The Danger of Consumer-Driven Health Care Crash Course
by Jonathan Cohn
The New Republic
Nov. 7, 2005
Health care operates by what economists commonly call an “80/20” rule. In any given year, most of the money being spent on medical care in the United States (about 80 percent of the total) is for the relatively small portion of Americans (about 20 percent of the population) recovering from severe accidents, fighting off a life-threatening disease like cancer, or struggling with a serious chronic condition like diabetes.
… traditional health insurance spreads the financial burden, using premiums paid by people who don’t use many medical services to help pay the bills of those who do. The trouble with HSAs is that they change the equation, dramatically, allowing people in relatively good health to keep much more of their own money. “One hundred percent of the time it makes sense for a healthy person to take the savings account,” one benefits consultant explained in The Tampa Tribune. “That’s a no-brainer.” But, once that happens, there’s less money to subsidize care for the people with high medical bills–which means those people must either make up the difference themselves or simply go without care. “A wholesale switch to [HSAs] would redistribute the nation’s overall financial burden of health care from the budgets of chronically healthy families to those of chronically ill families,” Princeton economist Uwe Reinhardt has written. “One should simply not brush these ethical issues aside.”
…we need to go back to the guiding principle of group health care–that the way to both lower costs and serve as many Americans as possible is to broaden, rather than shrink, the patient pool. One way to do this is through the plan we’ve been flirting with since the Progressive era–universal health coverage. These days, the case for it seems stronger than ever.
Depending on how it’s structured, universal health care would either limit or eliminate altogether the employers’ responsibility for their workers’ health bills, by transferring greater financial responsibility to an even broader base: the entire population, through some combination of taxes and premiums.
(Jonathan Cohn is a senior editor at The New Republic. He is currently writing a book on the U.S. health-care system.)
http://www.tnr.com/user/nregi.mhtml?i=20051107&s=cohn110705&pt=5%2FcM70%2FKqHd9828cDSfJPW%3D%3D
Comment: The full article is well worth reading for those who want an excellent crash course on the danger of consumer-directed health care.
We are looking forward to the publication of Jonathan Cohn’s new book on the U.S. health-care system. Now, more than ever, there is a greater need for more light and less heat on the subject.