not, and much more importantly…in the house insurance market, you can’t tell which house is going to burn down the way that underwriting screws the ick in the health insurance market. And of course the uninsured driver is the one who gets… Read more »

Eric Novack
Guest

Brian- “the conceit among providers” you mention does not exist, if you mean it in the way that providers believe the system (ie federal and state gov’ts) will endlessly respond to requests for funding. 150,000 pages of medicare guidelines and growing medical liability costs soaring special interest groups suing for more and more coverage under medicaid medicare cuts totalling 30% before being adjusted for inflation a shrinking physician workforce at the same time the baby boomers are reaching the age of increased healthcare consumption old-line companies being crushed under the weight of retiree benefit costs Not one physician I know… Read more »

Brian Klepper
Guest

As always, Matt gathers and delivers grave info with good wit and cheer. I continue to marvel that anyone can actually consume and digest this much information. But I’m certainly glad he does! Ahem, Mr. Holt! Do you remember your skepticism at my January Atlanta presentation of last May’s Bureau of Labor Statistic data: A loss of 32% of private jobs with health benefits in 13 years. Erosion of the percentage of private sector jobs with health benefits running now at 4.5%/year, up from last decade’s erosion rate of 2.3%/year. Only 45% of private jobs now have benefits. The KFF… Read more »

Bob
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Bob

There is a bit more to the equation than you let on, Matthew . . . While the shift may be on to HDHP vs more traditional plans, you mention the so-called loss of benefits (no more copays) but fail to mention the premium savings. Many employers pay 100% of the employee cost, but the premium for dependent care is often passed to the employee. In some cases this can be as much as a mortgage payment. The covered participants may give up some copay benefits but many of the times it is usually offset by the increased take home… Read more »

Eric Novack
Guest

Matthew- As always, I appreciate the mentions. As I believe I have implied- in my posts, podcasts, and private conversations with you- both parties are guilty of abandoning principles for political expediency and/ or convenience. To single out the republicans for ties to interest groups without the obvious ties that democrats have to some of the same and others is, if I might say, more than a little intellectually dishonest. I maintain that the government’s tax favored status for employer based health insurance is the cause of the problems in the individual health insurance market. Again, I ask you to… Read more »

Joe Crea
Guest
Joe Crea

Matt,
I can’t understand why you consider any idea more than single-payer as an illegitimate alternative to the present health care system. Hasn’t this failed 40-year natural experiment with Medicare/Medicaid been enough to disavow you of any illusions?

Ron Greiner
Guest
Ron Greiner

Matthew, the tax free HSA was added to the Medicare Rx Bill so it would be passed. It was illegal in America for a senior to purchase Rx coverage that would cover a $1,500 a month Rx bill. Now that the tax free HSA is passed and the law of the land, we should revisit the Rx in Medicare issue and clean up the pork and give seniors more options in the free and open market. The President knows it’s one step at a time. I haven’t heard Eric and the Heritage Dr. yet. Doesn’t Haritage own “townhall.com”? That place… Read more »