Medisave: A Blend of Government funded healthcare in a privately controlled fund
Much of today’s debate about healthcare reform revolves around two distinctly differing viewpoints. On one side we have the call for a government takeover of the present system, with new insurance mandates, continued insurance management and regulation, and higher taxes. On the other side we have the call for an end to government regulation, an opening up of the free market, and the end of the insurance industry's undue authority and oppressive control over healthcare processes, without any new taxes.
Is there a way to bring the two sides together?
Let’s look at some numbers:
Estimated population of the United States is 300 million.
Estimated direct government contribution to healthcare spending in 840 billion dollars.
That is about $2,800 a year per person.
Is there a way to spend that money more efficiently?
Here is my proposal:
Individually owned Medisave accounts for all United States citizens from birth.
With no added taxes from the government, the $2,800 can be used to purchase a catastrophic high deductible insurance policy that would also cover the first $500-1,000 per year of preventive coverage for well exams, Pap smears, childhood vaccines, etc.
These Medisave accounts would be individually owned and controlled and could be managed by banks or other brokerage service centers. To cover the costs of the deductible, patients and employers could voluntarily contribute to the accounts. For the unemployed, there could be more charity care and other tax deductible accounts set up. Means testing would also be on the table for those truly in need. Any money remaining in the Medisave accounts at the end of the year would roll over for the following year.
Hopefully money would be saved in these accounts to fully cover any future year deductible. Family members can use a portion of their excess Medisave dollars for other family members or for charity to others in need.
The Medisave accounts would be paid for by the same taxes present today. However these monies would need to be separated from the government’s general fund to avoid having any of the funds spent on other programs. With the accounts controlled by individuals, it would bring an end to government lobbyists and special interests.
Tort reform would also need to be enacted to lower the costs of defensive medicine. A fair system is beyond the scope of this article.
Lets look at the positives of this plan:
1) Lowers employer costs greatly. Employees could get more in salary as a result. Also insurance is fully portable, and not dependent on employment, only upon citizenship. Non-citizens can buy into the plan at much lower costs than today’s insurance premiums.
2) Ends Medicare and Medicaid and all the government regulations and price controls and replaces them with individually controlled and owned policies.
3) No price controls. The free market would set the costs. Competition would open up and be fierce to increase innovation and decrease costs. Look at all the mini-clinics opening up as lower cost alternatives as an example of true free market competition.
4) Citizens can opt out of the plan, but what would be the advantage?
5) If individuals want to buy a Medigap policy for their deductibles, they may buy one on the open market.
6) Insurance companies would stay in business but would have to change they way they operate. They would no longer be in the business of healthcare, but back solely in the business of insurance.
This proposal would cover every United States Citizen and be funded by the government in the form of Medisave withholding deductions from paychecks. This would replace the Medicare withholding. The percentage needed can be calculated by a group of budget economists. It would be budget neutral as no new funds would be needed.
Medicare and Medicaid would end along with the regulations. Patients would have open access to any doctor or health care provider they choose in the free market. Payment would be direct from their Medisave accounts at the time of service or as agreed upon between patient and the doctor or provider. There would be no third party involved to increase costs or intrude upon the doctor-patient relationship. And most importantly, those with medical expertise and genuine interest in our patients' health will once again have absolute control.
Thursday, June 12, 2008
Tuesday, June 3, 2008
An Open Letter from America's Physicians
Dr Steven Horvitz- Reading between the lines: Healthcare Information you can trust!
In the first half of 2008, I have been involved in a grass roots campaign with other doctor's across the nation whose goal is to reform the healthcare system and to restore the doctor-patient relationship to make healthcare once again affordable for all. Written below is a letter that I helped to create along with six other doctors. We are presently acquiring physician signatures so that we can present our thoughts on the problems that face our healthcare system and how we can best solve them.
We presently have over 3,200 physician signatures with more each and every day.
I ask for your opinions on healthcare today and on the letter as it is written. The physician community truly wants to partner with the American public to create and better system.
----------------------------------------------------------------------------------------------------------------
An Open Letter from America's Physicians
Dear Fellow Americans,
For decades the United States has led the world in healthcare. We have enjoyed the finest hospitals, medical schools, research, technology, and resources. Unfortunately, our healthcare system has lost focus to the point where patient well-being is placed after politics, profits, and special interests. Healthcare costs are on the rise and patients have lost their freedom of choice. These trends are hurting our economy and compromising the doctor-patient relationship. As a result, it has become difficult for physicians to deliver the best possible care.
Our heavily fragmented healthcare system has made it very difficult for you, the American public, to get the care you need. As your physicians, we want to partner with you to address the critical defects of the system as outlined below:
Dear Fellow Americans,
For decades the United States has led the world in healthcare. We have enjoyed the finest hospitals, medical schools, research, technology, and resources. Unfortunately, our healthcare system has lost focus to the point where patient well-being is placed after politics, profits, and special interests. Healthcare costs are on the rise and patients have lost their freedom of choice. These trends are hurting our economy and compromising the doctor-patient relationship. As a result, it has become difficult for physicians to deliver the best possible care.
Our heavily fragmented healthcare system has made it very difficult for you, the American public, to get the care you need. As your physicians, we want to partner with you to address the critical defects of the system as outlined below:
- You are paying a lot for healthcare and not receiving enough in return. Your insurance premiums continue to increase while your healthcare options are dwindling. Gatekeepers, insurance networks, and restrictive regulations limit your choice of doctors and your access to care.
- You have been made dependent on complicated and expensive health insurance plans. Employers are forced to take money out of your paycheck to purchase health coverage. If you lose your job, you are left with no safety net and the money you have paid for health coverage vanishes.
- The time you spend with your physician has become remarkably brief due to regulatory hurdles requiring doctors to spend more time on documentation than with you.
- The insurance industry's undue authority and oppressive control over healthcare processes
- Excessive and misguided government regulation
- The practice of defensive medicine in response to a harmful and costly legal environment
We, the physicians of the United States, will no longer remain silent. We will not tolerate a healthcare system where those without medical expertise or genuine interest in our patients' health have absolute control. This letter is merely a summary of the most important problems in our current system. We believe that by partnering with the public we can start to demand real change and formulate practical solutions.
We invite you, our patients, friends, neighbors, and employers to unite with us at this important time in the history of healthcare in the United States. Together, we can guarantee our nation a healthier tomorrow.
Please talk to your doctor about this letter and visit http://www.sermo.com/doctor... for more information.
Respectfully,
The Undersigned U.S. Physicians
Monday, May 12, 2008
The Clock is Ticking. My response to a blog post on HealthBeat
The Clock is Ticking. My response to a blog post on HealthBeat.
The link to the above original post on Healthbeat is found next: http://www.healthbeatblog.org/2008/05/the-clock-is-ti.html
I have copied it below with my comments in red.
May 12, 2008
The Clock Is Ticking
After being re-elected in 2004, President Bush began touting an ambitious social policy platform, the so-called "ownership society." Part of this agenda was a strong push for high-deductible health plans (HDHPs) coupled with health savings accounts (HSAs)—tax-free savings accounts to pay for health care expenses.
Like so much else that the Bush Administration attempted (author’s- Niko Karvounis- bias), the ownership society flopped (author’s - Niko Karvounis bias),, in large part because it called for the privatization of Social Security (which failed due to Democratic party disagreements, not to any failure of the Bush administration). With this failure (author’s - Niko Karvounis- bias),, HDHPs and HSAs fell out of the public spotlight. To the casual observer, the question of whether or not health care reform should move in this direction seemed to have been put to rest.
But even though they are no longer in the political spotlight, HDHPs and HSAs are actually thriving—and in fact penetrating our health care system at a relatively brisk rate (The result of free market forces at work). This is problematic (the authors - Niko Karvounis - opinion only). Not only are HDHP/HSA plans poor policy, but their proliferation also weakens the political viability of the health care reform we really need (the authors - Niko Karvounis -opinion only, not a fact).
Here are the numbers: at the end of last month, the Associated Press reported that the number of Americans enrolled in HDHP/HSA plans has nearly doubled (free market forces at work) from 2006 estimates, to around 6 million. Admittedly (by whom?), these plans still have a long way to go before they become a force to be reckoned with. America’s Health Insurance Plans estimate that enrollment in HDHP/HSA plans comprises just 3.4 percent of the private insurance market in the U.S., and in March, Employee Benefit Research Institute (EBRI) estimates that 42 percent of people who have HDHPs and are eligible for HSAs don’t even use the accounts (that is because it is up to the individual, not the government or the the employer. Its called individual responsibility).
Nevertheless, a doubling of enrollees over two years is nothing to scoff at (I agree). And while national rates of enrollment are still meager, the picture’s somewhat different at the state level. The AP reports that in Minnesota, the state with the highest percentage of HDHP enrollees, "about 9.2 percent of the state's total enrollment in private health insurance comes through high-deductible plans. Following closely behind [are] Louisiana, [at] 9 percent and the District of Columbia, [with] 8.7 percent."
State governments are also beginning to turn to HDHPs and HSAs as models for reform. Last week, Georgia passed a law—with the support of Newt Gingrich—that will give insurers $146 million in tax breaks for selling HSA plans (While I like HSA’s, I don’t understand the need for tax breaks to health insurance companies to sell them.). In Indiana, Health Affairs reports that HSAs are being coupled with Medicaid to provide high-deductible health insurance to low-income citizens. (Maybe a way for the Medicaid population to save for their future medical needs, as we do not expect individuals to remain on Medicaid their entire lives. Sort of like Welfare reform signed into law by Bill Clinton.)
In practice, the HSS/HDHP combination makes little sense for families poor enough to qualify for on Medicaid. The $1,100 deductible is more money that most impoverished families have lying around, and the requirement that they contribute 2 percent to 5 percent of their income to the HSA each month ignores the fact that families on Medicaid live paycheck to paycheck and often run out of groceries before the end of the month. (Scare tactic. Please prove that claim) They don’t have a 2 percent to 5 percent cushion to deposit in an HSA. (Not much to disagree on here, but some form of means testing and a way for each individual to save for the future to get off public assistance would be helpful. All income classes would agree with that.)
Yet while Bush was unable to broadly institutionalize HDHPs and HSAs in one stroke Social Security (which failed due to Democratic party disagreements, not to any failure of Bush administration)., it's clear that the two still have made major inroads into our health care system—and into policymakers’ thinking on reform (free market acting on its own!). With so much activity surrounding HDHP/HSA plans, projections for growth are optimistic: the U.S. Treasury Department estimates that there will be 14 million HSA policies in place across the U.S. by 2010.
Despite this healthy forecast, HDHPs and HSAs aren’t the answer to America’s health care problems (again, the author’s – Niko Karvounis -opinion only, not a fact). As I’ve noted in the past, consumer-driven health plans require a lot of out-of-pocket spending (even in the Indiana Medicaid/HSA program, the annual deductible is a not-cheap $1,100). Big expenses at the point of service encourage patients to forego necessary care—including patients with chronic conditions, who often end up needing more costly and extensive catastrophic care down the line. With HDHPs, patients save now, and pay—a lot—later (Instead we have today’s system, where people get everything and then some, and paying little for it, but at much higher premiums, without better long-term medical outcomes. Wouldn’t you rather get a higher paycheck, then insurance you don’t use?)
HDHPs and HSAs also do little for the uninsured, since most families without health insurance are low-income won’t be able to afford health coverage that asks them to pay $4,000 out of pocket before their insurance kicks in (I would like to see true data on this one. Medicaid is available for the lowest income earners. Many of the others are uninsured by choice, not due to income. If affordable coverage was available, they might not be uninsured.) (In 2005, $4,000 was the average HDHP deductible for a family). No wonder EBRI found that in 2007 only 7 percent of people enrolled in HDHP with HSAs were uninsured before they got their current plan, and just 15 percent of those in HDHPs without HSAs had no insurance before enrolling. (And what percent of people today do NOT have insurance? Is it greater than 7-15%? The 2007 estimated population is just over 300 million. If we count 47 million as uninsured that is just over 15%- numbers seem the same to me!)
Asking people to pay more is not the way to expand health insurance to those without it—especially since the higher out-of-pocket spending of HDHPs is often coupled with increasingly expensive premiums. (Not even near as expensive as todays traditional plans) In April, the Minneapolis Star-Tribune reported the story of John Gruber, a 63 year-old man who has an HDHP/HSA plan and who has continually seen his health care costs increase. Even though Gruber’s medical bills have never exceeded his deductible, his insurer Blue Cross Blue Shield upped his monthly premium from $337.50 a month to $470.50 in 2007, a 39 percent increase. His annual deductible also increased from $3,500 in ’04 to $4,100 in ’07. (Why not give the example of the many individuals with insurance that never visit the doctor, have minimal to no healthcare costs. What is the cost savings in premiums and personal healthcare costs to them? What is the profit to the insurer? )
Gruber’s case is not unique: the Star-Tribune quotes Blue Cross Blue Shield as admitting that HDHP premiums are increasing just like those for traditional insurance plans. Patients are paying more out-of-pocket and more in premiums. And don’t count on HSA savings to soften the blow of high health care costs, which have been growing faster than investment returns. (As HSA savings grow year to year, patients will have money saved up for their deductibles, while the catastrophic costs will be covered by their plan. So the problem is ???)
The only folks who can really benefit from HDHPs and HSAs are high-income earners. When you have enough money to pay for your health care expenses, high-deductible plans aren’t a problem; and if you are wealthy, you also have more money to save, making HSAs more useful. (Class warfare at its finest). Finally, HSAs offer a way to permanently shelter you income. Like an IRA, or a 401-k, an HSA gives an employee a chance to squirrel away pre-tax dollars—you don’t pay any income tax on the money the year you put it into the tax shelter.
But with the HSA, the deal is even sweeter: when employees withdraw money from the HSA to cover medical expenses, they still don’t have to pay any taxes on the either the principal or the dividends and capital gains that have compounded over the years. Moreover, "medical expenses" include items often not covered by health insurance including contact lenses, in vitro fertilization, psychoanalysis and dental work. (Coverage for items not covered under todays insurance system- Sounds terrible to me ????? So the problem is??)
As a tax shelter, the HSA has no peer, at least for healthy, wealthy Americans. (No, it works for all Americans regardless of income) Today, a family with cash to spare can sock away up to $5,800 a year, tax-free, sign up for high-deductible policy that will cover catastrophes—and then pay for check-ups, flu shots, mammograms, eye exams and the occasional childhood accident out of a separate account. (That is called choice, and in a free society, choice is to be desired and not taken away)
Why not use the $5,800 in the HSA to cover the medical expenses? Because if you don’t touch the HSA you can carry it over to the next year, contribute another $5,800 and watch the account compound, tax-free, for decades. (And the problem with that is???)
As a gift from the government (actually a remarkably generous present from other,less fortunate taxpayers), the HSA can’t be beat. (How is money that individuals earned and saved, a gift from the government. The government did not work to earn the HSA-money, the individual did. It is not the governments money to take.) A family that tucks $5,800 into an HSA for 30 years, and earns 7 percent a year on their investments, will wind up with a nest egg worth well over half a million dollars—tax free. (And the problem there is??) You can then leave the HSA to a spouse, again without paying taxes. (If your spouse happens to be, say, 20 or 30 years younger than you are, he or she can look forward to continuing the family tradition of contributing to an HSA, and watching it grow, tax-free, for another few decades). (A spouse 20-30 years younger than you. Wow. All I can say is Way to Go!!!!)
A GAO report from last week suggests that families have caught on to the benefits of using HSAs as tax shelters. In 2005 contributions to HSAs totaled $754 million, more than double the $366 million in withdrawals (And the profits of the health insurance companies over that same time period dwarfs the 754 million. Where would you rather have the money saved? In the insurers bank accounts as profits, or in your own tax free medical-health savings account.) This disparity between what people put in and what people take out of HSAs suggests that there’s a certain degree of money hoarding at work, with folks taking advantage of the opportunity to stash big bucks away in a tax-free haven. This has nothing to do with promoting healthcare or a healthier America. (What you call hoarding, others call saving for the future, so as not to have to ask the government or their employer to pay their expenses.)
Given the advantages for the wealthy, it should come as no surprise that taxpayers with HSAs earn almost two-and-a-half times as much as the average American, with an average adjusted gross income of $139,000—compared to $57,000 for all other filers.
Besides the basic injustice of a health care policy that so explicitly favors the rich and the healthy, there’s another reason to be concerned over the high-income bias of HDHPs and HSAs. Maggie has written a lot about how meaningful, system-wide health care reform is going to require a high degree of unity, and she’s right (the author’s - Niko Karvounis - opinion, not fact). But HDHPs and HSAs undermine this unity by giving high-income Americans the opportunity to "check out" of health care reform. (Incorrect assumption. It gives all Americans with HSA’s the ability to put away money for their future healthcare, instead of giving it to insurance companies for profit.)
Think about it. HDHP/HSA plans are a sweet deal for the rich. They pay for care only when they need it—a risk that they can afford thanks to their deep pockets—and they have a new tax shelter to boot. How on Earth are we going to convince the rich to pay higher taxes to fund universal health care if they settle into this cushy situation? (Here is the author’s - Niko Karvounis -biased answer for healthcare reform. Have the rich pay for healthcare for all of America. Is that the American Way???)
Unfortunately, HDHPs and HSAs are indeed becoming the pet policy of high-income earners. According to a March Employee Benefits Research Institute/Commonwealth Fund report, 31 percent of households that held these plans had incomes of $100,000 in 2007—up from 22 percent in 2005. In contrast, just 19 percent of households with high-deductible plans made under $50,000 in 2007, down from 33 percent in 2005. The demographics of HDHP/HSA plans are becoming more uniformly high-income. (Meanwhile, there was little change in income distribution of people enrolled in traditional insurance). (That leaves 50% of households with HSA’s who earn between $50,000 and $100,000- Does not sound uniformly high-income to me!)
HDHPs and HSAs run the risk of dividing our commitment to health care reform by fragmenting interests—and not just for rich people (author’s - Niko Karvounis -opinion, not fact). Like high-income Americans, employers have a vested interest in exploiting HDHPs and HSAs. (Employers exploiting – interesting use of words!) In this case, the appeal lies in the offloading of responsibility. Premiums tend to be lower for HDHP plans than for traditional health insurance, which means that employers contribute less to them. Further, employers are not required to contribute to employees’ HSAs—and in fact there’s a legal limit to how much an employer can contribute if it chooses to do so.
This is good news for employers, who are eager to minimize their health care responsibilities. (I guess it matters whose responsibility healthcare is. I always assumed that healthcare was the responsibility of individuals and families, not employers or government. Why not ask employees if they prefer higher take home salaries or more expensive health insurance?) Indeed, the proportion of U.S. workers covered by employer-based coverage fell from 51.1 percent in 2000 to 48.8 percent in 2006. HDHP/HSA plans might be a happy surprise for the rich, but for employers, they are a long-awaited backdoor exit. So it’s no surprise that firms are increasingly offering HDHPs and HSAs to their employees. The Kaiser Family Foundation reports that in 2003 less than one percent of firms offered HDHP plans with HSAs; in 2007, the share rose to 4.2 percent. Once again, this is not a whopping number, but it’s a rapid increase. (Maybe its due to the high cost of traditional plans.)
Here we have the same problem that surrounds high-income earners: how do you get an interest group to think of the greater good once they catch wind of an immediate alternative that furthers their own self-interest? (Nice rationalization by class warfare! The greater good would be to bring down costs for healthcare, by having individuals assume some individual responsibility for the costs, with government creating a foundation to help those who most need it, not a one size fits all for those who do not!) Can we really expect employers to embrace health care reform that might require mandates or some form of employer-based coverage once they succeed in disengaging from health insurance? Once they’re out of the health care business (Excuse me, but how many employers are in the healthcare business? Does Home Depot sell healthcare? Does your local mom and pop grocery store sell healthcare?), it won’t be easy to pull them back in—even as an intermediary step to universal coverage. (There you have it. Universal coverage. It is not what everyone wants. And to force it by mandating everyone into a single system will just raise costs. Look at the Massachusetts state plan and the cost overruns. Look at all the mandates in Massachusetts. Imagine that on a nationwide scale.)
It’s important to note that neither high-income earners nor employers are officially "out"—at least, not yet. HDHPS and HSAs make up only a tiny part of our system. But as these policies continue to gain ground, the fracturing of health care interests will become more and more of a problem. Wealthy Americans and businesses are two of the most influential lobbies in U.S. politics, let alone health care. If they feel that their self-interest is being served without broader systemic change, then reform is going to be that much more of an uphill battle. (Reform and change are big words being used a lot this election cycle. But the words are not as important as the type of reforms and the type of change that is being proposed)
Ultimately, we should be concerned about HDHPs and HSAs not only because they’re bad policy—which they are—but also because they get in the way of good policy ( The author’s - Niko Karvounis -opinion only- not a fact). And we should get moving on meaningful, universally beneficial health care reform before it’s too late. (I agree on the need for reform of the healthcare system, but not the present author’s vision. We need reform that will bring down costs across the board, by opening up the free market to bring down costs and increase quality. It has worked in all other areas of our economy, it can work in the healthcare system.)
Posted by Niko Karvounis on May 12, 2008.
The remarks appearing in red are by Steven Horvitz, D.O.
The link to the above original post on Healthbeat is found next: http://www.healthbeatblog.org/2008/05/the-clock-is-ti.html
I have copied it below with my comments in red.
May 12, 2008
The Clock Is Ticking
After being re-elected in 2004, President Bush began touting an ambitious social policy platform, the so-called "ownership society." Part of this agenda was a strong push for high-deductible health plans (HDHPs) coupled with health savings accounts (HSAs)—tax-free savings accounts to pay for health care expenses.
Like so much else that the Bush Administration attempted (author’s- Niko Karvounis- bias), the ownership society flopped (author’s - Niko Karvounis bias),, in large part because it called for the privatization of Social Security (which failed due to Democratic party disagreements, not to any failure of the Bush administration). With this failure (author’s - Niko Karvounis- bias),, HDHPs and HSAs fell out of the public spotlight. To the casual observer, the question of whether or not health care reform should move in this direction seemed to have been put to rest.
But even though they are no longer in the political spotlight, HDHPs and HSAs are actually thriving—and in fact penetrating our health care system at a relatively brisk rate (The result of free market forces at work). This is problematic (the authors - Niko Karvounis - opinion only). Not only are HDHP/HSA plans poor policy, but their proliferation also weakens the political viability of the health care reform we really need (the authors - Niko Karvounis -opinion only, not a fact).
Here are the numbers: at the end of last month, the Associated Press reported that the number of Americans enrolled in HDHP/HSA plans has nearly doubled (free market forces at work) from 2006 estimates, to around 6 million. Admittedly (by whom?), these plans still have a long way to go before they become a force to be reckoned with. America’s Health Insurance Plans estimate that enrollment in HDHP/HSA plans comprises just 3.4 percent of the private insurance market in the U.S., and in March, Employee Benefit Research Institute (EBRI) estimates that 42 percent of people who have HDHPs and are eligible for HSAs don’t even use the accounts (that is because it is up to the individual, not the government or the the employer. Its called individual responsibility).
Nevertheless, a doubling of enrollees over two years is nothing to scoff at (I agree). And while national rates of enrollment are still meager, the picture’s somewhat different at the state level. The AP reports that in Minnesota, the state with the highest percentage of HDHP enrollees, "about 9.2 percent of the state's total enrollment in private health insurance comes through high-deductible plans. Following closely behind [are] Louisiana, [at] 9 percent and the District of Columbia, [with] 8.7 percent."
State governments are also beginning to turn to HDHPs and HSAs as models for reform. Last week, Georgia passed a law—with the support of Newt Gingrich—that will give insurers $146 million in tax breaks for selling HSA plans (While I like HSA’s, I don’t understand the need for tax breaks to health insurance companies to sell them.). In Indiana, Health Affairs reports that HSAs are being coupled with Medicaid to provide high-deductible health insurance to low-income citizens. (Maybe a way for the Medicaid population to save for their future medical needs, as we do not expect individuals to remain on Medicaid their entire lives. Sort of like Welfare reform signed into law by Bill Clinton.)
In practice, the HSS/HDHP combination makes little sense for families poor enough to qualify for on Medicaid. The $1,100 deductible is more money that most impoverished families have lying around, and the requirement that they contribute 2 percent to 5 percent of their income to the HSA each month ignores the fact that families on Medicaid live paycheck to paycheck and often run out of groceries before the end of the month. (Scare tactic. Please prove that claim) They don’t have a 2 percent to 5 percent cushion to deposit in an HSA. (Not much to disagree on here, but some form of means testing and a way for each individual to save for the future to get off public assistance would be helpful. All income classes would agree with that.)
Yet while Bush was unable to broadly institutionalize HDHPs and HSAs in one stroke Social Security (which failed due to Democratic party disagreements, not to any failure of Bush administration)., it's clear that the two still have made major inroads into our health care system—and into policymakers’ thinking on reform (free market acting on its own!). With so much activity surrounding HDHP/HSA plans, projections for growth are optimistic: the U.S. Treasury Department estimates that there will be 14 million HSA policies in place across the U.S. by 2010.
Despite this healthy forecast, HDHPs and HSAs aren’t the answer to America’s health care problems (again, the author’s – Niko Karvounis -opinion only, not a fact). As I’ve noted in the past, consumer-driven health plans require a lot of out-of-pocket spending (even in the Indiana Medicaid/HSA program, the annual deductible is a not-cheap $1,100). Big expenses at the point of service encourage patients to forego necessary care—including patients with chronic conditions, who often end up needing more costly and extensive catastrophic care down the line. With HDHPs, patients save now, and pay—a lot—later (Instead we have today’s system, where people get everything and then some, and paying little for it, but at much higher premiums, without better long-term medical outcomes. Wouldn’t you rather get a higher paycheck, then insurance you don’t use?)
HDHPs and HSAs also do little for the uninsured, since most families without health insurance are low-income won’t be able to afford health coverage that asks them to pay $4,000 out of pocket before their insurance kicks in (I would like to see true data on this one. Medicaid is available for the lowest income earners. Many of the others are uninsured by choice, not due to income. If affordable coverage was available, they might not be uninsured.) (In 2005, $4,000 was the average HDHP deductible for a family). No wonder EBRI found that in 2007 only 7 percent of people enrolled in HDHP with HSAs were uninsured before they got their current plan, and just 15 percent of those in HDHPs without HSAs had no insurance before enrolling. (And what percent of people today do NOT have insurance? Is it greater than 7-15%? The 2007 estimated population is just over 300 million. If we count 47 million as uninsured that is just over 15%- numbers seem the same to me!)
Asking people to pay more is not the way to expand health insurance to those without it—especially since the higher out-of-pocket spending of HDHPs is often coupled with increasingly expensive premiums. (Not even near as expensive as todays traditional plans) In April, the Minneapolis Star-Tribune reported the story of John Gruber, a 63 year-old man who has an HDHP/HSA plan and who has continually seen his health care costs increase. Even though Gruber’s medical bills have never exceeded his deductible, his insurer Blue Cross Blue Shield upped his monthly premium from $337.50 a month to $470.50 in 2007, a 39 percent increase. His annual deductible also increased from $3,500 in ’04 to $4,100 in ’07. (Why not give the example of the many individuals with insurance that never visit the doctor, have minimal to no healthcare costs. What is the cost savings in premiums and personal healthcare costs to them? What is the profit to the insurer? )
Gruber’s case is not unique: the Star-Tribune quotes Blue Cross Blue Shield as admitting that HDHP premiums are increasing just like those for traditional insurance plans. Patients are paying more out-of-pocket and more in premiums. And don’t count on HSA savings to soften the blow of high health care costs, which have been growing faster than investment returns. (As HSA savings grow year to year, patients will have money saved up for their deductibles, while the catastrophic costs will be covered by their plan. So the problem is ???)
The only folks who can really benefit from HDHPs and HSAs are high-income earners. When you have enough money to pay for your health care expenses, high-deductible plans aren’t a problem; and if you are wealthy, you also have more money to save, making HSAs more useful. (Class warfare at its finest). Finally, HSAs offer a way to permanently shelter you income. Like an IRA, or a 401-k, an HSA gives an employee a chance to squirrel away pre-tax dollars—you don’t pay any income tax on the money the year you put it into the tax shelter.
But with the HSA, the deal is even sweeter: when employees withdraw money from the HSA to cover medical expenses, they still don’t have to pay any taxes on the either the principal or the dividends and capital gains that have compounded over the years. Moreover, "medical expenses" include items often not covered by health insurance including contact lenses, in vitro fertilization, psychoanalysis and dental work. (Coverage for items not covered under todays insurance system- Sounds terrible to me ????? So the problem is??)
As a tax shelter, the HSA has no peer, at least for healthy, wealthy Americans. (No, it works for all Americans regardless of income) Today, a family with cash to spare can sock away up to $5,800 a year, tax-free, sign up for high-deductible policy that will cover catastrophes—and then pay for check-ups, flu shots, mammograms, eye exams and the occasional childhood accident out of a separate account. (That is called choice, and in a free society, choice is to be desired and not taken away)
Why not use the $5,800 in the HSA to cover the medical expenses? Because if you don’t touch the HSA you can carry it over to the next year, contribute another $5,800 and watch the account compound, tax-free, for decades. (And the problem with that is???)
As a gift from the government (actually a remarkably generous present from other,less fortunate taxpayers), the HSA can’t be beat. (How is money that individuals earned and saved, a gift from the government. The government did not work to earn the HSA-money, the individual did. It is not the governments money to take.) A family that tucks $5,800 into an HSA for 30 years, and earns 7 percent a year on their investments, will wind up with a nest egg worth well over half a million dollars—tax free. (And the problem there is??) You can then leave the HSA to a spouse, again without paying taxes. (If your spouse happens to be, say, 20 or 30 years younger than you are, he or she can look forward to continuing the family tradition of contributing to an HSA, and watching it grow, tax-free, for another few decades). (A spouse 20-30 years younger than you. Wow. All I can say is Way to Go!!!!)
A GAO report from last week suggests that families have caught on to the benefits of using HSAs as tax shelters. In 2005 contributions to HSAs totaled $754 million, more than double the $366 million in withdrawals (And the profits of the health insurance companies over that same time period dwarfs the 754 million. Where would you rather have the money saved? In the insurers bank accounts as profits, or in your own tax free medical-health savings account.) This disparity between what people put in and what people take out of HSAs suggests that there’s a certain degree of money hoarding at work, with folks taking advantage of the opportunity to stash big bucks away in a tax-free haven. This has nothing to do with promoting healthcare or a healthier America. (What you call hoarding, others call saving for the future, so as not to have to ask the government or their employer to pay their expenses.)
Given the advantages for the wealthy, it should come as no surprise that taxpayers with HSAs earn almost two-and-a-half times as much as the average American, with an average adjusted gross income of $139,000—compared to $57,000 for all other filers.
Besides the basic injustice of a health care policy that so explicitly favors the rich and the healthy, there’s another reason to be concerned over the high-income bias of HDHPs and HSAs. Maggie has written a lot about how meaningful, system-wide health care reform is going to require a high degree of unity, and she’s right (the author’s - Niko Karvounis - opinion, not fact). But HDHPs and HSAs undermine this unity by giving high-income Americans the opportunity to "check out" of health care reform. (Incorrect assumption. It gives all Americans with HSA’s the ability to put away money for their future healthcare, instead of giving it to insurance companies for profit.)
Think about it. HDHP/HSA plans are a sweet deal for the rich. They pay for care only when they need it—a risk that they can afford thanks to their deep pockets—and they have a new tax shelter to boot. How on Earth are we going to convince the rich to pay higher taxes to fund universal health care if they settle into this cushy situation? (Here is the author’s - Niko Karvounis -biased answer for healthcare reform. Have the rich pay for healthcare for all of America. Is that the American Way???)
Unfortunately, HDHPs and HSAs are indeed becoming the pet policy of high-income earners. According to a March Employee Benefits Research Institute/Commonwealth Fund report, 31 percent of households that held these plans had incomes of $100,000 in 2007—up from 22 percent in 2005. In contrast, just 19 percent of households with high-deductible plans made under $50,000 in 2007, down from 33 percent in 2005. The demographics of HDHP/HSA plans are becoming more uniformly high-income. (Meanwhile, there was little change in income distribution of people enrolled in traditional insurance). (That leaves 50% of households with HSA’s who earn between $50,000 and $100,000- Does not sound uniformly high-income to me!)
HDHPs and HSAs run the risk of dividing our commitment to health care reform by fragmenting interests—and not just for rich people (author’s - Niko Karvounis -opinion, not fact). Like high-income Americans, employers have a vested interest in exploiting HDHPs and HSAs. (Employers exploiting – interesting use of words!) In this case, the appeal lies in the offloading of responsibility. Premiums tend to be lower for HDHP plans than for traditional health insurance, which means that employers contribute less to them. Further, employers are not required to contribute to employees’ HSAs—and in fact there’s a legal limit to how much an employer can contribute if it chooses to do so.
This is good news for employers, who are eager to minimize their health care responsibilities. (I guess it matters whose responsibility healthcare is. I always assumed that healthcare was the responsibility of individuals and families, not employers or government. Why not ask employees if they prefer higher take home salaries or more expensive health insurance?) Indeed, the proportion of U.S. workers covered by employer-based coverage fell from 51.1 percent in 2000 to 48.8 percent in 2006. HDHP/HSA plans might be a happy surprise for the rich, but for employers, they are a long-awaited backdoor exit. So it’s no surprise that firms are increasingly offering HDHPs and HSAs to their employees. The Kaiser Family Foundation reports that in 2003 less than one percent of firms offered HDHP plans with HSAs; in 2007, the share rose to 4.2 percent. Once again, this is not a whopping number, but it’s a rapid increase. (Maybe its due to the high cost of traditional plans.)
Here we have the same problem that surrounds high-income earners: how do you get an interest group to think of the greater good once they catch wind of an immediate alternative that furthers their own self-interest? (Nice rationalization by class warfare! The greater good would be to bring down costs for healthcare, by having individuals assume some individual responsibility for the costs, with government creating a foundation to help those who most need it, not a one size fits all for those who do not!) Can we really expect employers to embrace health care reform that might require mandates or some form of employer-based coverage once they succeed in disengaging from health insurance? Once they’re out of the health care business (Excuse me, but how many employers are in the healthcare business? Does Home Depot sell healthcare? Does your local mom and pop grocery store sell healthcare?), it won’t be easy to pull them back in—even as an intermediary step to universal coverage. (There you have it. Universal coverage. It is not what everyone wants. And to force it by mandating everyone into a single system will just raise costs. Look at the Massachusetts state plan and the cost overruns. Look at all the mandates in Massachusetts. Imagine that on a nationwide scale.)
It’s important to note that neither high-income earners nor employers are officially "out"—at least, not yet. HDHPS and HSAs make up only a tiny part of our system. But as these policies continue to gain ground, the fracturing of health care interests will become more and more of a problem. Wealthy Americans and businesses are two of the most influential lobbies in U.S. politics, let alone health care. If they feel that their self-interest is being served without broader systemic change, then reform is going to be that much more of an uphill battle. (Reform and change are big words being used a lot this election cycle. But the words are not as important as the type of reforms and the type of change that is being proposed)
Ultimately, we should be concerned about HDHPs and HSAs not only because they’re bad policy—which they are—but also because they get in the way of good policy ( The author’s - Niko Karvounis -opinion only- not a fact). And we should get moving on meaningful, universally beneficial health care reform before it’s too late. (I agree on the need for reform of the healthcare system, but not the present author’s vision. We need reform that will bring down costs across the board, by opening up the free market to bring down costs and increase quality. It has worked in all other areas of our economy, it can work in the healthcare system.)
Posted by Niko Karvounis on May 12, 2008.
The remarks appearing in red are by Steven Horvitz, D.O.
Monday, April 28, 2008
Healthcare Persecution
“Things get worse for you only when you try to accommodate your persecutors”
This is a quote from a book I just finished, “The Charm School” by Nelson Demille.
Definition of persecution: Persecution is persistent mistreatment of an individual/group by another group. The most common forms are religious persecution, ethnic persecution, and political persecution, though there is naturally some overlap between these terms.
How does this relate to healthcare and the transition of my practice?
I will call it Healthcare persecution.
And it depends on who are your persecutors and what type of system you are working. I have heard some physicians complain and complain again about how patients are overly demanding and aggressive about their care. They want everything and they want it immediately. These physicians appear to consider patients as their persecutors.
Insurers have persecuted physicians by making managed care contracts more and more one-sided. No one is forcing physicians to sign these contracts. Yet, physicians over the past twenty years have persecuted themselves and their patients by continuing to participate with these managed care organizations.
A result has been that physicians gave up control of healthcare decisions without even blinking. Can anyone order a MRI without prior approval? Try to get a new pharmaceutical covered. Are we truly making decisions or just asking “Mommy May I?” Are our medical decisions being tainted by trying to avoid the managed care bureaucracy? Do you avoid ordering tests or medications that need managed care prior approval? Is that the type of care you went to medical school to learn? Is that the type of healthcare system you enjoy working in?
Our patients no longer feel that we are their advocates and that we do not have their best interests in mind. In today’s managed care environment, Can you blame them? Our patient’s want our help and want it unconditionally. They want the trust back in the doctor-patient relationship. But until we give up delegating healthcare decisions to insurers, we will not get the trust back.
Why did I stop participating with insurers?
“Things get worse for you only when you try to accommodate your persecutors”
Wednesday, April 23, 2008
Preparing yourselves for the transition away from third parties
Preparing yourselves for the transition away from third parties:
I have been asked by other members of the physician community to write about my practice transition and the different feelings, thoughts and reactions I have had as well as those of my peers, patients and community.
A few necessary items to make the transition are listed below in no particular order:
Courage- I have learned that the path to success is not to always follow the crowd. Watch for patterns and trends and determine what you feel is sustainable and what areas are not.
Thick Skin- There will be many parties that will try to throw mud at you. Face it. A majority of the public does not like change!
Marketing Plan- Be prepared to lose a good portion of your practice. But a good marketing plan outlining the positive and valued aspects of your practice will help you to retain your existing patients while growing your practice with new.
Good communication skills- Goes hand in hand with good marketing. If you or your staff can not communicate the purposes of your transition, it will not succeed.
Savings or a spouse that works- Be prepared for a possible decrease in your revenues. It should increase as patients who desire your new style of practice join you, but how long it will take is not possible to predict.
Ability to stay within a budget- You had better have a firm grasp on your practices finances. Knowing where every dollar goes and being able to determine how much overhead you can cut to keep the practice going and to keep your income flowing is an absolute necessity.
Proactive and visionary- If you wait until everyone else is doing it, you will be left behind.
--------------------------------------------------
Patient’s reactions:
Yelling and Screaming- There have actually been patients who have called up my office yelling and screaming that I no longer work with insurers. They do not understand the concept of a doctor-patient relationship without third party intrusion. I find that these are the patient’s who trust doctors the least.
Abandonment- Some patient’s feel abandoned. Again, you or your staff need to explain to all your practice that they are all still welcome, only that they will be responsible for payments as opposed to insurance.
Entitled- These are the patient’s who feel that they bought a product (insurance plan) that entitles them to free or low priced care.
"I already pay too much for insurance": Some patient’s, no matter how much they like you, feel that healthcare costs too much already by complaining about their insurance premium. It is a difficult concept for patient’s to understand but health insurance and healthcare are two different entities.
Excited and understanding: I like these patients. They understand the issues facing physicians, and they also value our services.
---------------------------------------
Doctor’s in the community:
Inquisitive: I have had responses from other docs such as, "You are doing what?, I wish I had the courage to do that!, and "You’ll end up going back to insurers"
Watching from afar: These same docs are also watching from afar. Many pharmaceutical reps have taken questions from other docs in the community asking how my transition is going.
Eager to steal your patients: Soma, albeit a minority of doctors, actually badmouth me and my new practice style to patients who have transferred out. This is the part I do not understand and is one of the main reasons our profession has been taken over by the big business interests.
Trying to find the courage to be the next to transition: There is one other doctor in my community who has given up insurance and switched to a Concierge practice. In speaking with him, so far he is very happy, and he feels that he has his patients respect.
Respect: Whether other physicians approve or disapprove of my transition, I have earned their respect for making a bold move.
---------------------------------------------------------
My feelings through the transition:
Excitement: It is exciting to start over again. Now I have not totally started over as about 40-50% of my patients have remained in my practice. But it feels good for the ego when you find out that people do value your services and that you are not just another name in the insurance directory.
Pissed off at Insurance lies to patients: I get calls from patients who tell me that the insurance company will not cover testing if it is ordered by a non-participating doctor. Unless the patient is in a managed care setting, this is wrong and disingenuous on the part of the insurance industry. A good article on the above abuses can be found by following this link to an article entitled "The Health Insurance Mafia."
Fear: On the days when I see 6 patients instead of the 25 I would usually average, it can get depressing or fearful. But then the next day comes and I have 20 patients and the fear fades.
Boredom: What do I do with all the free time I have at the office when I am not seeing patients. Well so far, I have had all my paper charts scanned into electronic format, and all the paper and filing cabinets stored in a basement. I am cleaning out some exam rooms and decluttering the other office rooms. I am preparing to give some rooms a new look, new paint and more open airy feel. I have time to journal my thoughts on this transition by use of this blog, and also posting to SERMO, a physicians online community.
Like a doctor again: Imagine you are a primary doctor and you want to send a patient for some tests. You hand them a prescription and send them to your medical assistant who helps the patient schedule the test. No referrals needed. No time consuming bureaucratic waste, a happy patient who feels the office is truly helping them get through the maze of the healthcare system.
More time to spend with family and friends: The best part of the process so far. While I am a physician, I am first a husband, father, friend and neighbor.
Enjoyment of the challenge: Whenever I get bored, I look for a new challenge. I have found it. While my office is low in patient volume, it will increase within a few years, and I will look back on the boredom and wish I had some of it again.
More info on my office can be found on my website at http://www.drhorvitz.com/
I have been asked by other members of the physician community to write about my practice transition and the different feelings, thoughts and reactions I have had as well as those of my peers, patients and community.
A few necessary items to make the transition are listed below in no particular order:
Courage- I have learned that the path to success is not to always follow the crowd. Watch for patterns and trends and determine what you feel is sustainable and what areas are not.
Thick Skin- There will be many parties that will try to throw mud at you. Face it. A majority of the public does not like change!
Marketing Plan- Be prepared to lose a good portion of your practice. But a good marketing plan outlining the positive and valued aspects of your practice will help you to retain your existing patients while growing your practice with new.
Good communication skills- Goes hand in hand with good marketing. If you or your staff can not communicate the purposes of your transition, it will not succeed.
Savings or a spouse that works- Be prepared for a possible decrease in your revenues. It should increase as patients who desire your new style of practice join you, but how long it will take is not possible to predict.
Ability to stay within a budget- You had better have a firm grasp on your practices finances. Knowing where every dollar goes and being able to determine how much overhead you can cut to keep the practice going and to keep your income flowing is an absolute necessity.
Proactive and visionary- If you wait until everyone else is doing it, you will be left behind.
--------------------------------------------------
Patient’s reactions:
Yelling and Screaming- There have actually been patients who have called up my office yelling and screaming that I no longer work with insurers. They do not understand the concept of a doctor-patient relationship without third party intrusion. I find that these are the patient’s who trust doctors the least.
Abandonment- Some patient’s feel abandoned. Again, you or your staff need to explain to all your practice that they are all still welcome, only that they will be responsible for payments as opposed to insurance.
Entitled- These are the patient’s who feel that they bought a product (insurance plan) that entitles them to free or low priced care.
"I already pay too much for insurance": Some patient’s, no matter how much they like you, feel that healthcare costs too much already by complaining about their insurance premium. It is a difficult concept for patient’s to understand but health insurance and healthcare are two different entities.
Excited and understanding: I like these patients. They understand the issues facing physicians, and they also value our services.
---------------------------------------
Doctor’s in the community:
Inquisitive: I have had responses from other docs such as, "You are doing what?, I wish I had the courage to do that!, and "You’ll end up going back to insurers"
Watching from afar: These same docs are also watching from afar. Many pharmaceutical reps have taken questions from other docs in the community asking how my transition is going.
Eager to steal your patients: Soma, albeit a minority of doctors, actually badmouth me and my new practice style to patients who have transferred out. This is the part I do not understand and is one of the main reasons our profession has been taken over by the big business interests.
Trying to find the courage to be the next to transition: There is one other doctor in my community who has given up insurance and switched to a Concierge practice. In speaking with him, so far he is very happy, and he feels that he has his patients respect.
Respect: Whether other physicians approve or disapprove of my transition, I have earned their respect for making a bold move.
---------------------------------------------------------
My feelings through the transition:
Excitement: It is exciting to start over again. Now I have not totally started over as about 40-50% of my patients have remained in my practice. But it feels good for the ego when you find out that people do value your services and that you are not just another name in the insurance directory.
Pissed off at Insurance lies to patients: I get calls from patients who tell me that the insurance company will not cover testing if it is ordered by a non-participating doctor. Unless the patient is in a managed care setting, this is wrong and disingenuous on the part of the insurance industry. A good article on the above abuses can be found by following this link to an article entitled "The Health Insurance Mafia."
Fear: On the days when I see 6 patients instead of the 25 I would usually average, it can get depressing or fearful. But then the next day comes and I have 20 patients and the fear fades.
Boredom: What do I do with all the free time I have at the office when I am not seeing patients. Well so far, I have had all my paper charts scanned into electronic format, and all the paper and filing cabinets stored in a basement. I am cleaning out some exam rooms and decluttering the other office rooms. I am preparing to give some rooms a new look, new paint and more open airy feel. I have time to journal my thoughts on this transition by use of this blog, and also posting to SERMO, a physicians online community.
Like a doctor again: Imagine you are a primary doctor and you want to send a patient for some tests. You hand them a prescription and send them to your medical assistant who helps the patient schedule the test. No referrals needed. No time consuming bureaucratic waste, a happy patient who feels the office is truly helping them get through the maze of the healthcare system.
More time to spend with family and friends: The best part of the process so far. While I am a physician, I am first a husband, father, friend and neighbor.
Enjoyment of the challenge: Whenever I get bored, I look for a new challenge. I have found it. While my office is low in patient volume, it will increase within a few years, and I will look back on the boredom and wish I had some of it again.
More info on my office can be found on my website at http://www.drhorvitz.com/
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