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.

My friend and health care sage Jane Sarasohn Kahn took offense at this paragraph from my recent post

So absolute proof that the Bush administration’s efforts to defend the Medicare bill is nothing but PR. Silly really, as there are some good things in the bill (like coverage for the very poorest seniors) that they could at least make a half-assed attempt to promote properly.

Jane writes

"I must respectfully disagree with you on your identifying coverage for the very poorest seniors in PDIMA as a "good thing." The poorest seniors have already been covered through Big Pharma cos. discount programs — like GSK’s Orange Card, the TogetherRx program which is a consortium of many pharmas (AZ, GSK, Janssen, Aventis, Abbott, Ortho-McNeil, Novartis, BMS), and others. You rightfully describe other aspects of the bill as being PR, and this "poorest seniors" aspect is, as well.All Congress would have had to do to extend Rx access to a greater number of seniors would have been to extend an already successful program that gets too-little PR in our sound-bitten era of "Big Tobacco, Big Oil, Big Pharma" to more seniors. The pharmas would extend the programs more in today’s environment. I’m no defender of all of Big Pharma’s practices, as you know–but Congress could have prevented the huge bureaucratic mess that will be the 2-year discount card program prior to the 2006 implementation of PDIMA. I am working with a pharma on their approach to the card (Phase I of PDIMA) and have attended two meetings in Baltimore with DHHS on the implementation schedule and requirements — and it really will be a bureaucratic mess that will add administrative costs to our already-costly system. This is even before the actual "modernized Medicare" kicks in in 2006. I cannot fathom the bureaucratic mess, donut hole and all, that will play out then.

Now I agree with Jane that there’s alot bundled in the bill that’s not helpful towards covering the poorest seniors. But while Medicaid does cover the very poorest seniors, there is another tranche of seniors who don’t have coverage and don’t do well. CMS reports that 76% of seniors have drug coverage. But that means that 24% do not. Of those that do not 19% of seniors without drug coverage spend between $1,000 and $1,999 a year on drugs and 4% spend more than $2,000. And of those that do have drug coverage 6% pay between $1,000 and $1,999 and 2% more than $2,000. So if you’re following along at home, 31% of seniors are paying more than $100 out of pocket a month on drugs. I don’t have the exact numbers to correlate drug coverage with income but the Stat Abstract reports that the median income of households over 65 was $23,000 in 2000, and 30% had incomes less than $15,000. So it’s pretty good bet that if your a senior with less than $1,100 a month in income, you’re likely to be paying over $100 of that in drug costs.

I’m sure Janes’s correct to say that the money could have been better spend subsidizing a discount card, even thought these programs don’t cover anything like the 30% of seniors who need help. Dan Burton would agree that the premiums and the donut hole combine mean that these costs won’t go to nothing, but there will be subsidies of premiums for the very poor and the bill is going to make the situation better for those who are spending hundreds a month on drugs. If I was the Administration I’d be pushing this very hard. What else can they do?

Understanding that this issue could lose Florida and Pennsylvania for the Bushies in November, it looks like (as I’ve been saying for a while) the Administration is getting ready to cave on the banning of drug import issue that its pharma paymasters had inserted into the PDIMA Bill. Yesterday HHS Secretary Tommy Thompson created a Task Force on Drug Importation, which in due course will come back and recommend changing that part of the bill. This has big implications as it’s by far the most unpopular part of the PDIMA bill, and if it goes away opposition to the bill could fade. That will make life a little tricky for the Dems.

Meanwhile the fuss about Tom Scully banning the CMS actuary from telling Congress the truth has been turned into a formal investigation, which will presumably proceed with the same "relentnessness" with which the DOJ has gone after whoever in the White House outed Valerie Plame. So we can expect that to be all cleared up around the time the bill takes effect in 2006!

So one of the perks of having a blog is that you see how people found you and I was very curious why a couple of people found my blog after searching for Karen Ryan. I’d never heard of her, having missed today’s NY Times story about how the Bush administration had paid actors to imitate reporters to make fake news clips about Medicare. So why did the phrase "from Washington I’m Karen Ryan reporting" show up in THCB?

Well you may remember a few weeks back I got all hot and bothered about a poorly researched report on the subject of whether the huge increase in health spending was good for us or not. The report was put together by a coalition of health industry groups and was very thinly veiled propaganda–even though it did have legitimate points to make. With the report was distributed a video clip. By now you’ve guessed the rest; the last line of the voice over was "from Washington I’m Karen Ryan reporting", which went into TCHB and thence into Google.

So absolute proof that the Bush administration’s efforts to defend the Medicare bill is nothing but PR. Silly really, as there are some good things in the bill (like coverage for the very poorest seniors) that they could at least make a half-assed attempt to promote properly.

The Center for Health System Change continues to pump out great stuff, including this piece from Len Nichols called 10 myths about the uninsured. Go read it because it’s very sensible and makes directly the link between the mess we have of an individual insurance market, the fact that the majority of the uninsured cannot afford insurance, and that (as Alain Enthoven will tell you) health benefits are part of compensation, not an independent cost to business. Coincidentally over at Business Word, Don Johnson, a (non-foaming at the mouth) conservative had a sensible piece on the uninsured yesterday. Don almost lets it slip in his last paragraph when he says:

I have long advocated requiring everyone who pays Social Security and Medicare payroll taxes to provide proof on their income tax forms that they have purchased basic health insurance for themselves and their dependents. If people don’t provide such proof, they are taxed the equivalent of a year’s premium, payable monthly, and that money is put into a pool that provides catastrophic health insurance to those who won’t buy health insurance for themselves.

So despite some recent comments about Enthoven and me , it seems that Don, too, is in favor of universal insurance. His version of it is called an individual mandate, with a mop-up social program for the truly indigent, those outside the system. What Don misses is that he’s only got half the solution. Yes, the uninsured should be forced to pay into the system for some of their insurance, but as Nichols points out

"if policy makers really want to increase coverage, they’re going to have to subsidize people, probably quite substantially, since most of the uninsured have incomes below twice-times poverty"

Of course there is already a cross subsidy of the uninsured by all of us who use health services and find that we are charged more than cost by providers who are also treating the uninsured. It would just be more sensible if the subsidy was clear and obvious. But again this is only half the issue. The Commonwealth Fund reported thatemployers continue to support providing health insurance. But, and this is not a minor "but", more and more of the cost of premiums are being forced onto employees. Meanwhile the proportion of smaller employers (with less than 100 employees) who believe that it is "very important" to provide insurance is only 54%, and only 44% of those employers who do not currently provide insurance think that it’s "very important" that they do so. It’s the employees of these employers who make up the majority of the working uninsured, who are themselves about 75% of the uninsured.

In other words, to get to universal insurance you either need an individual mandate, an employer mandate, or some kind of social insurance system (maybe Medicare-for-all). The first two need some cross-subsidy and the last needs to change "premiums" for "taxes." The first two also in some part rely on an individual and small groups insurance system which is a total mess, charges far more for the exact same products that are sold to large groups, and probably cannot be fixed without major legislation too. In the end, we’re not getting any of these solutions in the next few years. But at least the discussion has restarted. . . . .