The New York Times
August 31, 2004
Full Text of the Remarks of Senate Majority Leader Bill Frist
This victory for our Party (2003 Medicare legislation)– and above all for Seniors — is part of a larger battle we’re fighting on behalf of every American. How we do so is crucial. Our opponents have a way of confusing compassion with dependency. We believe true compassion encourages and empowers Americans to be responsible and take control of their own lives.
That’s what President Bush and the Republican Congress did when we made Health Savings Accounts — HSAs — the law of the land. With an HSA you can
invest tax-free in a personal savings account. You can roll it over year to year or withdraw funds if you get sick … without paying a penny of tax. YOU own it. YOU invest it. YOU grow it. YOU control it. It is YOURS.
So here’s the choice: do we grow the bureaucracy and gouge you with higher
taxes, as Mr. Kerry will do? Or, do we let the American people grow their own HSAs and own their health care, as George Bush wants to do? We’ve made
our choice.
http://www.nytimes.com/2004/08/31/politics/campaign/01TEXT-FRIST.html
Comment: My comments here are about policy. They are partisan only in the
respect that politicians have staked out their policy positions, as they clearly should. The democratic process is at its best when we vote based on an understanding of the policy stances of the candidates.
Tomorrow evening, President Bush will advocate for the “ownership society.” This concept supports individual responsibility and opposes dependency. In his speech, Sen. Frist quite explicitly expresses the view that Americans should take responsibility for their own health care through mechanisms such as Health Savings Accounts (HSAs), while avoiding dependency on others. Quite implicit in this is the fact that funding for health care should come primarily from an individual’s own funds rather than from a pool of funds to which everyone contributes, whether that be private insurance or a public program such as Medicare.
What would happen if each American funded a separate account for his or her
own health care? About 70% of our population uses only about 10% of the health care delivered in this nation. The other 30% utilizes 90% of the care
(5% utilize over half of all care). If you split up the risk pool into individual accounts then 10% of care will be funded by 70% of the population, whereas 90% of health care costs would be funded by the other 30%. For that 30%, that would average over $18,000 per individual per year (90% of the $1.79 trillion 2004 health expenditure divided by 30% of 290 million population). Conversely, for the healthy 70%, their annual contribution would average less than $900. This does not include the consideration that there would be winners and losers within each group, depending on amount of need. Clearly most individuals with significant health care needs could not afford to fund personal accounts that would be adequate for their needs.
To be realistic, the Republican leadership does not entirely dismiss dependency on others in that they recognize the necessity of high deductible (catastrophic) insurance to cover those who do have major losses. But how well would that work? They claim that catastrophic plans are very affordable and they prove this by citing the premium for healthy young individuals with no preexisting disorders which may be about $1000/year. But what would the premium actually be? Let’s say that we ask each individual to place $5000 in an individual account (though a mechanism would need to be in place to fund the accounts of those with no disposable income). You have now pulled $1.45 trillion out of the contribution to the risk pool ($5000 times 290 million population), leaving $340 billion ($1.79 trillion minus 1.45 trillion) to fund the $1.18 trillion worth of care (an amount that we are already spending) that would fall under the catastrophic coverage for the 30% with needs (90% of $1.79 trillion less the $5000 times 30% of the 290 million population that is the patients’ share of the contribution from their own accounts). That “low cost” high deductible plan actually would cost $4000 per each man, woman and child. Add that to the $5000 for each and
suddenly protection from financial loss costs close to $9000 per capita or
$36,000 for a family of four! That $9000 per capita adds up to a national health
care bill of $2.6 trillion ($9000 times 290 million population) rather than the $1.79 trillion we are currently paying. That extra $800 billion exposes the fraud behind the concept of individual accounts. Those extra funds are inequitable, regressively funded personal savings – nothing more, nothing less.
Perhaps high deductible insurance doesn’t really fit in with the ownership society, and we should just allow those with health care needs to do the best that they can. We can provide them with compassion as they struggle with their needs. Or maybe, just maybe, we should accept the concept that we need to take care of those with needs by paying for their care out of a pool that we all fund on an equitable basis.
Naw… those with needs would be abandoning their personal responsibility to
take care of themselves and their loved ones, and really wouldn’t be worthy of our compassion. I’ve “confused compassion with dependency,” and Dr. Frist
understands the difference.
