BushCo: The Healthcare People

It appears that the central policy point of the State of the Union address will be health savings accounts. Of course, Social Security privatization was the central policy point of last year's State of the Union, and a mission to Mars the year before, and we all know how well they went over, so maybe we shouldn't care what the President goes on about next week. But one interesting point, which Josh Marshall makes, is that this Administration, which has let millions more Americans go uninsured during its tenure, which won't expand coverage to all of our children, which is mired in one of the worst public health crises in recent memory with this prescription drug disaster, is going to use HEALTHCARE as their theme of the biggest policy address of the year. How can they possibly expect to have any credibility on the issue?

As for the question of "what are Health Savings Accounts, exactly," Ezra Klein takes up this question:

Bush's major proposals encourage the spread of Health Savings Accounts and render most out-of-pocket spending tax deductible (attentive news junkies will note the dissonance with the November recommendations of Bush's tax commission, which sought to limit health care deductions). This is a rethink of the entire health care system: no more risk pooling; instead, you sock away cash in tax-advantaged accounts, spending it only when you get sick. So no (or very low) premiums. But when you fall ill, there'll be no insurance company defraying the costs, not until you've spent $10,000 or so.

The idea here is simple. Conservatives believe Americans have too much health insurance, that they spend heedlessly and wastefully on care, procedures, and medications they would simply forego if insurance plans didn't pick up the tab. Ergo, HSA's, which end risk pooling, forcing care to come directly from pockets. Newly responsible for their medical bills, consumers will be spurred by the Magic of the Market to make smarter decisions, show more prudence, lead healthier lifestyles, smile more often, and smell springtime fresh. It's gonna be awesome.

At least if you're healthy. Because what HSA's really do is separate the young from the old, the well from the sick. Currently, insurance operates off of the concept of risk pooling. Since health costs tend to be unpredictable and illness isn't thought a moral failing, we all pay a bit more than we expect to use in order to subsidize those who end up needing much more than they ever thought possible. The well subsidize the sick, the young subsidize the old, and we all accept the arrangement because one day we will be old, and one day we will be sick, and no one wants to shoulder that alone.

But HSA's slice right through this intergenerational, redistributionist arrangement: they're a great deal for young, healthy folks because they don't force subsidization. Just don't get sick. And if you're already sick, don't think you can hide by remaining in traditional insurance plans: when the healthy rush towards HSA's, older plans will hold only the ill, and insurance companies will send premiums skyrocketing to recoup the difference.

This gang has never lifted a finger to promote saving in this country; indeed, they've mandated shopping as part of one's civic duty. The national personal savings rate is next to nothing, and I don't think the idea of saving for health care because it's tax-free would do anything to enhance that (there are retirement plans that you can spend on ANYTHING when you get older that do the same job). It's a virtue to live off of home equity and credit card bills. Being in debt is part of the American psyche these days, from the federal government to the average family (who owe roughly $10,000 on their credit cards). And certainly the credit card companies, who have doubled their monthly minimums and made it nearly impossible to declare bankruptcy, aren't going to make it any easier to save either.

HSAs are really no different that the shift from private pensions to 401(k) plans - both move from a defined benefit to a defined contribution (and it's unclear whther or not employers will even have to contribute to HSAs). What they do is remove risk from insurers and place it on the backs of working people.

Conservatives seem to think that HSAs will halt unnecessary care which causes costs to soar. What they call unnecessary care others might call preventive care. If all the money's coming out of our pockets, will we be as willing to have that checkup every year? Get a mammogram? Check the prostate? Less preventive care means more catastrophic care that could have been avoided.

This is maybe the worst idea to hit healthcare in a while in that 1) it doesn't solve a single problem facing the industry, 2) it adds instability to Americans' already unstable lives, and 3) it's coming from the most incompetent Adminstration on healthcare issues in a century.