Thursday, August 17, 2006

Mark Green & the Limited Promise of HSAs

It’s amazing to me that Mark Green has the guts to criticize Doyle on the governor’s health care reform proposals when Green himself has offered little to nothing on the topic.

All Green keeps talking about are state tax breaks for Health Savings Accounts (HSAs), which hardly amounts to a blip on the health care radar in Wisconsin. What’s more, the move would do absolutely nothing to address the growing number of uninsured and the actual cost of care in the state.

It’s also getting tougher and tougher for proponents to find good press on HSAs, which are a signature part of High Deductible Health Plans (HDHPs) or, as they’re often called, Consumer Driven Health Plans (CDHPs).

The idea of CDHPs is that people will get a low premium, high deductible health plan that affords them a HSA to use for the increased out-of-pocket deductible payments.

Since people will be spending their own money for the care, proponents argue, they will be more responsible with the care they receive – seeking out lower cost providers whenever possible, thereby increasing competition and subsequently lowering prices across the board.

According to a recent story in the Chicago Tribune, however, people in these CDHPs are discovering it is impossible to “shop around” for the best provider price, which – as described above – is the central tenet of CDHPs.

The industry newsletter FierceHealthcare explains:

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Healthcare is, by nature, a fragmented industry. One procedure can involve various services from hospitals, doctors and labs, each of which bill separately. This makes an up-front estimate almost impossible. Added to that is the fact that patient's level of health varies: Two patients undergoing the same procedure will be charged different prices based on their particular needs.

At this early stage, CDHPs seem like a Catch-22. Consumers are supposed to comparison shop without even getting a chance to look at the real price tag.

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Adding more pressure to the promise of HSAs is a recent report commissioned by Destiny Health – a company that sells and promotes CDHPs – that suggests most Americans are unwilling to do the necessary homework even when they can manage to get accurate pricing information from health care providers.

According to the findings, less than 40 percent of respondents said they would be willing to “shop around” for care if given the opportunity. And this is coming from a company that’s trying to sell these plans!

People are also showing through their health plan choices that comprehensive coverage is preferred to the uncertainty and risk of CDHPs. As stated in a recent Business Journal of Milwaukee article, while 20 percent of employers in the country currently offer CDHPs, only 5 to 10 percent of eligible employees opt for them.

This trend is in line with findings by the non-partisan Commonwealth Fund late last year that people in CDHPs are significantly less satisfied with them than people who are in comprehensive coverage plans (even those with relatively high out-of-pocket costs).

In the end, Governor Doyle is right: HSAs can be a useful tool as part of broader healthcare reform, but they do not work as a standalone measure. And simply providing state tax breaks on them isn’t a viable answer to the growing health care crisis in Wisconsin.

For example, the health care reform plan proposed by Sen. Russ Decker (D-Schofield) and Rep. Terry Musser (R-Black River Falls) this past spring includes a $600 deductible for families ($300 for individuals). HSAs would be an excellent addition to the plan that would allow people to save their out-of-pocket deductible costs tax-free prior to paying them.

But what makes HSAs an acceptable idea in this plan is that the overall costs of care would be controlled through other facets of the proposal that reduce administrative overhead and increase the negotiating power of payers in the system. Once these costs are controlled, it takes the risk and uncertainty out of the HSA. Plus, the deductible costs are modest in the Decker/Musser plan compared to those in CDHPs, which are a minimum of $2000 for families and $1000 for individuals.

The more Green merely criticizes Doyle on health care reform, the more obvious it becomes that the only purpose in the task is to cover the fact his campaign has nothing meaningful to offer on the topic.

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