Thursday, June 30, 2005
Congress to tighten Medicaid estate planning
[Ricardo Alonso-Zaldivar, "Senate Takes On Medicaid Loopholes," The Los Angeles Times, 30 June 2005.]
Medicaid estate planning is increasingly coming under fire as a way to game the system and improperly use taxpayer dollars:
Congress is considering a crackdown on financial planning strategies increasingly favored by middle-class families to shift the cost of nursing home care for elderly parents onto the federal government.
Senate Finance Committee Chairman Charles E. Grassley (R-Iowa) denounced the practices Wednesday as "legal shenanigans" and vowed to help stop maneuvers he said were turning Medicaid into an asset protection program, instead of what it was supposed to be — an insurer of last resort for elderly people too poor to afford care.
Tightening the rules could save Medicaid $1 billion to $2 billion over five years, Grassley said, though Medicaid's long-term care bill is projected at $290 billion over the next five years.
[See Stephen A. Moses, "Project Proposal: Controlling Medicaid Long-Term Care Costs," The Flint Hills Center, January 2004.]
[Ricardo Alonso-Zaldivar, "Senate Takes On Medicaid Loopholes," The Los Angeles Times, 30 June 2005.]
Medicaid estate planning is increasingly coming under fire as a way to game the system and improperly use taxpayer dollars:
Congress is considering a crackdown on financial planning strategies increasingly favored by middle-class families to shift the cost of nursing home care for elderly parents onto the federal government.
Senate Finance Committee Chairman Charles E. Grassley (R-Iowa) denounced the practices Wednesday as "legal shenanigans" and vowed to help stop maneuvers he said were turning Medicaid into an asset protection program, instead of what it was supposed to be — an insurer of last resort for elderly people too poor to afford care.
Tightening the rules could save Medicaid $1 billion to $2 billion over five years, Grassley said, though Medicaid's long-term care bill is projected at $290 billion over the next five years.
[See Stephen A. Moses, "Project Proposal: Controlling Medicaid Long-Term Care Costs," The Flint Hills Center, January 2004.]
Wednesday, June 29, 2005
Alternatives to co-pays sought
[Barbara Martinez, "Drug Co-Pays Hit $100," The Wall Street Journal, 28 June 2005.]
Third party payment has led to a situation where consumers lack basic awareness of actual prices for prescription drugs. Some are now trying desperate measures to control rising costs and utilization, but the result may be worse health outcomes. Rather than just jacking up prices, a better way to restrain rising costs is to more fully incorporate the consumer into the purchasing process:
Get ready for the $100 co-pay. That is how much state workers in Georgia will soon pay for certain brand-name drugs, in what may be the highest drug co-payment anywhere in the country.
It is the starkest demonstration yet of employers' aggressive efforts to rein in the rising cost of prescription-drug benefits by driving employees to lower-cost medicines. Employer drug costs rose 83.4% over the past five years, an average of 16.7% each year, according to Mercer Human Resource Consulting, New York. And some estimates predict these costs will continue to rise at an 11% to 12% annual pace over the next several years.
As a result, consumers are seeing a variety of changes in their prescription-drug benefits. The most popular is tinkering with co-pays -- a set portion of the pharmacy bill that patients pay out of their own pockets -- to give patients a financial stake in what drugs they and their doctors choose. Just a few years ago, co-pays were rarely higher than $30, and most were much lower. Now, raising co-pays is a commonly used stick to discourage high-cost drug use. There also is a new carrot: making generic drugs free to patients by eliminating the co-pays altogether.
Another increasingly popular approach to making patients more aware of drug costs has been to require "co-insurance," where a patient would pay 10% or 20%, even 50% of a drug's cost rather than a flat co-pay.
[John McClaughry, "Patient Power: A Health Care Reform Agenda for Kansas," The Flint Hills Center, May 2004.]
[Barbara Martinez, "Drug Co-Pays Hit $100," The Wall Street Journal, 28 June 2005.]
Third party payment has led to a situation where consumers lack basic awareness of actual prices for prescription drugs. Some are now trying desperate measures to control rising costs and utilization, but the result may be worse health outcomes. Rather than just jacking up prices, a better way to restrain rising costs is to more fully incorporate the consumer into the purchasing process:
Get ready for the $100 co-pay. That is how much state workers in Georgia will soon pay for certain brand-name drugs, in what may be the highest drug co-payment anywhere in the country.
It is the starkest demonstration yet of employers' aggressive efforts to rein in the rising cost of prescription-drug benefits by driving employees to lower-cost medicines. Employer drug costs rose 83.4% over the past five years, an average of 16.7% each year, according to Mercer Human Resource Consulting, New York. And some estimates predict these costs will continue to rise at an 11% to 12% annual pace over the next several years.
As a result, consumers are seeing a variety of changes in their prescription-drug benefits. The most popular is tinkering with co-pays -- a set portion of the pharmacy bill that patients pay out of their own pockets -- to give patients a financial stake in what drugs they and their doctors choose. Just a few years ago, co-pays were rarely higher than $30, and most were much lower. Now, raising co-pays is a commonly used stick to discourage high-cost drug use. There also is a new carrot: making generic drugs free to patients by eliminating the co-pays altogether.
Another increasingly popular approach to making patients more aware of drug costs has been to require "co-insurance," where a patient would pay 10% or 20%, even 50% of a drug's cost rather than a flat co-pay.
[John McClaughry, "Patient Power: A Health Care Reform Agenda for Kansas," The Flint Hills Center, May 2004.]
Tuesday, June 28, 2005
Surgical centers growing in number
["Office-Based Surgery," NCPA Daily Policy Digest, 28 June 2005.]
As health care continues to grow more consumer-oriented, expect to see a greater number of offerings that make health care services more readily accessible and less intrusive into daily life:
Free-standing (or office-based) surgical centers now account for almost one-in-five surgical procedures performed nationwide, says the New York Times.
Since their inception in the early 1970s, surgical centers have expanded their repertoire of procedures to include complex orthopedic, gastroenterological and gynecological surgeries, as well as breast biopsies and cataract removals. Even cosmetic surgeons use the centers for virtually all procedures that do not require a doctor's office.
The shift from hospitals to free-standing surgical centers continues to grow thanks to technological advances that allow for less invasive procedures, says the Times.
- There are about 4,600 centers in operation, a 53 percent increase over the 3,000 five years ago.
- Experts expect 8.8 million operations to be conducted at the centers this year.
- Corporate chains like HealthSouth, Surgis and AmSurg are among the fastest-growing owners, followed by joint hospital-physician ventures.
Moreover, they offer a more cost-effective alternative to hospitals, says the Times. Even though office-based surgeries are bound by a specific category of regulation and restrictions, recent inspections have raised questions about patient safety.
The major concern is whether or not doctors are keeping to the appropriate kinds of surgery and that only the most appropriate people are being treated. But most regulators find that the centers maintain excellent levels of safety.
Furthermore, advocates and opponents contend that the centers provide an important service as long as patients consult their doctors and are aware of the limitations.
["Office-Based Surgery," NCPA Daily Policy Digest, 28 June 2005.]
As health care continues to grow more consumer-oriented, expect to see a greater number of offerings that make health care services more readily accessible and less intrusive into daily life:
Free-standing (or office-based) surgical centers now account for almost one-in-five surgical procedures performed nationwide, says the New York Times.
Since their inception in the early 1970s, surgical centers have expanded their repertoire of procedures to include complex orthopedic, gastroenterological and gynecological surgeries, as well as breast biopsies and cataract removals. Even cosmetic surgeons use the centers for virtually all procedures that do not require a doctor's office.
The shift from hospitals to free-standing surgical centers continues to grow thanks to technological advances that allow for less invasive procedures, says the Times.
- There are about 4,600 centers in operation, a 53 percent increase over the 3,000 five years ago.
- Experts expect 8.8 million operations to be conducted at the centers this year.
- Corporate chains like HealthSouth, Surgis and AmSurg are among the fastest-growing owners, followed by joint hospital-physician ventures.
Moreover, they offer a more cost-effective alternative to hospitals, says the Times. Even though office-based surgeries are bound by a specific category of regulation and restrictions, recent inspections have raised questions about patient safety.
The major concern is whether or not doctors are keeping to the appropriate kinds of surgery and that only the most appropriate people are being treated. But most regulators find that the centers maintain excellent levels of safety.
Furthermore, advocates and opponents contend that the centers provide an important service as long as patients consult their doctors and are aware of the limitations.
Monday, June 27, 2005
South Carolina moves forward with Medicaid reform
[Roddie Burris, "Medicaid changes sought," The State, 21 June 2005.]
South Carolina is joining Florida as one of a handful of states that are taking bold steps to reorganize and revitalize Medicaid as a sustainable and effective program:
“Beneficiaries aren’t even involved in the process right now,” said Robbie Kerr, director of the state Department of Health and Human Services, which oversees Medicaid in the state.
In the waiver request sent last week to the federal Centers for Medicaid Services, Kerr contends the lack of consumer involvement is a major factor in the state’s rising Medicaid costs.
Under the waiver, most S.C. Medicaid recipients would be given a personal health account. That account would be used to select and pay for a coverage plan, ranging from those with low premiums and high deductibles to full-service programs.
Whatever is left over after paying for a coverage plan would go on a debit card that would have controls to restrict its use to purchases of medical services.
The monetary value of each personal health account would be based on a profile of the individual Medicaid recipient, including age, gender and physical condition.
Officials say health care providers, pushed by competition, will devise new options if consumer choice is part of the Medicaid system.
Beneficiaries then could use the debit cards for whatever medical expenses are most important to them — including co-pays, other office visits or extra prescriptions.
“It will be a completely different role for us,” said Gwen Power, HHS special projects director. The agency would begin the shift to quality assurance and accounting for coverages, she said, rather than administer the program.
Gov. Mark Sanford is behind the Medicaid overhaul.
“Such change is vital to the long-term fiscal health of Medicaid and physical health of the program’s beneficiaries,” Sanford said in a statement.
“We’re all one step away from Medicaid,” Kerr said. Medicaid recipients “are like you and me. They think like you and me and will make choices like you and me. Why wouldn’t we give them the same choices?”
[Matthew Hisrich, "A Backgrounder on Kansas Medicaid," The Flint Hills Center, 19 July 2004.]
Kansas is ready for broader implementation of HSAs
[Victoria Craig Bunce and Merrill Matthews, "What’s Next for HSAs?," Issues & Answers, The Council for Affordable Health Insurance, June 2005.]
HSAs are spreading like wildfire in the private sector, but there are plenty of opportunities for the public sector, as well:
State and local governments are employers, too. Since they offer health insurance coverage to their employees — and many are seeing premium increases in the double digits — they should consider consumer driven health care models which have a proven track record for stabilizing health care costs.
The problem with the Medicaid program as it is currently structured is that people have little incentive to be prudent shoppers of medical services. A Medicaid HSA plan for the under-age-65 population would change those incentives. The state could continue to be the insurer, but increase the deductible, depositing part or all of the savings in the Medicaid beneficiary’s HSA. Better yet, the state could simply provide a defined contribution to a private sector insurer or third-party administrator selling HSA plans.
Would this approach be a radical departure from traditional Medicaid? Yes, but Medicaid needs radical change. Iowa passed into law a Medicaid HSA, H.B. 841, on May 12, 2005. And Florida’s new Medicaid reform has an innovative HSA plan.
If the states don’t want to be left behind, they need to look for ways to make HSAs available to public sector populations.
[Devon M. Herrick, "Give Medicaid recipients more control," The Wichita Eagle, 3 March 2005.
Devon Herrick, "HSAs for state and local employees," The Pittsburg Morning-Sun, 1 May 2005.]
[Victoria Craig Bunce and Merrill Matthews, "What’s Next for HSAs?," Issues & Answers, The Council for Affordable Health Insurance, June 2005.]
HSAs are spreading like wildfire in the private sector, but there are plenty of opportunities for the public sector, as well:
State and local governments are employers, too. Since they offer health insurance coverage to their employees — and many are seeing premium increases in the double digits — they should consider consumer driven health care models which have a proven track record for stabilizing health care costs.
The problem with the Medicaid program as it is currently structured is that people have little incentive to be prudent shoppers of medical services. A Medicaid HSA plan for the under-age-65 population would change those incentives. The state could continue to be the insurer, but increase the deductible, depositing part or all of the savings in the Medicaid beneficiary’s HSA. Better yet, the state could simply provide a defined contribution to a private sector insurer or third-party administrator selling HSA plans.
Would this approach be a radical departure from traditional Medicaid? Yes, but Medicaid needs radical change. Iowa passed into law a Medicaid HSA, H.B. 841, on May 12, 2005. And Florida’s new Medicaid reform has an innovative HSA plan.
If the states don’t want to be left behind, they need to look for ways to make HSAs available to public sector populations.
[Devon M. Herrick, "Give Medicaid recipients more control," The Wichita Eagle, 3 March 2005.
Devon Herrick, "HSAs for state and local employees," The Pittsburg Morning-Sun, 1 May 2005.]
President Bush on HSAs
["Remarks by President Bush on Energy and Economic Security," The Wichita Eagle, 23 June 2005.]
President Bush recently reaffirmed his support for the concept of health savings accounts during a speech at the Calvert Cliffs Nuclear Power Plant in Lusby, Maryland:
If you're running a small business, look into what's called HSA's, health savings accounts -- they're a really interest[ing] product that'll let your worker manage his or her own money, and at the same time make health care more affordable for the small business -- or large business for that matter. HSA's are an interesting, innovative way for people to get good health care insurance that puts you in charge of the decision-making process, that lets you make the decisions, and at the same time, save money for your health care concerns tax-free.
[Matthew Hisrich, "HSAs are increasing Americans' health coverage," The Topeka Capital-Journal, 26 September 2004.]
["Remarks by President Bush on Energy and Economic Security," The Wichita Eagle, 23 June 2005.]
President Bush recently reaffirmed his support for the concept of health savings accounts during a speech at the Calvert Cliffs Nuclear Power Plant in Lusby, Maryland:
If you're running a small business, look into what's called HSA's, health savings accounts -- they're a really interest[ing] product that'll let your worker manage his or her own money, and at the same time make health care more affordable for the small business -- or large business for that matter. HSA's are an interesting, innovative way for people to get good health care insurance that puts you in charge of the decision-making process, that lets you make the decisions, and at the same time, save money for your health care concerns tax-free.
[Matthew Hisrich, "HSAs are increasing Americans' health coverage," The Topeka Capital-Journal, 26 September 2004.]
Friday, June 24, 2005
Individual responsibility and long-term care
[Rowland Nethaway, "Beating Medicaid system," The Waco Tribune-Herald, 22 June 2005.]
The government needs to provide long-term care coverage because grandma didn't buy insurance? As John Stossel would say, "Give me a break."
Medicare doesn’t pay for long term health care for seniors who need assistance in their homes or in nursing homes.
The cost of long-term health insurance policies are beyond the reach of many seniors, especially those who did not purchase these policies when they were younger and healthier.
Because of rising health-care costs that the government is unwilling to control, Medicare recipients are routinely seeing double-digit increases on their monthly premiums that far exceed annual inflation and even their annual cost-of-living increases in their Social Security checks.
The dilemma that confronts many families is whether to wait until their parents or grandparents spend themselves into poverty with high health-care bills or whether to retain some family assets by purposefully impoverishing their elderly relatives.
More and more American families are finding ways to beat the system. Even in those cases where this sort of "Medicaid planning" is legal, there remains the question as to whether they are ethical.
First of all, there are ways to pay for long-term care coverage. Why should someone get a free ride because they "forgot" to look into policies before they needed care? That concept certainly doesn't fly when people get into auto accidents.
Even if coverage wasn't purchased long ago, there are still means. Most seniors own their own homes. This asset should be utilized to pay for care, and can be through tools such as reverse mortgages. Again, why should taxpayers have to pick up the tab for long-term care just so that someone can leave cash to their heirs?
Finally, the rise in health care costs is a problem, but it is exactly by transferring financial responsibility for these issues that we have gotten to such a point of rising costs. The answer is definitely not to encourage abuse and then somehow artifically "cap" costs by government mandate and pretend the problem is solved. Only by restoring the role of the consumer in health care can costs ever truly be contained.
[Stephen Moses, "Nursing home system in need of reform," The Pittsburg Morning Sun, 22 May 2005.]
[Rowland Nethaway, "Beating Medicaid system," The Waco Tribune-Herald, 22 June 2005.]
The government needs to provide long-term care coverage because grandma didn't buy insurance? As John Stossel would say, "Give me a break."
Medicare doesn’t pay for long term health care for seniors who need assistance in their homes or in nursing homes.
The cost of long-term health insurance policies are beyond the reach of many seniors, especially those who did not purchase these policies when they were younger and healthier.
Because of rising health-care costs that the government is unwilling to control, Medicare recipients are routinely seeing double-digit increases on their monthly premiums that far exceed annual inflation and even their annual cost-of-living increases in their Social Security checks.
The dilemma that confronts many families is whether to wait until their parents or grandparents spend themselves into poverty with high health-care bills or whether to retain some family assets by purposefully impoverishing their elderly relatives.
More and more American families are finding ways to beat the system. Even in those cases where this sort of "Medicaid planning" is legal, there remains the question as to whether they are ethical.
First of all, there are ways to pay for long-term care coverage. Why should someone get a free ride because they "forgot" to look into policies before they needed care? That concept certainly doesn't fly when people get into auto accidents.
Even if coverage wasn't purchased long ago, there are still means. Most seniors own their own homes. This asset should be utilized to pay for care, and can be through tools such as reverse mortgages. Again, why should taxpayers have to pick up the tab for long-term care just so that someone can leave cash to their heirs?
Finally, the rise in health care costs is a problem, but it is exactly by transferring financial responsibility for these issues that we have gotten to such a point of rising costs. The answer is definitely not to encourage abuse and then somehow artifically "cap" costs by government mandate and pretend the problem is solved. Only by restoring the role of the consumer in health care can costs ever truly be contained.
[Stephen Moses, "Nursing home system in need of reform," The Pittsburg Morning Sun, 22 May 2005.]
Wednesday, June 22, 2005
New internet services allow patients to upload medical records
[Sarah Rubenstein, "Putting Your Health History Online," The Wall Street Journal, 21 June 2005.]
Consumer driven health care assumes that individuals should be free to engage in consumerism. In other words, if I don't like the services or prices of a particular provider, I should be free to take my business elsewhere. But there are transaction costs which may discourage such freedom of movement. According to this recent article, one of the most onerous costs - that of keeping updated medical records with you at all times - may be a thing of the past:
Having to fill out pages of questions about your medical history every time you see a new doctor can get old fast. Now, some companies are offering patients a way to cut down on the tedium of the doctor's office clipboard.
The new services, which come amid a broader effort to move the nation's medical records from paper to computers, let patients store their health histories -- from ailments to medications to emergency contacts -- at a single electronic location. The idea is that patients, as well as the medical professionals and family members they designate, can then readily access that information. Some of the services also tout other features, like drug-interaction checkers and daily pill reminders.
Somewhere between 250,000 and 500,000 people now have so-called "personal health records," in some cases through their employers, in others through their insurers, according to an estimate by the Markle Foundation, a New York not-for-profit that focuses on information technology and public policy.
[Greg Scandlen, "Choice is revolutionizing health care," The Wichita Eagle, 28 September 2004.]
[Sarah Rubenstein, "Putting Your Health History Online," The Wall Street Journal, 21 June 2005.]
Consumer driven health care assumes that individuals should be free to engage in consumerism. In other words, if I don't like the services or prices of a particular provider, I should be free to take my business elsewhere. But there are transaction costs which may discourage such freedom of movement. According to this recent article, one of the most onerous costs - that of keeping updated medical records with you at all times - may be a thing of the past:
Having to fill out pages of questions about your medical history every time you see a new doctor can get old fast. Now, some companies are offering patients a way to cut down on the tedium of the doctor's office clipboard.
The new services, which come amid a broader effort to move the nation's medical records from paper to computers, let patients store their health histories -- from ailments to medications to emergency contacts -- at a single electronic location. The idea is that patients, as well as the medical professionals and family members they designate, can then readily access that information. Some of the services also tout other features, like drug-interaction checkers and daily pill reminders.
Somewhere between 250,000 and 500,000 people now have so-called "personal health records," in some cases through their employers, in others through their insurers, according to an estimate by the Markle Foundation, a New York not-for-profit that focuses on information technology and public policy.
[Greg Scandlen, "Choice is revolutionizing health care," The Wichita Eagle, 28 September 2004.]
Tuesday, June 21, 2005
Krugman vs. Barone on HSAs
[Paul Krugman, "One Nation, Uninsured," The New York Times, 13 June 2005.
Michael Barone, "HSAs Work," Townhall.com, 13 June 2005.]
Comparing and contrasting these two views provides an excellent insight into the debate over the direction of health care in this country. Can we fend for ourselves?
Krugman:
[T]he patchwork system that evolved in the absence of national health insurance is unraveling. The cost of health care is exploding, the number of uninsured is growing, and corporations that still provide employee coverage are groaning under the strain.
So the time will soon be ripe for another try at universal coverage. Public opinion is already favorable: a 2003 Pew poll found that 72 percent of Americans favored government-guaranteed health insurance for all.
Let's ignore those who believe that private medical accounts - basically tax shelters for the healthy and wealthy - can solve our health care problems through the magic of the marketplace. The intellectually serious debate is between those who believe that the government should simply provide basic health insurance for everyone and those proposing a more complex, indirect approach that preserves a central role for private health insurance companies.
While Krugman dismisses anyone who believes in the power of the consumer as intellectually challenged, Michael Barone is apparently confident enough in his mental prowess not to wither in response:
How many times have you heard that health care costs are rising at record rates? Well, they aren't any more.
The Bureau of Labor Statistics reports that health care costs rose 7.5 percent in 2004, well under the 11.4 percent rise in 2002. The BLS also reports that costs for employers for health insurance per employee per hour worked has slowed down even more. From March 2001 to March 2002, it rose 11 perecnt; from March 2002 to March 2004, it rose 9 percent each year. But from March 2004 to December 2004, it rose only 3 percent.
Something is going on out there.
The overriding assumption in much commentary on health care finance is that individuals and companies are helpless automata waiting for government action before anything can be done anything about health care costs. But recent developments suggest that, in fact, employers and employees are active players, and that provisions of recent legislation that were not much noticed by the commentariat have enabled them to take action that reduces costs and provides increased benefits and incentives for healthier behavior.
We have problems, yes, but we are not helpless.
[Charles W. Van Way, III, MD, "The Strength of a Really Bad Idea," The Flint Hills Center, 8 May 2004.]
[Paul Krugman, "One Nation, Uninsured," The New York Times, 13 June 2005.
Michael Barone, "HSAs Work," Townhall.com, 13 June 2005.]
Comparing and contrasting these two views provides an excellent insight into the debate over the direction of health care in this country. Can we fend for ourselves?
Krugman:
[T]he patchwork system that evolved in the absence of national health insurance is unraveling. The cost of health care is exploding, the number of uninsured is growing, and corporations that still provide employee coverage are groaning under the strain.
So the time will soon be ripe for another try at universal coverage. Public opinion is already favorable: a 2003 Pew poll found that 72 percent of Americans favored government-guaranteed health insurance for all.
Let's ignore those who believe that private medical accounts - basically tax shelters for the healthy and wealthy - can solve our health care problems through the magic of the marketplace. The intellectually serious debate is between those who believe that the government should simply provide basic health insurance for everyone and those proposing a more complex, indirect approach that preserves a central role for private health insurance companies.
While Krugman dismisses anyone who believes in the power of the consumer as intellectually challenged, Michael Barone is apparently confident enough in his mental prowess not to wither in response:
How many times have you heard that health care costs are rising at record rates? Well, they aren't any more.
The Bureau of Labor Statistics reports that health care costs rose 7.5 percent in 2004, well under the 11.4 percent rise in 2002. The BLS also reports that costs for employers for health insurance per employee per hour worked has slowed down even more. From March 2001 to March 2002, it rose 11 perecnt; from March 2002 to March 2004, it rose 9 percent each year. But from March 2004 to December 2004, it rose only 3 percent.
Something is going on out there.
The overriding assumption in much commentary on health care finance is that individuals and companies are helpless automata waiting for government action before anything can be done anything about health care costs. But recent developments suggest that, in fact, employers and employees are active players, and that provisions of recent legislation that were not much noticed by the commentariat have enabled them to take action that reduces costs and provides increased benefits and incentives for healthier behavior.
We have problems, yes, but we are not helpless.
[Charles W. Van Way, III, MD, "The Strength of a Really Bad Idea," The Flint Hills Center, 8 May 2004.]
Monday, June 20, 2005
Ramthun: confusion over HSAs has dropped
[Sarah Lueck, "Legal Action," The Wall Street Journal, 20 June 2005.]
Despite obstacles, HSAs are growing at an incredible pace:
Insurers are quick to note that regulatory and other barriers haven't stopped HSAs from growing in popularity. Last month, an AHIP survey showed that more than one million people had signed up for HSAs as of March, compared with 438,000 in September. Many HSA plans were sold to people who were previously uninsured, or through businesses that previously didn't offer health benefits to workers.
"This is a product that is meeting a demand on the part of people who didn't have coverage," Ms. Ignagni says. "That also adds momentum to this."
More and more people apparently also are figuring out how HSAs work. "The confusion seems to be minimizing," says Roy Ramthun, a senior health adviser at the Treasury Department who recently became a health-policy adviser at the White House.
But another major challenge remains, particularly for individuals who want to set up HSAs without the help of an employer: finding a financial institution to handle the account. Insurers and government officials say smaller banks and credit unions have tended to be conservative about getting into the business. And many consumers want to deal with an institution they're already familiar with.
"That appears to be the biggest problem -- going to the bank on the corner that they go to all the time and either being met with a blank stare or finding that nobody knows what they're talking about," Mr. Ramthun says. The Treasury Department has tried to encourage more banks and credit unions to get involved in setting up HSAs. "If they're doing IRAs today, HSAs are going to be a no-brainer," Mr. Ramthun says. "We hope that through the end of the year people will have an opportunity in their backyard."
[Devon Herrick, "HSAs for state and local employees," The Pittsburg Morning-Sun, 1 May 2005.]
Mutual aid and the welfare state
[Susan Olasky , "Healthy alternative," World Magazine, 18 June 2005.]
One New Jersey doctor's charitable efforts underscore the transformation that has taken place in America's health care system:
According to University of Alabama historian David Beito, in 1920 nearly one-third of adults over age 20 were members of fraternal lodges that typically contracted with a general practitioner to provide medical care to members who paid one or two dollars a year for coverage of themselves and their families. For example, on the Lower East Side of Manhattan "500 doctors had contracts with Jewish lodges alone. During the 1920s, there were an estimated 600 fraternal societies among blacks in New Orleans that offered the services of a physician." By the 1930s, though, "lodge practice" faced increasing competition from insurance companies, government programs, and medical associations that "launched an all-out war against lodge practice. . . . Old relationships of voluntary reciprocity and autonomy [gave way before] impersonal bureaucracies controlled by outsiders."
Whether clinics like Zarephath signal a return to mutual aid, as the Ecks would like, depends a lot on forces beyond their control. Will Congress enact policies that encourage innovation and provide incentives for doctors to provide charity care? All doctors aren't like the Ecks, but the existence of only 17 low-cost clinics like ZHC in New Jersey shows both a lack of incentives and the presence of disincentives.
[Susan Olasky , "Healthy alternative," World Magazine, 18 June 2005.]
One New Jersey doctor's charitable efforts underscore the transformation that has taken place in America's health care system:
According to University of Alabama historian David Beito, in 1920 nearly one-third of adults over age 20 were members of fraternal lodges that typically contracted with a general practitioner to provide medical care to members who paid one or two dollars a year for coverage of themselves and their families. For example, on the Lower East Side of Manhattan "500 doctors had contracts with Jewish lodges alone. During the 1920s, there were an estimated 600 fraternal societies among blacks in New Orleans that offered the services of a physician." By the 1930s, though, "lodge practice" faced increasing competition from insurance companies, government programs, and medical associations that "launched an all-out war against lodge practice. . . . Old relationships of voluntary reciprocity and autonomy [gave way before] impersonal bureaucracies controlled by outsiders."
Whether clinics like Zarephath signal a return to mutual aid, as the Ecks would like, depends a lot on forces beyond their control. Will Congress enact policies that encourage innovation and provide incentives for doctors to provide charity care? All doctors aren't like the Ecks, but the existence of only 17 low-cost clinics like ZHC in New Jersey shows both a lack of incentives and the presence of disincentives.
Friday, June 17, 2005
WSJ: 4 million now enrolled in consumer driven health care plans
[Vanessa Fuhrmans, "Patients Give New Insurance Mixed Reviews," The Wall Street Journal, 14 June 2005.]
Buried in an article largely devoted to the "mixed reviews" of health savings accounts and other consumer-driven plans is a bigger story - their explosive growth:
While some form of consumer-driven health care has been around since the 1990s, it is only in the past couple of years that the approach has really taken off. Nearly four million Americans have some form of them now, with most of that growth coming in the past year since tax-free Health Savings Accounts were introduced in late 2003 as an option for the personal account portion of these plans.
[Devon Herrick, "Health Savings Accounts: The Future Of Health Care For Kansans," The Flint Hills Center, 14 February 2005.]
[Vanessa Fuhrmans, "Patients Give New Insurance Mixed Reviews," The Wall Street Journal, 14 June 2005.]
Buried in an article largely devoted to the "mixed reviews" of health savings accounts and other consumer-driven plans is a bigger story - their explosive growth:
While some form of consumer-driven health care has been around since the 1990s, it is only in the past couple of years that the approach has really taken off. Nearly four million Americans have some form of them now, with most of that growth coming in the past year since tax-free Health Savings Accounts were introduced in late 2003 as an option for the personal account portion of these plans.
[Devon Herrick, "Health Savings Accounts: The Future Of Health Care For Kansans," The Flint Hills Center, 14 February 2005.]
Tuesday, June 14, 2005
How can we approach this uninsured problem?
[William E. Gibson, "Immigrants a quarter of uninsured," The South Florida Sun-Sentinel, The Wichita Eagle, 14 June 2005.]
Further evidence that the uninsured will not be successfully addressed by simple approaches such as expanding Medicaid is seen in this report:
Immigrants made up one-quarter of people in the United States who lacked health insurance in 2003, up from one-fifth a decade earlier, the nonpartisan Employee Benefit Research Institute found.
We already know that the uninsured include a portion of wealthy individuals, and now a full quarter are revealed as immigrants. Clearly, this is a problem that will require numerous solutions targeted to the needs of specific populations.
[William E. Gibson, "Immigrants a quarter of uninsured," The South Florida Sun-Sentinel, The Wichita Eagle, 14 June 2005.]
Further evidence that the uninsured will not be successfully addressed by simple approaches such as expanding Medicaid is seen in this report:
Immigrants made up one-quarter of people in the United States who lacked health insurance in 2003, up from one-fifth a decade earlier, the nonpartisan Employee Benefit Research Institute found.
We already know that the uninsured include a portion of wealthy individuals, and now a full quarter are revealed as immigrants. Clearly, this is a problem that will require numerous solutions targeted to the needs of specific populations.
Costco to enter health insurance market
[Debora Vrana, "It's Insurance a la Cart: Costco Stores to Market Health Plans," The Los Angeles Times, 9 June 2005.]
Big discount retail chains such as Target have started to enter the health care market by offering care on-site, but Costco appears to be the first to enter the insurance industry:
Costco Wholesale Corp., the low-cost bulk supplier of breakfast cereal, motor oil and diamond rings, is adding health insurance to its warehouse shelves.
In a pilot program to be launched next month in Southern California, Costco will offer family and individual coverage to its customers who pay $100 a year for "executive" membership, company officials said. The insurance is aimed at people such as contractors, waiters and students who are self-employed or cannot sign up for plans at work.
Company officials would not quote premiums but said the insurance would be 5% to 20% cheaper than policies individuals could buy on their own. Costco expects to offer coverage statewide by the end of the year and may eventually make it available to regular members, said Dellanie Fragnoli, assistant vice president of insurance services at Issaquah, Wash.-based Costco.
The move, along with the entry of financial institutions into the health insurance market, provides further evidence that the old ways of doing things are no longer going to work. A new emphasis on reaching out to consumers and meeting them where they are is likely to place increasing competitive pressure on traditional insurance companies to adapt accordingly:
Although discount retailers selling health insurance may seem like an odd mix, it points out the need consumers have for alternatives, given the rising costs of health insurance, [J.D. Kleinke, a healthcare economist in Portland, Ore.] said.
Other major retailers including Target Corp. and Longs Drug Stores Corp. also have moved into the healthcare arena. At some Target stores in Minneapolis, shoppers can visit walk-up clinics staffed mostly by nurse practitioners for minor ailments, such as a bladder infection or seasonal allergies, with no appointment and little or no waiting. Target is contracting with Minneapolis-based MinuteClinic Inc. to run the clinics.
In Davis, Calif., this year, Longs unveiled its own in-store clinic. And also this year, the Wal-Mart Stores Inc.-operated Sam's Club began offering a discount program to members that cuts by as much as 50% the cost of some health services not covered by insurance, such as laser eye surgery and dental care.
This area is going to continue to grow, predict healthcare specialists like Kleinke, as rising costs push people to find new ways to insure themselves.
[Greg Scandlen, "Choice is revolutionizing health care," The Wichita Eagle, 28 September 2004.]
[Debora Vrana, "It's Insurance a la Cart: Costco Stores to Market Health Plans," The Los Angeles Times, 9 June 2005.]
Big discount retail chains such as Target have started to enter the health care market by offering care on-site, but Costco appears to be the first to enter the insurance industry:
Costco Wholesale Corp., the low-cost bulk supplier of breakfast cereal, motor oil and diamond rings, is adding health insurance to its warehouse shelves.
In a pilot program to be launched next month in Southern California, Costco will offer family and individual coverage to its customers who pay $100 a year for "executive" membership, company officials said. The insurance is aimed at people such as contractors, waiters and students who are self-employed or cannot sign up for plans at work.
Company officials would not quote premiums but said the insurance would be 5% to 20% cheaper than policies individuals could buy on their own. Costco expects to offer coverage statewide by the end of the year and may eventually make it available to regular members, said Dellanie Fragnoli, assistant vice president of insurance services at Issaquah, Wash.-based Costco.
The move, along with the entry of financial institutions into the health insurance market, provides further evidence that the old ways of doing things are no longer going to work. A new emphasis on reaching out to consumers and meeting them where they are is likely to place increasing competitive pressure on traditional insurance companies to adapt accordingly:
Although discount retailers selling health insurance may seem like an odd mix, it points out the need consumers have for alternatives, given the rising costs of health insurance, [J.D. Kleinke, a healthcare economist in Portland, Ore.] said.
Other major retailers including Target Corp. and Longs Drug Stores Corp. also have moved into the healthcare arena. At some Target stores in Minneapolis, shoppers can visit walk-up clinics staffed mostly by nurse practitioners for minor ailments, such as a bladder infection or seasonal allergies, with no appointment and little or no waiting. Target is contracting with Minneapolis-based MinuteClinic Inc. to run the clinics.
In Davis, Calif., this year, Longs unveiled its own in-store clinic. And also this year, the Wal-Mart Stores Inc.-operated Sam's Club began offering a discount program to members that cuts by as much as 50% the cost of some health services not covered by insurance, such as laser eye surgery and dental care.
This area is going to continue to grow, predict healthcare specialists like Kleinke, as rising costs push people to find new ways to insure themselves.
[Greg Scandlen, "Choice is revolutionizing health care," The Wichita Eagle, 28 September 2004.]
Monday, June 13, 2005
Sebelius stuck on Medicaid
[Alan Bjerga, "Sebelius calls for ways to keep people from losing insurance," The Wichita Eagle, 12 June 2005.]
In response to the recent Families USA report detailing how much the insured are paying to cover the uninsured, Kansas Governor Kathleen Sebelius had this to say:
"We must find affordable ways to cover more workers and their families."
In Kansas, the group estimated that families pay an additional $729 a year, which is actually below the national average of $922. But it's still a major burden, Sebelius said, that can best be combated by making sure that state-run Medicaid programs remain healthy enough to keep people from becoming uninsured and thus a greater public burden.
The problem of expensive insurance can be best combated by strengthening Medicaid? Sure, Medicaid is a mess, but isn't it a better idea to keep people off the program in the first place by reducing the overall cost of insurance?
[Matthew Hisrich, "One size won't fit all," Letter to the Editor, The Wichita Eagle, 2 June 2005.]
Friday, June 10, 2005
Canadian supreme court rules in favor of private health care
[Lawrence H. White, "Gasp – Canada’s Supreme Court legalizes private health insurance," Division of Labour, 10 June 2005.]
University of Missouri - St. Louis economics professor Lawrence White comments on the trend toward a free market in Canadian health care in this recent commentary:
Many critics of US health care point to Canada’s single-payer monopoly system as a “model” to be emulated. One small problem with that system: sick people languish in Canada’s waiting lines. One such person was George Zeliotis of Montreal, who says he became addicted to painkillers during his yearlong wait for a hip replacement, and wanted the option of paying a private clinic for faster service. The Province of Quebec refused to let him get private help. He and his doctor, Jacques Chaoulli, brought suit seeking permission.
Remarkably the Supreme Court of Canada has now mercifully widened the options for sick Quebecers like Mr. Zeliotis. (Contrast the US Supreme Court’s recent ruling against medical marijuana, which cruelly limits the treatment options for California’s sick.) The Canadian court struck down Quebec’s ban on private health insurance, opening the door to private health care. Canadian health care may now be moving toward the US “model”.
"The evidence in this case shows that delays in the public health-care system are widespread and that in some serious cases, patients die as a result of waiting lists for public health care," the Canadian Supreme Court ruled.
"In sum, the prohibition on obtaining private health insurance is not constitutional where the public system fails to deliver reasonable services."
Naturally, health-care egalitarians predict dire consequences from the Pareto-improvement of allowing anyone to buy better care:
"Creation of a private health-care system will benefit only wealthy people who can afford it, said Adam Natsheh, cochairman of the New Health Professionals Network, a lobby group that supports government-funded health care."
Better to have a system that benefits fewer people, Natsheh apparently thinks.
[Charles W. Van Way, III, MD, "The Strength of a Really Bad Idea," The Flint Hills Center, 8 May 2004.]
[Lawrence H. White, "Gasp – Canada’s Supreme Court legalizes private health insurance," Division of Labour, 10 June 2005.]
University of Missouri - St. Louis economics professor Lawrence White comments on the trend toward a free market in Canadian health care in this recent commentary:
Many critics of US health care point to Canada’s single-payer monopoly system as a “model” to be emulated. One small problem with that system: sick people languish in Canada’s waiting lines. One such person was George Zeliotis of Montreal, who says he became addicted to painkillers during his yearlong wait for a hip replacement, and wanted the option of paying a private clinic for faster service. The Province of Quebec refused to let him get private help. He and his doctor, Jacques Chaoulli, brought suit seeking permission.
Remarkably the Supreme Court of Canada has now mercifully widened the options for sick Quebecers like Mr. Zeliotis. (Contrast the US Supreme Court’s recent ruling against medical marijuana, which cruelly limits the treatment options for California’s sick.) The Canadian court struck down Quebec’s ban on private health insurance, opening the door to private health care. Canadian health care may now be moving toward the US “model”.
"The evidence in this case shows that delays in the public health-care system are widespread and that in some serious cases, patients die as a result of waiting lists for public health care," the Canadian Supreme Court ruled.
"In sum, the prohibition on obtaining private health insurance is not constitutional where the public system fails to deliver reasonable services."
Naturally, health-care egalitarians predict dire consequences from the Pareto-improvement of allowing anyone to buy better care:
"Creation of a private health-care system will benefit only wealthy people who can afford it, said Adam Natsheh, cochairman of the New Health Professionals Network, a lobby group that supports government-funded health care."
Better to have a system that benefits fewer people, Natsheh apparently thinks.
[Charles W. Van Way, III, MD, "The Strength of a Really Bad Idea," The Flint Hills Center, 8 May 2004.]
Defensive medicine driving up health care costs
["Defensive medicine," NCPA Daily Policy Digest, 10 June 2005.]
The costs of a hyper-litigious society are weighing heavily on an already over-burdened health care system:
“Defensive medicine” is an inclusive term meaning the ordering unnecessary tests and the passing off of complicated patients to stall the filing of malpractice lawsuits. Unfortunately, the rising use of defensive medicine is impeding patient care, says the Journal of the American Medical Association (JAMA).
The Pew Charitable Trusts surveyed 824 physicians in Pennsylvania. The doctors involved came from six high-risk specialty practices and 93 percent said they practice some from of defensive medicine.
Moreover:
- Some 59 percent said they often ordered more diagnostic tests than necessary, while 52 percent referred patients to other specialists even if the referral was unnecessary.
- Some 42 percent said liability concerns had forced them to restrict some practices since 2000, including eliminating procedures prone to complications, avoiding patients with complex medical problems and avoiding patients who appeared litigious.
- Physicians in the field of obstetrics, gynecology and radiology report limiting services, such as reading mammograms.
Higher levels of defensive medicine are part of the social costs of instability in the malpractice system. The most frequent form of defensive medicine, ordering costly imaging studies, seems merely wasteful, but other defensive behaviors may reduce access to care and even pose risks of physical harm, explains JAMA.
Because both obstetrics and breast cancer detection are high-liability fields, women’s health may be particularly affected. Efforts to reduce defensive medicine should concentrate on educating patients and physicians regarding appropriate care in the clinical situations that most commonly prompt defensive medicine, developing and disseminating clinical guidelines that target common defensive practices, and reducing the financial and psychological vulnerability of individual physicians in high-risk specialties to shocks to the liability system, says JAMA.
["Defensive medicine," NCPA Daily Policy Digest, 10 June 2005.]
The costs of a hyper-litigious society are weighing heavily on an already over-burdened health care system:
“Defensive medicine” is an inclusive term meaning the ordering unnecessary tests and the passing off of complicated patients to stall the filing of malpractice lawsuits. Unfortunately, the rising use of defensive medicine is impeding patient care, says the Journal of the American Medical Association (JAMA).
The Pew Charitable Trusts surveyed 824 physicians in Pennsylvania. The doctors involved came from six high-risk specialty practices and 93 percent said they practice some from of defensive medicine.
Moreover:
- Some 59 percent said they often ordered more diagnostic tests than necessary, while 52 percent referred patients to other specialists even if the referral was unnecessary.
- Some 42 percent said liability concerns had forced them to restrict some practices since 2000, including eliminating procedures prone to complications, avoiding patients with complex medical problems and avoiding patients who appeared litigious.
- Physicians in the field of obstetrics, gynecology and radiology report limiting services, such as reading mammograms.
Higher levels of defensive medicine are part of the social costs of instability in the malpractice system. The most frequent form of defensive medicine, ordering costly imaging studies, seems merely wasteful, but other defensive behaviors may reduce access to care and even pose risks of physical harm, explains JAMA.
Because both obstetrics and breast cancer detection are high-liability fields, women’s health may be particularly affected. Efforts to reduce defensive medicine should concentrate on educating patients and physicians regarding appropriate care in the clinical situations that most commonly prompt defensive medicine, developing and disseminating clinical guidelines that target common defensive practices, and reducing the financial and psychological vulnerability of individual physicians in high-risk specialties to shocks to the liability system, says JAMA.
Thursday, June 09, 2005
IBD: Health insurance premiums pay for the uninsured
[Editorial, "No Free Lunch In Health Care, Either," Investor's Business Daily, 9 June 2005.]
The editors at Investor's Business Daily are tired of hearing about how universal coverage is the answer to the uninsured, and point out that insured Americans are already making a substantial contribution to providing care for this population:
There's a myth that goes something like this: Millions of people have no health insurance and are receiving no care at all. A new study shows just how wrong that is.
It's true that 48 million Americans lack health insurance. But it's simply not true that they get no care at all. They do get care — and you pay for it. At least, that's the conclusion of a study by Families USA, a liberal advocacy group.
And how much do you pay? According to the study, premiums for employer-provided family health insurance average $10,979 nationwide. But $922 of that is just to cover the uninsured, a burden that is projected to climb to $1,502 by 2010. This is helping drive health care spending ever higher on a per capita basis (see chart).
This is a big issue — linked to what economists call the "free rider" problem. Yes, it's true some of the uninsured are at or near poverty and need help of one sort or another.
But the problem's not that cut and dried. And it doesn't require some kind of radical, big-government "universal care" solution, as some have suggested.
In sifting through census data last year, for instance, Blue Cross & Blue Shield Association uncovered some interesting facts about the uninsured.
Many, for example, do have jobs. They simply choose not to be covered, often because they're young and healthy. But, hey, why should they? When things go bad, the rest of us are there to pick up the tab.
What's the solution?
It isn't a centralized, national health care plan. Nor is it more rules at the federal and state level — they are already a big cause of this nation's soaring health care costs.
Medical savings accounts, no doubt, will make insurance more appealing to those with jobs.
The bottom line is this: The uninsured are a big burden on working families. The truly poor, a small number, deserve our help.
But at some point, we must recognize that people who choose to be uninsured even though they can afford it should not be a burden on the rest of us.
Economists have a nifty acronym for this: TANSTAAFL. As in, there ain't no such thing as a free lunch.
[Matthew Hisrich, "Greatest increase in uninsured found among wealthy," The Flint Hills Center, 10 May 2004.]
[Editorial, "No Free Lunch In Health Care, Either," Investor's Business Daily, 9 June 2005.]
The editors at Investor's Business Daily are tired of hearing about how universal coverage is the answer to the uninsured, and point out that insured Americans are already making a substantial contribution to providing care for this population:
There's a myth that goes something like this: Millions of people have no health insurance and are receiving no care at all. A new study shows just how wrong that is.
It's true that 48 million Americans lack health insurance. But it's simply not true that they get no care at all. They do get care — and you pay for it. At least, that's the conclusion of a study by Families USA, a liberal advocacy group.
And how much do you pay? According to the study, premiums for employer-provided family health insurance average $10,979 nationwide. But $922 of that is just to cover the uninsured, a burden that is projected to climb to $1,502 by 2010. This is helping drive health care spending ever higher on a per capita basis (see chart).
This is a big issue — linked to what economists call the "free rider" problem. Yes, it's true some of the uninsured are at or near poverty and need help of one sort or another.
But the problem's not that cut and dried. And it doesn't require some kind of radical, big-government "universal care" solution, as some have suggested.
In sifting through census data last year, for instance, Blue Cross & Blue Shield Association uncovered some interesting facts about the uninsured.
Many, for example, do have jobs. They simply choose not to be covered, often because they're young and healthy. But, hey, why should they? When things go bad, the rest of us are there to pick up the tab.
What's the solution?
It isn't a centralized, national health care plan. Nor is it more rules at the federal and state level — they are already a big cause of this nation's soaring health care costs.
Medical savings accounts, no doubt, will make insurance more appealing to those with jobs.
The bottom line is this: The uninsured are a big burden on working families. The truly poor, a small number, deserve our help.
But at some point, we must recognize that people who choose to be uninsured even though they can afford it should not be a burden on the rest of us.
Economists have a nifty acronym for this: TANSTAAFL. As in, there ain't no such thing as a free lunch.
[Matthew Hisrich, "Greatest increase in uninsured found among wealthy," The Flint Hills Center, 10 May 2004.]
GM not the only company struggling with health care costs
[Ron Scherer, "Rising benefits burden," The Christian Science Monitor, 9 June 2005.]
GM is making the news rounds with its ongoing struggle to pay for rising health care costs, but the company really just serves as an indicator of larger problems throughout the economy:
An increasing part of production costs in America comes from the price of promises.
There are corporate commitments to provide a pension - some 44 million Americans get a monthly check - that add up to as much as $124 billion a year. There are also healthcare benefits that many companies have agreed to provide, either voluntarily or by union contract, at a cost of billions more each year.
The problems go well beyond GM and the other automakers: Some of the nation's steelmakers, airlines, and old-line manufacturers - and even some municipalities - are also carrying large "legacy costs" - and may face similar layoff decisions.
"Big companies that dominated the economic landscape 20 to 30 years ago are really struggling," says John Challenger, CEO of Challenger, Gray & Christmas, a Chicago outplacement company. "This may not be the last major job cut announcement we see this year as other companies, including the other American automakers, struggle to make a profit amid escalating healthcare costs, not to mention the ongoing health benefits to the growing ranks of retirees."
On Tuesday, the chairman of General Motors, Rick Wagoner, said, "We've worked the healthcare topic hard for a long time, and from every angle." But, he added, "Frankly, the continuing double-digit US inflation in healthcare costs is swamping that progress."
The reality is that we are reaching a breaking point and serious changes must be made in the way health care is provided and consumed in this country.
[John McClaughry, "Patient Power: A Health Care Reform Agenda for Kansas," The Flint Hills Center, May 2004.
Richard B. Warner, MD, "How Would You Like Your Medicine?," The Flint Hills Center for Public Policy, 24 July 1999.]
[Ron Scherer, "Rising benefits burden," The Christian Science Monitor, 9 June 2005.]
GM is making the news rounds with its ongoing struggle to pay for rising health care costs, but the company really just serves as an indicator of larger problems throughout the economy:
An increasing part of production costs in America comes from the price of promises.
There are corporate commitments to provide a pension - some 44 million Americans get a monthly check - that add up to as much as $124 billion a year. There are also healthcare benefits that many companies have agreed to provide, either voluntarily or by union contract, at a cost of billions more each year.
The problems go well beyond GM and the other automakers: Some of the nation's steelmakers, airlines, and old-line manufacturers - and even some municipalities - are also carrying large "legacy costs" - and may face similar layoff decisions.
"Big companies that dominated the economic landscape 20 to 30 years ago are really struggling," says John Challenger, CEO of Challenger, Gray & Christmas, a Chicago outplacement company. "This may not be the last major job cut announcement we see this year as other companies, including the other American automakers, struggle to make a profit amid escalating healthcare costs, not to mention the ongoing health benefits to the growing ranks of retirees."
On Tuesday, the chairman of General Motors, Rick Wagoner, said, "We've worked the healthcare topic hard for a long time, and from every angle." But, he added, "Frankly, the continuing double-digit US inflation in healthcare costs is swamping that progress."
The reality is that we are reaching a breaking point and serious changes must be made in the way health care is provided and consumed in this country.
[John McClaughry, "Patient Power: A Health Care Reform Agenda for Kansas," The Flint Hills Center, May 2004.
Richard B. Warner, MD, "How Would You Like Your Medicine?," The Flint Hills Center for Public Policy, 24 July 1999.]
Tuesday, June 07, 2005
WSJ offers reality check on health care "leadership"
[Holman W. Jenkins, Jr., "O Health-Care Leader, Where Art Thou?," The Wall Street Journal, 1 June 2005.]
Should we rely on government as the source of innovation and leadership in health care? Columnist Holman Jenkins takes issue with the idea that anyone but business leaders can provide the impetus for change:
[B]usiness has always taken the lead in addressing the country's health-care woes -- as it must, given the irrelevance of most punditry and political posturing on the subject.
Right now, cost increases are slowing again -- the Bureau of Labor Statistics says they're up only 7.5% in the last 12 months, compared 11.4% in 2002. Business can take a bow for this result. In just the last year, the number of large firms offering or planning to offer "health savings accounts" to their workers nearly doubled, from 14% to 26%.
These allow insurance to get back to its classic role of paying for "catastrophic" medical bills while consumers save tax-free to cover routine medical costs and small emergencies. The idea is not, as some headline writers put it, to "shift costs" from employers to employees -- employees would be kidding themselves to believe they don't pay for their own health care however the bill is served up. But it does introduce an incentive to spend health dollars more wisely.
To champions of health-care reform, this progress is effortlessly ignored... This blind spot can be described succinctly: a policy that doesn't lead to more direct government spending on health care is no policy at all.
A dozen states have woken up and begun backing down from mandates that specified in detail what treatments and procedures insurance must cover, driving the cost of available policies out of sight.
[H]ealth-care "reformers" have spent 30 years touting their wares without finding the courage to tackle the tax code. Until they do, business will have no choice but to provide default leadership in coping with the central malady of our health-care economy.
[Matthew Hisrich, "HSAs are increasing Americans' health coverage," The Topeka Capital-Journal, 26 September 2004.]
Golden Rule announces customers have $132 million in savings
[Press Release, "Popularity of Health Savings Accounts Continues to Grow," Golden Rule Insurance Company, 1 June 2005.]
Golden Rule, one of the forerunners in offering MSAs and HSAs, recently announced its customers have surpassed the $130 million mark in HSA funds:
Just 18 months after health savings accounts (HSAs) became available by law, Golden Rule Insurance Company today said that 40 percent of its customers are choosing an HSA over more traditional health insurance plans.
Golden Rule, a UnitedHealthcare company and a leader in the individual health insurance market, also confirmed that its customers have accumulated more than $132 million in their tax-advantaged savings accounts - strong evidence that the accounts are working the way HSA proponents intended they would.
According to Golden Rule Vice President of Health Products Mike Corne, "HSAs have moved into the mainstream."
[Press Release, "Popularity of Health Savings Accounts Continues to Grow," Golden Rule Insurance Company, 1 June 2005.]
Golden Rule, one of the forerunners in offering MSAs and HSAs, recently announced its customers have surpassed the $130 million mark in HSA funds:
Just 18 months after health savings accounts (HSAs) became available by law, Golden Rule Insurance Company today said that 40 percent of its customers are choosing an HSA over more traditional health insurance plans.
Golden Rule, a UnitedHealthcare company and a leader in the individual health insurance market, also confirmed that its customers have accumulated more than $132 million in their tax-advantaged savings accounts - strong evidence that the accounts are working the way HSA proponents intended they would.
According to Golden Rule Vice President of Health Products Mike Corne, "HSAs have moved into the mainstream."
HSAs may spawn increased entrepreneurial activity
["HSAs Could Keep You In The Pink," BusinessWeek, 13 June 2005.]
Health care costs are often in the news with regard to their effect on existing businesses, but there is a more subtle toll they take on the development of new start-ups. This article underscores the importance of HSAs in addressing the issue:
[T]he price of health insurance has long deterred budding entrepreneurs who might otherwise leave the corporate cocoon to strike out on their own.
That calculation is changing, in part thanks to the new health savings accounts (HSA) that were authorized in the 2003 Medicare prescription drug legislation.
Anyone can use HSAs, but experts believe they are particularly well-suited for the self-employed. "Entrepreneurs trade off the risk of paying out a couple of thousand dollars in tax-sheltered money in order to protect themselves from catastrophic costs," says Leon Rousso, a certified financial planner in Ventura, Calif. Brad Rosley, who has a wife and three children, also a financial planner in Glen Ellyn, Ill., made the switch. His previous health insurance policy to cover his family cost him $660 a month, or nearly $8,000 a year, with a deductible of $1,000.
Rosley replaced that plan with an HSA. He went for a policy with a $5,100 deductible and put that much into the tax-sheltered account for a family. His premium for the policy is $260 a month, or $3,120 annually. He uses the $400 a month he's saving over the previous policy to fund his HSA. Rosley figures he could well end up with a six-figure account, since any money left in the HSA can be rolled over from year to year. That money can pay for everything from long-term care insurance to a new hip during his golden years.
Rosley's experience appears typical. The average yearly premium on a family policy for an HSA is $3,550 for those aged 30 to 54, according to America's Health Insurance Plans, a Washington trade group. In contrast, private sector employees with a family plan through work pay between $2,100 and $2,400 a year, according to John Ascensio, senior vice-president at Segal Co., a New York benefits consulting firm.
[Devon Herrick, "Health Savings Accounts: The Future Of Health Care For Kansans," The Flint Hills Center, 14 February 2005.]
