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April 11, 2007
Are HSAs Unfair?
Responding to the study showing HSAs end up costing women are $1,000 more per year, Julian writes:
I feel a bit churlish quibbling about this, but wouldn't an equally reasonable frame here be that the more common low-deductible plans amount to a $1,000 cross-subsidy to women?
Well, which more common lower-deductible plans? According to the Kaiser Employer Health Benefits Survey, 63% of individuals in HSAs are in HSAs with deductibles of over $2,000. And 71% of families in HSAs have deductibles over $3,000. So I'm not sure who's in all these $1,000 HSAs, but they're certainly not getting picked up in the literature. Worse, these are employer-sponsored HSAs, and we'd expect those purchased on the individual market to have higher, not lower, deductibles.
So take the average individual HSA, which has a deductible of $2,011. For a male, out of pocket expenses will average $500. For a female, they'll average $1,200. And women make less anyway. Now, one of two things can happen here. Women can continue using health care at their current rate and pay more, or the expected cost effects will occur and women will begin using less health care. Given that the $1,200 number is for routine care -- mammograms and the like -- we don't want to disincentivize their routine, preventive care. So what we're really doing is simply making them pay more for health care because...they're women. And because we haven't thought this through very much.
We can, however, exempt some of these costs from the deductible. Some HSAs currently do that for pregnancy-related care, mammograms, cervical cancer screenings, etc. We could expand that across a range of preventative, routine, or cost-effective services and erase the gap. But given that HSAs are not generally $1,000 deductible plans, the study's conclusion stands: Women are getting screwed.
Update: Julian IMs to clarify that by "low-deductible plans," he didn't mean low deductible HSAs, but current health insurance plans. So he was saying we currently subsidize women to the tune of $1,000, and HSAs can be seen as simply eliminating that subsidy. As a quick response to that, I have no problem subsidizing individuals for medical needs beyond their control, and would prefer a system that subsidizes cost-effective care on grounds of both justice and efficiency, so I find the point unconvincing. But there it is.
April 11, 2007 in Consumer-Directed Health Care | Permalink
Comments
There are so many different ways we can frame the question of who should pay for what (or who should pay for whom)?
The real key is going be how much of a "we" can generate and sustain.
Yes, women pay more for health care. They also live years longer, so they are getting more out of it too. I would willingly pay the extra $700 a year for the extra years of life expectancy.
If women shouldn't pay more for being women (and I agree with that actually), should the elderly pay more just for being old? But if we shift from underwritten pricing (higher rates the older you get) to a tax priced system (as in Canada), this will shift part of the burden from the older to the younger. Is that fair?
Maybe this is the time when we are finally going to get universal health care. But if universal health care fails or if we just universalize the obligation to pay money to insurance companies that serve no useful function, it will be because we don't generate a large enough, strong enough sense of "we" and are played off each other, young vs. old, women vs. men, black vs. white, well off vs. poor, immigrant vs. American born. And one way to build that larger we would be to have a larger discussion of both universal health care and universal education for a globalized economy.
We need more, better, and better organized health care and we need more, better, and better organized education and training to vastly raise our collective skill levels. And we need them at the opposite ends of the life cycle we all go through, so paradoxically dealing with both could strenghten our sense of "we", which is the key to creating the tidal wave of public support we will need to overcome the well-financed campaigns by those doing very well under the current system, thank you.
Posted by: Kevin Rooney | Apr 11, 2007 5:53:34 PM
Above,
"But if universal health care fails"
should say
"But if the campaign to enact universal health care fails"
I wish there was a function to edit comments after I post them. I need to often enough.
Posted by: Kevin Rooney | Apr 11, 2007 6:06:36 PM
"Women are getting screwed."
True.
Posted by: ostap | Apr 11, 2007 6:11:24 PM
"I have no problem subsidizing individuals for medical needs beyond their control,"
From each according to ability, to each according to need. Absolutely.
Posted by: bob mcmanus | Apr 11, 2007 6:55:22 PM
"Some HSAs currently do that for pregnancy-related care, mammograms, cervical cancer screenings, etc."
Er, pregnancy-related care? When I was looking about a year ago, all of the HSAs I found told me to save up and pay, if we were at all thinking of going down that road. Are some parts of HSAs state-dependent perhaps? When I told my boss (in CA) about this, he seemed puzzled as the HSA for his family covers that kind of thing..
I guess another fun part of the American health care system is what plans you get (from Nation-wide companies) depends drastically from state to state.
Posted by: Tom in AZ | Apr 11, 2007 7:13:12 PM
OH god please ezra tell me you are not this dense.
The reason women pay more is because THEY USE MORE HEALTHCARE!
Its not because there is some kind of secret conspiracy to screw women over. Women utilize more services due to their biological situation. You see ezra there are in fact anatomical differences between men and women. I know the ultra libs like to pretend that we're all a unisex population with identical needs, but thats just not the case no matter how much you want it to be.
Posted by: joe blow | Apr 11, 2007 7:21:36 PM
joeblow, if you read Ezra's posts on this matter carefully, you will see that Ezra says that the fact that women use more "chronic"/non-emergency health care makes HSAs a much worse deal for them in a way that regular health insurance doesn't. Please read carefully before shooting your mouth off next time.
Posted by: Constantine | Apr 11, 2007 8:51:17 PM
"I know the ultra libs like to pretend that we're all a unisex population with identical needs, but thats just not the case no matter how much you want it to be."
Wow. Have irrelevant axes to grind much?
Posted by: sidereal | Apr 11, 2007 9:04:56 PM
Constantine:
Here is the line from Ezra's post:
"So what we're really doing is simply making them pay more for health care because...they're women."
That makes it sound so horribly unfair to women, like there is some checkbox on the payment form that makes the same procedures cost more because you happen to be female. That is completely misleading. They use more (and/or more expensive) services, and therefore need to pay more.
If, by whatever metabolism differences, I eat two times more than someone else, should my food bill be the exact same? That would be unfair because it's penalizing me for having a high metabolism
Look, I'm not a fan of HSA's at all, and am willing to consider universal health care (though the potential for the govt to make unpopular behavior "virtually" illegal scares me). But Ezra's statement was plain ridiculous. Women aren't "penalized for being women".
Posted by: Tito | Apr 11, 2007 9:13:47 PM
Sarcasm was intended on the "that would be unfair because it's penalizing me for having a high metabolism". The blog software ate my <sarcams> tags
Posted by: Tito | Apr 11, 2007 9:17:46 PM
Tito, the context of this topic is the practical effects of instituting HSAs in the workplace. Since women have "fixed costs" of health care that are higher than men's (the demands of regular pap smears and breast exams), an HSA regime in the workplace, as opposed to a regular insurance plan, is like coming up with a compensation package that takes money out of the pockets of women workers, and only women workers. An HSA, in effect, is a means of offloading the higher fixed health care costs of being a woman onto women, rather than spreading them out among both men and women, which normal insurance plans do.
An HSA in this case doesn't spread the risk, it concentrates it (it could even make things worse for everyone, because failure to pay for those preventative measures could lead to catastrophic outcomes down the line, which impacts the health insurance costs to the company of both men and women).
Posted by: Constantine | Apr 11, 2007 9:50:51 PM
Constantine: An HSA, in effect, is a means of offloading the higher fixed health care costs of being a woman onto women, spreading them out among both men and women, which normal insurance plans do.
Don't normal insurance plans set different rates for women and for men (and for different age groups)?
Not saying should or shouldn't, just that they do.
If the argument is that the "minimum health care cost" so to speak is higher for women (even with the average cost being pretty similar), then the problem of women being affected more by high deductibles would apply to any insurance with high deductibles, not just HSAs.
Posted by: Kevin Rooney | Apr 11, 2007 10:13:13 PM
Employer plans, which are mainly what we're talking about, tend to have fixed buy-in rates (community rating throughout the employer pool). So they don't charge differently on gender.
And yes, the point is that there are biological differences between men and women and so they have different fixed costs. It's perfectly fine to think women should simply have to pay more. I, however, don't agree.
Posted by: Ezra | Apr 12, 2007 12:27:26 AM
Don't normal insurance plans set different rates for women and for men (and for different age groups)?
Not saying should or shouldn't, just that they do.
This hasn't been my experience with the 4 or 5 different health plans I've been on in my adult life (almost all affiliated with large companies/institutions), but perhaps there are counterexamples.
the problem of women being affected more by high deductibles would apply to any insurance with high deductibles, not just HSAs.
Good point. Though HSAs are typically combined with a catastrophic coverage plan.
Posted by: Constantine | Apr 12, 2007 1:06:27 AM
"And yes, the point is that there are biological differences between men and women and so they have different fixed costs. It's perfectly fine to think women should simply have to pay more. I, however, don't agree."
So how does medical care differ from say: food. (Yes, my example wasn't completely arbitrary.) Sure we subsidize food to an extent, but no one suggests making sure everyone pays the same amount, regardless of what they consume. And food is definitely more necessary to life than medical care. And higher quality foods have a high impact on long term health as well.
Posted by: Tito | Apr 12, 2007 3:57:48 AM
Ezra, I'm not sure I understand your thinking. You say you have no problem "subsidizing individuals for medical needs beyond their control", and you say that as a way of defending a subsidy from men (as a group) to women (as a group). But in the context of removing the subsidy, you don't talk about individuals, but instead focus only on the groups. Interesting rhetoric, but that's all it is. I think a little more attention to the concept of "medical needs" is required as well, since, as has been stated repeatedly, women live longer, healthier lives than men, so it isn't clear whether their increased costs as a class are related to their needs or to the fact that they simply consume more health care in a way that allows them to live longer, healthier lives (something that men apparently don't "need" to do).
Tito does have it right though: since men, on average, consume 20-30% more calories than women, they're penalized by the fact that they're not subsidized for their increased consumption.
Posted by: Thomas | Apr 12, 2007 9:59:54 AM
Thomas, my understanding was that the increased costs incurred by women, at least the ones we're talking about here, aren't because they've got seven or so extra years of checkups; it's because they need to get checkups for things men don't have to, thus incurring higher costs on a year to year basis.
Posted by: Ben | Apr 12, 2007 2:19:11 PM
Ben, my point is that, likely as a result of the extra health care they consume, women live longer, healthier lives. Why women should internalize both the benefits of the health care and a subsidy to pay for it isn't clear to me. It's apparently very clear to Ezra, though no argument has been provided.
Posted by: Thomas | Apr 12, 2007 2:23:59 PM
Thomas, complaints about the unfairness of the system are easy to argue both ways. Rather than focussing on that, it might be better to focus more on just providing health care in the most efficient way possible for all who need it. That might involve some extra subsidies for women, for those with certain genetic traits, etc.
Posted by: Sanpete | Apr 12, 2007 2:36:40 PM
Sanpete, I'm not sure where we disagree. It's Ezra who has focused on it, and who thinks that, rather than arguing about the efficiency of the provision of health care, we should argue about whether HSAs are unfair to women.
Posted by: Thomas | Apr 12, 2007 3:55:43 PM
True, but it's not his main focus. Ezra can deny this if he cares, but I think this is something of a detour for him, that he sees it as unfair, but he's not pressing the point beyond having explained the basic idea. He seems to recognize the competing views of fairness involved and that it would be hard to settle which should prevail. His main focus is on the delivery of health care in the most efficient way possible for those who need it.
Posted by: Sanpete | Apr 12, 2007 4:19:44 PM
Sanpete, that's a very generous reading of a post entitled "Are HSAs Unfair" and which answers the question in the affirmative, but I'm not opposed to generosity, so I'll say I agree with you on what the question should be and leave it at that.
Posted by: Thomas | Apr 12, 2007 5:32:59 PM
Just to be clear, I mean this thread is a detour from his more central blogging objective. You're right that this thread is definitely about a particular fairness issue.
Posted by: Sanpete | Apr 12, 2007 6:32:53 PM
Ezra does know that every nation on earth uses some kind of co-pay for medical care right? Surely he's not under the illusion that medical care is 100% free to the individual, not even in his ultra liberal utopian european states. EVERYBODY has some kind of co-pay for services utilized.
So what Ezra is proposing is not just universal healthcare, but UNPRECEDENTED UNIVERSAL HEALTH CARE WITH ABSOLUTELY ZERO COST TO THE CONSUMER.
After all, if one person has to see a doc in Europe 5 times and pay 5 copays, vs another person who only has to see the doc once with 1 copay, according to ezra thats "unfair" and should be illegal or the extra copay cost should be eaten by the state in some fashion.
newsflash ezra according to your criteria for "fairness" there is NO "fair" healthcare system in teh entire world. Not even your swedish utopia has a "fair" system according to your incredibly bloated standard.
Posted by: joe blow | Apr 12, 2007 6:52:40 PM
So what Ezra is proposing is not just universal healthcare, but UNPRECEDENTED UNIVERSAL HEALTH CARE WITH ABSOLUTELY ZERO COST TO THE CONSUMER.
No.
Posted by: Sanpete | Apr 12, 2007 7:05:29 PM
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