Op-Ed: Health savings accounts add costs to our health system
By Lauren O. Florence, July 1, 2006, Salt Lake City Tribune
Health savings accounts are President Bush's central focus for decreasing costs in health care. If you don't need health care, the money you save can stay in the savings account and grow tax-free. To be able to put money away like this, the health savings account law says that you must buy a high-deductible health insurance plan. Once the high deductible is met, then the insurance kicks in and pays for health care costs.
It seems to be a wonderful deal. Tax-free, a family can put as much as $5,450 away each year. Individuals can save as much as $2,700. If you turn 65 and still haven't used the money for health care, you can take it out without penalty. On the other hand, how many more people does the bank require to decide what is a legitimate health care cost and whether fines and taxes must be paid on withdrawals?
Furthermore, do the owners of the account get pre-authorization for the care they want before they spend their own money? How many more people are required to evaluate medical necessity or compliance with the purchased insurance policy?
I submit that health savings accounts will add a new, dense layer of administrative
costs.
Our Utah legislators will ask the Public Employees Health Plan to offer
health savings accounts, with a hearing set this week. This wonderful health
plan operates with a 3.8 percent administrative overhead. No other plan
in the country runs with a private, nonprofit trust fund that pays so promptly
for health care. No other plan is so lean and efficient. This plan should
be a model for every other health care insurance company in the nation.
Most health insurance plans claim around a 15 percent overhead. Some SEC
filings show that some for-profit health insurance companies have a 30 percent
overhead. Let's not add to the administrative overhead of the Public Employees
Health Plan by making it offer health savings accounts.
We already have a fragmented health-care delivery system overburdened with
administration from many plans. Adding another bureaucracy of health savings
account banking and health-care administrators as well as space and supplies
for them to work adds only costs.
No more providers are in the mix because health savings accounts don't get actual health care to an increased number of people. Health savings accounts get the purchasers only an insurance policy and a savings plan. Healthy people won't need to access care and will save their money. No provider increase there.
Insured, sick people, who are already getting care under their current plan, won't get more care because of a health savings account. Again, no provider increase.
As for the current uninsured, some of them think they are immune to illness and injury. They imagine that they won't need any kind of health insurance, no matter what it costs, and don't buy health insurance, because nothing will happen to them. If they get health care and their needs increase the numbers of providers required, it will not be because of health savings accounts.
Finally, if the uninsured don't have health insurance because they can't afford it, they might be able to afford the lower premiums of a high-deductible plan like a health savings account. They would then be on an insurance plan. When insured, this group may add to the number of providers, if they can afford the high deductible.
But, remember, they couldn't afford health insurance before, why would we think that lower premiums would make them able to afford the large deductible to actually access care? If they don't access care, they don't add providers.
If mostly what we get is more administrative jobs in health care, but
the same amount of care that we are already getting, it's not a good deal
for our system, however much a small group may benefit.
We are doing things better in Utah. Let's keep it that way.
Lauren O. Florence is a plastic surgeon. She is also chair of the
editorial board, Utah Medical Association and of the Utah Health Alliance.
