If you look at this, yesterday we had on the Kaiser Commission of the Uninsured and Medicaid, this slide was presented. Among people with less than $30,0000, they’re in fairly low tax marginal brackets. The way I describe it is if I have a really rip-roaring toothache, and I need a root canal, and where I live it’s about a thousand bucks to get a root canal and another thousand for the crown. When I pay that out of the HSA, it will cost me, at most, $600, because if you add up all these taxes that I face at the margin, for every dollar I put into the HSA, it cost me only, at most, $0.60. The gas station attendant, the waitress, the WalMart worker, it cost them around $900 for the same root canal in after-tax dollars. I personally think that that’s an ethical proposition that we should debate. I’m not saying we shouldn’t do it, but I do argue that it should be openly debated. This is not neutral.

The second issue is, obviously this is meant to be a cost control and benefit cost-control device, but we are looking mainly to the lower part of the national income distribution to do the belt tightening and to do all this stuff. And, of course, as I mentioned and I never fail to remind you that those are the people to whom America looks to go abroad to fight. It is not our children, though our son did, but that’s almost weird, it isn’t the elite’s children who do the fighting, it is mainly people in the lower half, not the very poorest, but in the lower half of incomes who fight for us. So they bear already the blood and financial burden of the war, and we want to load that on top of them. I personally think we should debate that. How much can you load on these wonderful people?

And the third, this is the income distribution of the United States 2002, 33-percent have an annual income of $40,000 or less. Interestingly, most health policy wonks and policy makers are in the upper two. Think about it, if you are a young professional and you are married to another young professional, you are up there. That’s what I tell my students, "You’re going to be living up there. You’re not part of American society as it reveals itself in the hinterland at all." And so, we have these images of "skin in the game" and so on, but I would say someone with a $200,000 family income, is anyone here willing to tell me that their healthcare behavior would be even in the slightest impacted by a $4000 deductible? I know it because I’ve always had them; not at all. This is peanuts; it’s a skiing trip. To a waitress and a husband with $40,000 or less income, $4000 and then more on top of it is a huge hit. They will modify. So it’s fair to say we’re looking to the bottom half of the income distribution to carry the load of cost containment in American healthcare. I saw this in Business Week, 1 in 4 workers makes less than $18,000; if they’re married, that’s $40,000.

So I go to eHealthInsurance, where you can buy these individual policies, the farmers’ market of that, and I made myself a 35-year-old woman with three kids and no husband; that’s what I put in. I picked Dallas, Texas because that’s where the National Center for Policy now is. [Laughter] Let’s see what you can get there. What you see is if she is healthy; I think if she’s sick, in that market she’d have trouble getting it because they’re underwritten. But if she’s not sick, she can get a policy for $148 a month with a $10,000 deductible. Those are the deductibles that you find on that web site, and Diane already walked you through this. I say that surely we don’t believe a family with an annual income of $20,000 will respond to a $10,000 deductible the same way you and I would if we have $200,000. So, what I’m arguing is, I think, unassailable. Now, of course, you could avoid this by making the deductible and maximum risk exposure, linking it to income. So that would say if a household of $40,000 can bear a deductible of $4000 and a maximum risk of say, $6000, it would mean that for congressmen and policy wonks, that deductible should be $20,000 with a maximum exposure of $30,000. Then you would have the same sensation of empowerment, or whatever you may call that, that the waitress and her husband will have. That means all of the Congress, the entire Congress, should have a minimum deductible of $20,000. It would mean executives of corporations shouldn’t have any health insurance at all. Because when you make $20 million, why do you need insurance? Ask yourself this. Yet, I saw this in The New York Times, here is Mr. Wile [misspelled?] (Note: I assume he means Sandy Weill of Citicorp) who probably was paid $30 million that year, he had $61,000 out-of-pocket dental and health insurance, the company paid it, and because it’s imputable income, they paid his taxes too. There was a piece in The Wall Street Journal a couple of years ago on how many, many corporate executives have first-dollar coverage; corporation pays everything plus the taxes. I personally wonder if these people, who are so risk adverse and of such an entitlement mentality, as you have in the corporate suites, ever think what they’re saying when they say that people "skin in the game," right? That is sort of, to me, that is a form of Marie Antoinetteism.

Finally, there is no question that we are talking about shifting the financial burden of ill health more out of the households of the chronically healthy to the chronically sick. I saw this, it must be the Jerry Andersen’s study, but more than half of healthcare spending is on behalf of multiple chronic conditions. As Katherine pointed out, this is in fact the 2001 per capita health spending of insured, the privately insured people below 65. Ken Thorpe gave me these numbers; you could see that if you had a $4000 deductible, in fact, the bulk of Americans would be saving money. But those people, the ones who are chronically ill year after year after year, would have to pay this deductible. It doesn’t take much to do that.

My concluding timing is perfect. My concluding remarks are I can style the HSA high deductible as a liberation from the shackles of government regulation or private health plans, managed care, and it is often marketed that way. I saw this thing "Reclaiming Personal Power and Freedom in Decision Making." That sounds mellow and it sounds good; it’s a way to market this idea. But I could also say I could present it to the nation the way it is now being proposed by the President. One can describe it, fairly, as one more policy to redistribute economic privilege, big tax cuts, and healthcare resources upward in the nation’s income distribution. That’s another way to describe it. I’m not saying we shouldn’t do it. Maybe we up there are very meritorious and should have these privileges, but I plead only for an open and honest discussion of these ethical facets, and not just reduce it to a technical discussion. I particularly take some umbrage of the issue of "skin in the game," particularly how it’s often pronounced by people who don’t really know what that would mean because they’re in an income class where there is no "skin in the game."