One of the good folks over at the Progressive Pulse is skeptical of consumer-driven health plans. He writes:
One example – their paper on how great “consumer-driven” health plans are (that’s basically a catastrophic health plan with you holding the bag for the first $3 to $5 grand of your health care costs) is one clue. These plans are great for healthy folks and, with special tax breaks, people in higher tax brackets, but not for anyone else. It’s the sort of thing gleefully cited by the Bush White House, despite heavy criticism.
Perhaps he should look into these plans a little more. What the author omits (or is simply ignorant of) is that so-called "catastrophic" or high-deductible health plans (HDHPs) are increasingly being coupled with health savings accounts (HSAs). With the reduced premiums, an individual (or her employer) can quickly put money into her HSA–high tax bracket or no. These plans are great for low-income earners, too, precisely because the premiums are lower and the deductible can be funded out of the HSA, if necessary. Increasingly, employers are finding this to be a cost-effective solution, and employees like that they can save for healthcare into their old age.
Here are some other benefits to consumer-driven plans the Progressive Pulse omits:
1. When you’re spending your own money and not that of others in a third-party plan, you are more likely to make cost-effective decisions about your healthcare — which, on aggregate, will help control costs. The "expense account" phenomenon dissipates.
2. Doctors and service providers will have to be far more responsive to cost-conscious consumers. They will also have to lower their prices to attract these customers. (Currently, they simply bill the insurance company and charge you for the privilege of doing so — i.e. in processing costs.)
3. Insurance premiums are currently so high not just because of the pre-paid healthcare model we currently have (the health equivalent of claiming a tune up or oil change on your car insurance), but because of all of the ridiculously expensive mandates states are currently building in (NC included). Thus, in many states HDHP premiums will still be high, despite moving maintenance healthcare out of the third party system. This is not the market’s fault, but as always, the government’s.
Predictably, opponents of HDHPs and HSAs will continue to attempt to obfuscate the situation, much like Progressive Pulse has here. But the truth is, these plans – while not a silver bullet – are becoming increasingly popular among employers of lower income folks. They’re even figuring out creative measures to mitigate the concerns about the deductible with lines of credit and other mechanisms, which allow people to build up their HSAs without concern. HSAs and HDHPs will be one crucial market weapon in the fight against single-payer healthcare, with its attendant rationing, higher taxes, shortages, waiting lists, and reduced quality. (For better information visit: here, here and here.)