Wednesday, August 11, 2004
Tearing down the Berlin Wall of health care insurance
[Joel Belz, "Life support," World Magazine, 14 August 2004.]
While it can be easy to fall into despair over the current costly insurance system, columnist Joel Belz urges us not to lose hope:
If you think that the greatest significance of the collapse of the Berlin Wall 15 years ago was the freedom that event brought to several million East Germans, think again.
The really important lesson from that great tumble was this: Don’t ever assume that the impossible can’t happen! Don’t think that any captivity must necessarily last forever.
I thought about that last week with reference to two much more mundane, but still very costly, forms of bondage: health insurance and Social Security. Most of us these days typically set aside more than 25 percent of every paycheck to cover those two items, and are assured by the actuaries that we’re on a trajectory where it will soon take a full third of our compensation. Still, we gloomily knuckle under and consign ourselves to perpetual oppression.
Well. As candidate John Kerry would say—but not at all in the sense in which he means it: Help is on the way! The Berlin Walls of health insurance and Social Security are showing some huge cracks. And the election of 2004 will go far to tell us whether it’s real or phony help.
A relatively new approach called “Health Savings Accounts” (HSA) is picking up speed. Part of the Medicare Reform Act effective since [January] 1 of this year, and therefore now the law of the land, HSAs have several advantages over traditional medical insurance. The key is in moving important parts of responsibility for health care from the employer to the employee.
The incentives are at least threefold: (1) your desire to keep the money in that account for yourself, and perhaps to watch it grow year after year, slowing down your use of healthcare services; (2) your ability to shop among a variety of healthcare providers, with no limitations dictated by your insurance company; and (3) your option to ask your healthcare provider for a discount for cash—a discount increasingly available from providers eager to escape the high cost of paperwork and process. The huge overhead of the insurance bureaucracy, estimated by many to range between 30 percent and 50 percent of all healthcare costs, would begin to disappear.
Richard Matthews, a specialist in employee benefits for the last three decades, told us last week while outlining some of these details that no matter what, responsibility for healthcare provision will pass soon from the nation’s employers. “Employers simply can’t continue paying double-digit annual increases for health insurance,” Mr. Matthews said. “Their only option—already—is to take it out of employee paychecks. So now, the only question is whether employers pass that responsibility back to individual employees for their own decision-making (just like they do for homeowners insurance and car insurance) or to the federal government and a nationalized healthcare system. It will be one or the other. The present system will not continue.”
In other words, this part of the Berlin Wall will either soon be torn down—or it will be built even higher. With a decision like that staring us in the face, isn’t it time for a little optimism?
[Joel Belz, "Life support," World Magazine, 14 August 2004.]
While it can be easy to fall into despair over the current costly insurance system, columnist Joel Belz urges us not to lose hope:
If you think that the greatest significance of the collapse of the Berlin Wall 15 years ago was the freedom that event brought to several million East Germans, think again.
The really important lesson from that great tumble was this: Don’t ever assume that the impossible can’t happen! Don’t think that any captivity must necessarily last forever.
I thought about that last week with reference to two much more mundane, but still very costly, forms of bondage: health insurance and Social Security. Most of us these days typically set aside more than 25 percent of every paycheck to cover those two items, and are assured by the actuaries that we’re on a trajectory where it will soon take a full third of our compensation. Still, we gloomily knuckle under and consign ourselves to perpetual oppression.
Well. As candidate John Kerry would say—but not at all in the sense in which he means it: Help is on the way! The Berlin Walls of health insurance and Social Security are showing some huge cracks. And the election of 2004 will go far to tell us whether it’s real or phony help.
A relatively new approach called “Health Savings Accounts” (HSA) is picking up speed. Part of the Medicare Reform Act effective since [January] 1 of this year, and therefore now the law of the land, HSAs have several advantages over traditional medical insurance. The key is in moving important parts of responsibility for health care from the employer to the employee.
The incentives are at least threefold: (1) your desire to keep the money in that account for yourself, and perhaps to watch it grow year after year, slowing down your use of healthcare services; (2) your ability to shop among a variety of healthcare providers, with no limitations dictated by your insurance company; and (3) your option to ask your healthcare provider for a discount for cash—a discount increasingly available from providers eager to escape the high cost of paperwork and process. The huge overhead of the insurance bureaucracy, estimated by many to range between 30 percent and 50 percent of all healthcare costs, would begin to disappear.
Richard Matthews, a specialist in employee benefits for the last three decades, told us last week while outlining some of these details that no matter what, responsibility for healthcare provision will pass soon from the nation’s employers. “Employers simply can’t continue paying double-digit annual increases for health insurance,” Mr. Matthews said. “Their only option—already—is to take it out of employee paychecks. So now, the only question is whether employers pass that responsibility back to individual employees for their own decision-making (just like they do for homeowners insurance and car insurance) or to the federal government and a nationalized healthcare system. It will be one or the other. The present system will not continue.”
In other words, this part of the Berlin Wall will either soon be torn down—or it will be built even higher. With a decision like that staring us in the face, isn’t it time for a little optimism?
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