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January 27, 2006
HSA's
The lovely Adrienne has a puzzling response to my recent writings on HSA's. Not that I'm expecting a CATO-wonk to agree with my writings, but this is just weird:
If your ultimate goal as a health policy wonk is to push for government-financed health care, then criticizing HSAs and the consumer-driven health care approach is your bread and butter, the overwhelming evidence that many people like having the HSA option notwithstanding.
Well, yeah. If yesterday I was paying to help sick, old people not go bankrupt and today I'm not, I'll probably be a happy camper. At least till I get sick and/or old. I'm sure the healthy young things populating HSA's are ecstatic to have lower premiums, but I'm similarly sure that HSA's are a bad idea. And since they will eventually destroy regular insurance if widely adopted, what they amount to is a redistributionist scheme in the exact wrong direction. Now, folks can argue that we should be tilting the paying field back towards the young and well, but whether or not HSA holders are happy about their plans really has nothing to do with it.
Also, Adrienne asks:
So, keeping in mind that all this health policy wonkery is really a debate about trade-offs, I pose this question to Ezra and his ilk: Would you rather see someone enrolled in an HSA/HDHP, or not have insurance at all?
Health care is certainly a debate about trade offs, but it's not a debate about that one. I would rather take what's behind door #3: universal health care, or at least an expansion of FEHBP. HSA's are not cheaper, or simpler, or otherwise better in any way that would make them the only alternative too an uninsured dystopia.
In other Adrienne posts, I'd meant to link awhile back to her critique of Healthy, Wealthy, and Wise. Since Bush's SOTU proposals are entirely cribbed from that book, a libertarian's take on it is well worth a read.
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» [Ezra Klein] HSA's from Marketplace.MD Blog
Ezra Klein:
The lovely Adrienne has a puzzling response to my recent writings on HSA's. Not that I'm... [Read More]
Tracked on Jan 27, 2006 2:36:40 PM
» [Ezra Klein] HSA's: A Comment from Marketplace.MD Blog
Adrienne:
Why is it so unreasonable that HSAs/HDHPs be allowed a shot in the marketplace alongside... [Read More]
Tracked on Jan 27, 2006 2:37:38 PM
» [Ezra Klein] HSA's: A Comment from Marketplace.MD Blog
Fred Jones:
It's a good question. "Ezra and his ilk"...feel that it's an all or nothing proposition... [Read More]
Tracked on Jan 27, 2006 2:38:58 PM
» [The Health Care Blog] HSAs Triple in 10 Months, or is AHIP just blowing more smoke? from Marketplace.MD Blog
Trapier K. Michael:
I'm trying to digest the anti-HSA deluge coming from the same few bloggers who... [Read More]
Tracked on Jan 27, 2006 5:08:40 PM
» Too Much Flip-Flopping from Hayek, MD
There's been a subtle but interesting shift in how the good boys and girls at TMCafe view employer-sponsored... [Read More]
Tracked on Mar 7, 2006 1:08:32 PM
» Arrow's Impossiblity Theorem applied to pundits and bloggers from Hayek, MD
Ezra Klein emailed me about my “flip-flopping accusations” against him and others (Kate Steadman, Malcolm... [Read More]
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» Private Accounts for Medicare, Part II: Setting The Trap from Hayek, MD
[Continued from Part I]
...Leaks sprang weeks in advance of the Address: “Bush to speak about... [Read More]
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» Private Accounts for Medicare, Part II: Setting The Trap from Marketplace.MD Newsletter
[Continued from Part I]
...The same leak sprang throughoutthe media weeks in advance of the address:... [Read More]
Tracked on Apr 17, 2006 11:55:39 PM
Comments
Important things first: it's Cato, not CATO. As much as I wish I worked for an organization whose acronym stood for Crazy Anarchists Taking Opium, it's just not the case.
I happen to disagree with Matt's statement that "there are only two genuinely possible outcomes in the long-run -- either the country will adopt a system of universal, government-funded health care or else we need to adopt a system wherein people are left to die in hospital waiting rooms when they run out of money."
That scenario seems...far-fetched, to say the least. I think we're largely going to keep our current mish-mash, patchwork system. I think we're largely going to continue to rely on employer-provided insurance for a decent chunk of the population. Given this scenario, one in which we still rely on insurers to offer coverage, why is it so unreasonable that HSAs/HDHPs be allowed a shot in the marketplace alongside HMOs? Instead of writing off HSAs as "bad," why not recognize their growing appeal to many people and then figure out ways to make them better so that they'll work for poorer folks and the chronically ill? (for example, here.)
Posted by: Adrienne | Jan 27, 2006 12:50:23 PM
...why is it so unreasonable that HSAs/HDHPs be allowed a shot in the marketplace alongside HMOs?
It's a good question. "Ezra and his ilk" (sorry, I just had to laugh) feel that it's an all or nothing proposition and anything less will steal their political thunder.
Posted by: Fred Jones | Jan 27, 2006 1:01:57 PM
I should note that I don't really consider Ezra and his government-loving comrades evil, but I'm required by law to pretend that I do.
Posted by: Adrienne | Jan 27, 2006 1:14:56 PM
Would you rather see someone enrolled in an HSA/HDHP, or not have insurance at all?
Ah, the drinkers' fallacy: an argument based upon licensed premises. On the substantive point: it's what's called 'enabling', and once you enable, you accept the underlying problem. It's like debating whether to offer an alcoholic wine or beer in place of liquor.
Important things first: it's Cato, not CATO.
And takes its name from the stereotype Chinese manservant of Inspector Clouseau.
Posted by: ahem | Jan 27, 2006 2:17:44 PM
Insofar as you're right and we remain in this patchwork, silly system we've got, yeah, let a thousand nutty strategies bloom! I don't, after all, think we should outlaw HSA's. But I will, as a health commentator, say that they're an awful, no good, very bad force in public policy, even within the employer-based context. I do, however, think they'll likely to destroy employer-based care if they become prevalent, so that may well be moot. HRA's, on the other hand, strike me as an excellent structure for a national program.
And Adrienne knows I love her too. And I'm not even required to hate her -- slumming with the libertarians is totally accepted in my neck of the woods ;)
Posted by: Ezra | Jan 27, 2006 3:17:13 PM
Would you rather see someone enrolled in an HSA/HDHP, or not have insurance at all?
This is idiotic. It's like asking "Did you walk to school or bring your lunch?"
One really has nothing to do with the other. Also, they are NOT mutually exclusive.
Posted by: SteveAudio | Jan 27, 2006 3:28:00 PM
"I think we're largely going to keep our current mish-mash, patchwork system. I think we're largely going to continue to rely on employer-provided insurance for a decent chunk of the population. Given this scenario, one in which we still rely on insurers to offer coverage, why is it so unreasonable that HSAs/HDHPs be allowed a shot in the marketplace alongside HMOs?"
I had this crazy professor who had a real problem with this type of argument. Given that things stay the way they are... Which is another way of saying, let's assume that we really don't implement any kind of healthcare policy, what's wrong with HSAs? And that sidesteps the real issue, which is what health care policy we should implement.
the assumption that things just stay the same, sittin' on the dock of the bay aside, is very appealing, but it's wrong as often as it's right.
Posted by: Cliff Mason | Jan 27, 2006 3:50:27 PM
One really has nothing to do with the other. Also, they are NOT mutually exclusive.
Come again? If you have an HSA, you're required by law to have an HDHP. I'd like to see the law changed so that HSAs are compatible with any type of insurance policy--or none at all, but as it stands, having an HSA = having coverage.
Posted by: Adrienne | Jan 27, 2006 4:04:43 PM
Would you rather see someone enrolled in an HSA/HDHP, or not have insurance at all?
False choices are always fun to posit in the public sphere, even if they are false.
- Would you rather see all US residents automatically enrolled in a single-payer universal coverage health insurance system, or not have insurance at all?
- Would you rather have only those who can afford current health insurance get medical care, or insist that health care is a modern human right that must be met?
- Would you rather have those who hate any government program designing national health care, or choose designers that will look at the results of experience and facts with an open mind?
Isn't this fun?
Posted by: JimPortandOR | Jan 27, 2006 4:13:17 PM
I'm trying to digest the anti-HSA deluge coming from the same few bloggers who seem to share health policy opinions (Ezra Klein at Ezra Klein, Matthew Holt at THCB, and Joe Paduda at Managed Care Matters). And I'm confused.
One common theme is that HSAs are a waste of time to talk about right now because they represent such a small, or "non-existent", part of the insurance market. [See 1 & 2 below]
But another theme is that HSAs will become so influential as to completely "destroy" (not change or alter but absolutely, entirely destroy) health insurance as we know it today. [3]
Obviously this is more than a minor inconsistency in the anti-HSA logic. Which view do most HSA critics hold? Or do they hold both in dissonance for the sake of killing an idea before it gets going because they dislike it?
Trapier K. Michael
www.marketplace.md
[1] "HSAs Triple in 10 Months, or is AHIP just blowing more smoke?", The Health Care Blog, 27 Jan 2006, http://www.thehealthcareblog.com/the_health_care_blog/2006/01/health_planspol.html.
[2] "HSAs. CDHPS, and FOOLs," Managed Care Matters, 23 Jan 2006, http://www.joepaduda.com/archives/000389.html.
[3] "HSA's: A Comment," Ezra Klein, 27 Jan 2006, http://ezraklein.typepad.com/blog/2006/01/hsas.html.
Posted by: Trapier K. Michael | Jan 27, 2006 4:56:45 PM
Now there's a man-bites-dog story, various critics criticize for various reasons.
Posted by: Ezra | Jan 27, 2006 5:00:28 PM
But ezra...they are mutually exclusive reasons. Either we should ignore talking about HSAs because they are inconsequential or we should kill them because they are going to take over health insurance. But we can't do both.
Posted by: Trapier K. Michael | Jan 27, 2006 7:17:48 PM
My employer has an option similar to HSAs, except a certain amount is deposited for you. The only people who choose it are the young and healthy, hoping they don't get sick. There's a huge "donut hole" where you are shelling out your own money.
Almost no one has adopted it, even me, who is young and healthy. (It would have been bad when my husband had to have his appendix removed.) One of my colleagues who did choose it only chose it one year because it was so much work trying to call around and find the cheapest doctor and bargaining over small things. I don't think HSAs can really continue to exist with our "patchwork" system because insurance has pretty much determined how much each doctor is paid. (It's about $100 just to walk in the doctor's office). Shopping around for healthcare is not at all easy, and it can destroy things like continuity of care. Plus, my colleague told me it took a significant portion of his time to do so.
Hey, I'm no healthcare policy wonk but I don't think HSAs are what people are going to choose first, especially if they are just putting pre-tax money into it (there's no "seed" money). I know many people who won't even put 6% pre-tax in their 401ks, even though they know they're leaving money on the table by not getting the 3% employer match.
Posted by: Unstable Isotope | Jan 27, 2006 10:31:15 PM
Trapier: Your point remains nonsensical. Obviously I, within the context of my critique, believe HSA's will be widely adopted because businesses will shunt workers onto them in order to shift costs. At that point, I think they'll be quite awful for the system, and that will rapidly become clear. Others think they won't be widely adopted. It's rather insane to insist that one of us set ground rules for the critique and all other health policy watchers follow their prediction. Opinions differ.
Posted by: Ezra | Jan 27, 2006 11:59:19 PM
I addressed "The Crock of HSAs" in a Daytona Beach News-Journal column a couple of months back. See the link, or http://www.pierretristam.com/Bobst/Archives/C110805.htm
The argument tracks Ezra's. This is a blessing for business, another nail in workers' security.
Posted by: Pierre Tristam | Jan 28, 2006 8:51:11 AM
Ezra:
Whatever comes of this debate, I trust you'll notice that it's "HSAs", not "HSA's". Note the conrast with "it's", the only non-possessive apostrophe "s" in English.
Posted by: Jonathan Goldberg | Jan 28, 2006 10:05:52 AM
Now, what I've been wanting are DSAs, Defense Savings Accounts. They're a Vietnam War era idea that allow you to buy just as much defense against one's enemies as one needs. Not everyone felt it was worth blowing big bucks fighting the North Vietnamese, and not everyone felt that the moribund Soviet Union, huffing and puffing and wheezing, was a serious threat to the United States. DSAs let you direct your money against the threats that threaten you.
All the evil and inefficiency in the world comes from that collectivist constitution they set up for this country over two hundred years ago. You'd think they had never read Adam Smith. When it comes to Al Qaeda, I'd rather rely on the invisible hand for my defense than on George W Bush.
P.S. This is pretty lame, but all I can do is bad satire at this hour.
Posted by: Kaleberg | Jan 28, 2006 9:24:56 PM
Well, as long as my opinion has been opined upon, I'll through my inflation-adjusted 3 cents in.
I love my HSA. I save tax dollars, I have a somehwat-reduced insurance bill, and it works reasonably well for me. BUT, when a health care emergency hits my family, I don't give a rat's rearend what it costs, the wife/kid is going to get any care from anyone no matter what.
BUT, there is lots of evidence that even medical doctors don't know exactly what works and what doesn't and why, and there is ample evidence of this in practice pattern variation (e.g. back surgery rates in FL vary by 400% across the state).
So, if docs aren't sure what to do, and medicine is at least as much art as science, how are we, the great unwashed, to figure out how best to allocate our dollars?
AND, fully half of the HSAs opened to date have not been funded at all. Yes, that means the accounts have no dollars in them. So, what happens when the account owner needs care? Anyone?
What else...
Much of the adoption of HSAs has been due to employers eliminating their other plans in favor of CDHP-HSA plans.
Employers are dumping their regular plans (well, a few are, most are not) because they can't afford to buy health insurance for their workers any more. And a big part of the reason they can't is because of cost-shifting from the uninsured to the insured. The uninsured get care, they just don't pay for it. see http://www.joepaduda.com/archives/000395.html for more on this.
3. The larger employers who are offering HSAs are seeing very low adoption rates. IBM has been offering them for over two years, and less than 3% of eligibles have signed up.
Clearly health care costs play a role in the industrial competitiveness of US companies; the HSA-CDHP debate merely clouds the overall issue - if we don't get our act together we will get our economic butt kicked.
Posted by: Joseph Paduda | Jan 29, 2006 11:01:34 AM
This is a copy of a comment I made at Adrienne's post.
Adrienne, I came to your post via Ezra Klein from Managed Care Matters. I'm astounded by the points that both you and Ezra are making. I apologize if this sounds ranty, it certainly isn't meant to be (though I am writing this in my public health T-shirt and ... well, chinos, not pajama bottms). I will freely admit that lots of people are adopting HSAs, but that is not necesarily the best barometer of a quality health plan. I will also admit that it is very hard to find a good barometer of quality--I often end up arguing that patient satisfaction is a good proxy, but only because all of the others suck--but, enrollment and patient satisfaction are not interchangeable. A more interesting statistic would be what is the probability that a person continues being enrolled in an HSA, given that he or she was in an HSA last year (it would be interesting to add the AND condition that the account ahs been depleted so that their are no transaction costs). On the other hand, Ezra posits an irrelevant comparison--HSAs vs. universal health care modeled on FEHBP. The option of a universal single-payer system is just not a tenable alternative at this time, too many people are wed to their employment-based insurance that a single-payer system would take away from them. At the end of the day, this debate boils down to prepayment of healthcare, since most of the concern about HSAs stems from there.
Personally, I think that advocates of HSAs (being the "reformers") need to provide evidence for a number of implicit claims underlying the benefit of HSAs.
1) Will doctors willingly publish fees in a meaningful manner (I'm not talking about finding out at the end of the visit how much it iwll cost, nor am I talking about knowing how much procedure X will cost--I'm talking about having a published list, which is easily accessible, of how much a doctor will charge for an episode of care that a lay person could understand)
2) Will consumers be able to make effective choices among a variety of HSAs?
3) What types of care will be reduced--in particular, will the essential care that is averted by HSAs (remember, this is what the RAND experiment tells us) be relevant to health outcomes?
4) Will the deductible caps be related to income or not? (If not, then the catastrophic insurance does not meet the definition of insurance).
I hope that my contribution is helpful.
Martin
P.S. I will try and post same at Ezra's blog
Posted by: Martin | Jan 29, 2006 7:58:18 PM
Re: "Trapier: Your point remains nonsensical. Obviously I, within the context of my critique, believe HSA's will be widely adopted because businesses will shunt workers onto them in order to shift costs. At that point, I think they'll be quite awful for the system, and that will rapidly become clear. Others think they won't be widely adopted. It's rather insane to insist that one of us set ground rules for the critique and all other health policy watchers follow their prediction. Opinions differ."
Well then, Ezra, perhaps you should object to your friends' arguments with the same vigor you bring to killing your enemies', as long as they are both faulty. That is unless you're more interested in a political outcome than an honest debate.
Trapier K. Michael
www.marketplace.md
Pres. & Founder
Posted by: Trapier K. Michael | Jan 30, 2006 5:45:45 PM
Trapier, dude. Ezra disagrees with them over a small matter of speculation. In the event that HSAs did become widespread, they would agree with ezra. and if they don't become widespread, ezra would agree with them.
Posted by: Cliff Mason | Jan 30, 2006 10:07:02 PM
Trapier's point are not correct. The pro-CDHP group is making two claims about the HSA. The first is that their widespread adoption will keep costs down, the second is that consumers love HSAs because they get to control their own healthcare spending. They truly believe that people in our society aren't confused enough by all of the things they have to worry about and they want to add healthcare to the list of things they have to do completely by themselves.
Ezra is responding to the first point by saying that no, they will not save money for the system and will actually bankrupt it. Joe and Matthew are saying no, people don't want really HSAs. In fact, when given the choice, a very small percentage (<5%) of people actually choose to be in HSAs.
Everybody agrees that HSAs are the issue to discuss right now. I don't think anybody has said it is a waste of time to talk about an issue that will be a centerpiece of the State of the Union Address. But what the pro-HSA group is trying to do is build momentum for them with bogus studies like "Enrollment triples because people LOVE HSAs", when a better title would be "Now that HSAs are legal, High Deductible Healthplans have re-categorized themselves as HSAs", which means something very different. The HSA crowd is running the campaign the way Bush runs his campaign. The Anti-HSA crowd is trying to make sure people realize this emporer has no clothes before it gains any more momentum. Trapier, you're trying to create a contradiction that clearly doesn't exist.
Posted by: spike | Jan 31, 2006 11:01:33 AM
Re: "Trapier, dude. Ezra disagrees with them over a small matter of speculation."
It is not a small disagreement. Ezra thinks HSAs will destroy the institution of health insurance that has lasted more than a half century; the others think HSAs will have a negligent impact because of a low uptake rate.
And those "others" are not small players in health policy. They are the New York Times and Los Angeles Times, to name just two papers, and the very respected Employee Benefit Research Institute, to name just one health policy research outfit [See quotations below].
---
"The 3 million enrollees in plans that qualify for the accounts represent a small percentage of the 198 million Americans who, as of 2004, were covered by private insurance — or even of the 46 million who have no insurance at all.
'Is it a success story? Yes and no,' said Paul Fronstin, a health economist with the Employee Benefit Research Institute. "Three years ago, the market didn't exist. But it still amounts to only a fraction of Americans who have private insurance."
~ J Havemann, “Enrollment Triples in Plans Offering Health Savings Accounts,” LATimes, 27 Jan 2006.
---
“More than two million people have signed up for the plans…a tiny fraction of the 180 million Americans with health insurance…workers and employers have been slow to embrace health savings plans.”
~ M Freudenheim, “Prognosis is Mixed For Health Savings,” NYTimes, 26 Jan 2006.
---
Now, how loud would Mr. Klein be barking if any pro-consumer-driven health care papers or policy researchers were an inch out of line in their promotion of HSAs? How venomous and snide would he be?
He just seems to be taking fallacy well whenever it fits his political goals. Which, to quote Mr. Klein, makes for "Good Politics" but "Bad Policy".
Trapier K. Michael
www.marketplace.md
Pres. & Founder
Posted by: Trapier K. Michael | Jan 31, 2006 11:09:02 AM
While we're on the subject of fallacies and anti-HSA argumentation...consider how faulty this overtly anti-HSA EBRI/Commonwealth Fund study from December was [1].
My own critiques of it were published here [2] and here [3]. I pointed them out to Ezra when he was criticizing pro-HSA scholarship but never heard any response.
Trapier K. Michael
www.marketplace.md
Pres. & Founder
[1] Early Experience With High-Deductible and Consumer-Driven Health Plans: Findings From the EBRI/Commonwealth Fund Consumerism in Health Care Survey, Paul Fronstin, Ph.D., and Sara R. Collins, Ph.D., The Commonwealth Fund, December 2005.
[2] T Michael, "Health care: Verdict still out on new plans," Portland Oregonian, letter, 19 Dec 2005.
[3] T Michael, “Health Plans Little Understood,” Hartford Courant, letter, 15 Dec 2005.
Posted by: Trapier K. Michael | Jan 31, 2006 11:21:26 AM
"It is not a small disagreement. Ezra thinks HSAs will destroy the institution of health insurance that has lasted more than a half century; the others think HSAs will have a negligent impact because of a low uptake rate."
Are you intentionally misrepresenting their arguments? "The others" only said that people don't like them. They didn't say a thing about how widespread they may or may not become. I don't know if you've noticed, but the majority of the people in group health insurance plans don't have a choice as to which coverage they have. They are forced to take what their employer gives them. If my employer decides tomorrow that my company will be all HSA, I will be in an HSA whether I like it or not.
The pro-HSA camp seems to think that everybody loves HSAs and can't wait to get into one. "The others" are merely disputing that point.
Posted by: spike | Jan 31, 2006 12:21:16 PM
