All of this is just so right ON. The market forces that are being subverted by the government in the health care marketplace are numerous. We'd be better off moving in the direction of more freedom.

From Tuesday's WSJ [wsj.com] (subscriber)

HSA Man Vs. Healthzilla

By DAVID GRATZER
October 12, 2004; Page A22

"More uninsured Americans." "Double-digit rises in health spending." "Middle-class angst about health insurance." These problems dominate headlines, with both parties pushing their reform packages. The year, though, is 1994, not 2004. Ten years ago this fall, the most ambitious plan to remake American health care since the Wagner-Murray-Dingell bill of 1943 collapsed, not with a bang but with a whimper: Senate Majority Leader George Mitchell delayed the vote on "Hillarycare."

Basic problems remain the same, however. And so do many of the proposed solutions. In Washington, Democrats continue to push statist prescriptions to America's health care ills; at the state level, legislatures experiment with them. It would be easy, thus, to assume that while Hillary Clinton lost the battle, she is winning the war.

Perhaps that is what makes tomorrow's debate so interesting. With the presidential candidates focused on domestic issues, America will have the opportunity to witness a debate between two fundamentally different visions of health care. John Kerry has offered up more of the same for health reform. In sharp contrast, President Bush proposes a package that could rout Hillary Clinton's statism and create a health-care revolution.

Let's start with the lost decade. There have been two major reform ideas that dominated the years since the Health Care Security Act of 1994: government meddling and managed care.

While the White House failed in its grand design, many states forged ahead -- expanding Medicaid, and regulating the price and scope of insurance. Today, across America, there are many more regulations on the books and the number of Medicaid enrollees has swelled (from 30 million in 1994 to 44 million today), but the political enthusiasm for statist interventions has waned. No wonder. Consider Medicaid. Between 1999 and 2002, the program's bottom line grew 36%, from $189 billion to $258 billion.

Support for managed care proved just as transient. The original impulse for Hillarycare was cost-control. The White House in 1993 predicted that, without major reforms, health spending would suck up 19% of the GDP by decade's end. Managed care was the private sector answer to the problem of health inflation. And it worked: health spending was reined in. Hospital spending actually dropped through much of the mid-1990s (in 1997, by an astonishing 5.3%). But the thuggish methods employed by HMOs led to a consumer and political backlash.

Why did both fail? Government meddling and managed care awkwardly attempt to compensate for the central problem: Americans don't directly pay for the health care they receive. Out-of-pocket expenses -- that is, the amount not covered by public and private insurance -- account for just 14 cents on every health dollar spent in the U.S. American health care is dominated by third-party payment. Nelson Sabatini, Maryland's secretary of health, observes: "Using health care in this country is like shopping with someone else's credit card." If the last decade seems to have done so little to address the woes of the system, no wonder: Consumers were never brought into the equation.

Sen. Kerry looks at today's woes and promises something statist for everyone. For employers struggling with rising premiums, he promises that Washington will pay 75% of extraordinary health bills and then subsidize the remaining insurance cost. He promises to create huge purchasing pools, heavy in regulations and mandates, so that employers and individuals can join together to buy insurance. He offers a massive expansion of public programs, like Medicaid, to cover most of America's kids. And for anyone taking prescription drugs -- which is to say most of the country -- he promises lower prices by allowing importation of Canadian drugs (and thus Canadian price controls).

His plan would enlarge Washington's role, involving it in the purchase and pricing of much of American health care. Such ambition carries a high price tag: $1.5 trillion over 10 years, by at least one estimate. In contrast, President Bush promotes a completely different approach: health savings accounts. Rather than ignore consumers, HSAs place people in charge of their own health care, "a plan that you own," as Mr. Bush observed in Ohio last week. And that ownership has the potential to tame health spending in its wake.

Created by the Medicare Modernization Act of 2003, HSAs are personal medical savings accounts used in conjunction with a high-deductible health insurance plan. For smaller expenses, then, individuals pay out of their HSA -- money that can follow them from employer to employer and can accrue from year to year. Catastrophic insurance covers larger expenses.

How much could this help? Writing on this page, economist Martin Feldstein noted that a typical Blue Cross of California family policy costs $8,460 (with a $500 deductible per member). But a similar HSA-style high deductible policy costs just $3,936 (with a $2,500 deductive). The difference ($4,524), then, far exceeds the maximum additional out-of-pocket expense that the family would face if they reached the maximum deductible ($2,500). In other words, the HSA approach results in great savings. Data from eHealthInsurance, a leading online insurance brokerage, suggests that a majority (55%) of customers purchasing health insurance through the HSA approach pay less than $100 per month. Not surprisingly, about a third of these HSA-plan enrollees were previously uninsured.

HSAs have the potential, though, to do more than just save some money on premiums. Individuals empowered with health dollars will begin to act like consumers of health care. Third-party payment, in fact, will be pushed to catastrophic events. Thus, the market forces that reshaped the rest of the economy may soon transform the health industry.

Tomorrow, President Bush shouldn't just emphasize HSAs (which Sen. Kerry, incidentally, opposes). He can map out further reforms that will make health insurance more affordable:

• Tax fairness. While employer contributions to health insurance are non-taxable, individuals must pay in after-tax dollars. Leveling the tax field not only makes health care more affordable, it also corrects the employer-based preference, a carry-over from World War II wage-and-price controls.

• Out-of-state insurance. State regulations have decimated insurance choices and driven up the cost of coverage in many jurisdictions. Because of this, premiums for similar policies differ widely among the states. In New Jersey, according to the Coalition Against Guaranteed Issue, it now costs more to purchase a family health policy than to lease a Ferrari; while in Connecticut, similar coverage is 80% less expensive. The federal government must allow out-of-state purchases of health insurance.

• Deregulation. Health care is choked by an endless list of regulations and restrictive laws that stifle innovation and result in high-cost, low-satisfaction medicine. Clinics and hospitals must comply with more than 100,000 pages of Medicare regulations. Ownership, FDA, Emtala and antitrust laws have stifled innovation further. Is there a sector of the economy that Washington regulated into efficiency?


President Bush should speak simply and clearly: A decade after Hillarycare, there is an alternative that places Americans, not government bureaucrats, in charge of their own health care. He should emphasize this tomorrow night -- and every other night of the campaign.

Dr. Gratzer, a physician, is a senior fellow at the Manhattan Institute.

"Americans don't directly pay for the health care they receive. Out-of-pocket expenses -- that is, the amount not covered by public and private insurance -- account for just 14 cents on every health dollar spent in the U.S. American health care is dominated by third-party payment. Nelson Sabatini, Maryland's secretary of health, observes: "Using health care in this country is like shopping with someone else's credit card." If the last decade seems to have done so little to address the woes of the system, no wonder: Consumers were never brought into the equation."

Hey Wu, you go first (as in agree to pay for all medical treatment out of your own pocket in the event you need it).

Even if you're a multi-millionaire, you could easily be bankrupted in a year or less, if the disease was pernicious enough.

Quote from J. Bourne : "Americans don't directly pay for the health care they receive. Out-of-pocket expenses -- that is, the amount not covered by public and private insurance -- account for just 14 cents on every health dollar spent in the U.S. American health care is dominated by third-party payment. Nelson Sabatini, Maryland's secretary of health, observes: "Using health care in this country is like shopping with someone else's credit card." If the last decade seems to have done so little to address the woes of the system, no wonder: Consumers were never brought into the equation." Hey Wu, you go first (as in agree to pay for all medical treatment out of your own pocket in the event you need it). Even if you're a multi-millionaire, you could easily be bankrupted in a year or less, if the disease was pernicious enough.

If people wouldn't use the system for regular health maintanence we could cut billions out of the cost of health care. Regular visits aren't that expensive and if something big comes up these people would file on their insurance policies (which cost significantly less) with this system. The idea of a tax free saving account for health care is wonderful, but no one will ever invest in their own health. They think paying these sky high insurance premiums are better so they don't have to worry about any health costs. I hear it all the time"iit only cost me a 15 dollar copay to see the doctor." (which only cost around 60 to begin with) The insurance company pulls in way more than 45 bucks to compensate for their "loss".

Quote from m_ellerbe : The insurance company pulls in way more than 45 bucks to compensate for their "loss".

Isn't that true of all insurance, though?

Quote from m_ellerbe : If people wouldn't use the system for regular heath maintanence we could cut billions out of the cost of health care. Regular visits aren't that expensive and if something big comes up these people would file on their insurance policies (which cost significantly less) with this system. The idea of a tax free saving account for health care is wonderful, but no one will ever invest in their own health. They think paying these sky high insurance premiums are better so they don't have to worry about any health costs. I hear it all the time"iit only cost me a 15 dollar copay to see the doctor." (which only cost around 60 to begin with) The insurance company pulls in way more than 45 bucks to compensate for their "loss".

I agree with much of this.

Consider this, though - what about ininsured persons using the emergency room of their local hospitals for routine medical treatment, and not being able to pay the bill? It gets passed on to the taxpayers.

Quote from J. Bourne : I agree with much of this. Consider this, though - what about ininsured persons using the emergency room of their local hospitals for routine medical treatment, and not being able to pay the bill? It gets passed on to the taxpayers.

This is why the state of Louisiana is hemmorhaging money in the Charity hospital systems. Instead of investing in primary care the money goes elsewere, and people wait for 13-24 hours for routine health problems in the ER. This costs at least 3 times as much as a normal office visit and they get less appropriate care as most ER docs aren't trained in primary care problems.

Quote from Gord : Isn't that true of all insurance, though?

My point was that insurance companies make a fortune. If people would use the money they pay in premiums to set up a tax free account (which is part of Bush's plan) they would save money in the long run. They would have a lower premium insurance set up for major problems only.

Quote from J. Bourne : Hey Wu, you go first (as in agree to pay for all medical treatment out of your own pocket in the event you need it). Even if you're a multi-millionaire, you could easily be bankrupted in a year or less, if the disease was pernicious enough.

I know it's late, but are you only reading the paragraph with boldface in it?

"...HSAs are personal medical savings accounts used in conjunction with a high-deductible health insurance plan. For smaller expenses, then, individuals pay out of their HSA -- money that can follow them from employer to employer and can accrue from year to year. Catastrophic insurance covers larger expenses"

The point is to have people approach health insurance as they do their car insurance. You pay out of pocket for the regular mantainence of your car as you should your body. Insurance is for catastrophies. You get diagnosed with something? You have an annual stop loss that you don't pay over.

Once people start using these more often, doctors will have new incintives to compete on price, further lowering costs.

I do think if HSAs were introduced along with new insurance products, basically catastrophe plans, people would switch based on the initial out of pocket savings in premiums, plus the fact that their monthly 'health expense' is no longer a totally sunk cost... insurance company premiums as now structured are sunk costs, so you might as well go to the doctor in order that you take advantage of the money you are compelled to lay out every month. HSAs are portable, you can take them with you to a new job, plus you can roll over the leftover money into the following year, so you are not incentivized to visit to doctor in an attempt to recover sunk costs.

Healthcare is a marketplace. Like any other market, it has supply and demand forces that, if subverted by gvt interference, (as described in the above article) will pervert the market and cause prices to rise.

Quote from Doctor_Wu : I know it's late, but are you only reading the paragraph with boldface in it? "...HSAs are personal medical savings accounts used in conjunction with a high-deductible health insurance plan. For smaller expenses, then, individuals pay out of their HSA -- money that can follow them from employer to employer and can accrue from year to year. Catastrophic insurance covers larger expenses" The point is to have people approach health insurance as they do their car insurance. You pay out of pocket for the regular mantainence of your car as you should your body. Insurance is for catastrophies. You get diagnosed with something? You have an annual stop loss that you don't pay over. Once people start using these more often, doctors will have new incintives to compete on price, further lowering costs. I do think if HSAs were introduced along with new insurance products, basically catastrophe plans, people would switch based on the initial out of pocket savings in premiums, plus the fact that their monthly 'health expense' is no longer a totally sunk cost... insurance company premiums as now structured are sunk costs, so you might as well go to the doctor in order that you take advantage of the money you are compelled to lay out every month. HSAs are portable, you can take them with you to a new job, plus you can roll over the leftover money into the following year, so you are not incentivized to visit to doctor in an attempt to recover sunk costs. Healthcare is a marketplace. Like any other market, it has supply and demand forces that, if subverted by gvt interference, (as described in the above article) will pervert the market and cause prices to rise.

Doctors can NOT compete on prices, especially primary care. The way the billing and coding systems are set up if a doctor does exam "x" and miscodes it as a lesser or greater cost code it is a felony. Many docs do this accidentally, but my point is that some major reform will have to take place with the system currently set up. Would you really want to go to a "bargain" doctor? THe lasik eye surgery commercials that you see, for example, pay 699 and get one eye free.

Quote from m_ellerbe : Doctors can NOT compete on prices, especially primary care. The way the billing and coding systems are set up if a doctor does exam "x" and miscodes it as a lesser or greater cost code it is a felony. Many docs do this accidentally, but my point is that some major reform will have to take place with the system currently set up. Would you really want to go to a "bargain" doctor? THe lasik eye surgery commercials that you see, for example, pay 699 and get one eye free.

I know stories, have read about them in the paper, and have heard from people, about doctors who have not charged people for a full office visit when they are just taking bandages off, or watching the patient walk down the hall. But the people had to ask for the discount. Those people were also paying out of pocket. People who pay out of pocket think like that. When it's just a co-pay ... who cares? You pass the cost on to the insurance company w/o a second thought.

I went to the Dr. once and he charged me the student rate for a shot, b/c i didn't have insurance... nor was i a student. He gave me the price break b/c of my situation (and i didn't ask).

What would be so bad with the Dr. having a price next to his name in the phone book? If we had some discount doctors around here we'd have less of a "health care" crisis to write threads about.

Sometimes you only need a perscription for allergy medication. You don't have to visit the Macy's of doctors every time, for some simple items, the Wal Mart doctor will do... which will allow you to save your money for the Macy's doctor when something serious comes along. What do you think of that?

To stay with my car analogy... you don't go to the dealer to get your oil changed ... unless it's under warrarnty and you don't have to pay for it. You go to the local shop that charges you $15 instead of the dealer that charges $30. But when you need something major fixed, you might just take it to the dealer, and you'll have the additional monetary resources that you preserved saving money on all those simple oil changes.

Quote from Doctor_Wu : I know stories, have read about them in the paper, and have heard from people, about doctors who have not charged people for a full office visit when they are just taking bandages off, or watching the patient walk down the hall. But the people had to ask for the discount. Those people were also paying out of pocket. People who pay out of pocket think like that. When it's just a co-pay ... who cares? You pass the cost on to the insurance company w/o a second thought. I went to the Dr. once and he charged me the student rate for a shot, b/c i didn't have insurance... nor was i a student. He gave me the price break b/c of my situation (and i didn't ask). What would be so bad with the Dr. having a price next to his name in the phone book? If we had some discount doctors around here we'd have less of a "health care" crisis to write threads about. Sometimes you only need a perscription for allergy medication. You don't have to visit the Macy's of doctors every time, for some simple items, the Wal Mart doctor will do... which will allow you to save your money for the Macy's doctor when something serious comes along. What do you think of that? To stay with my car analogy... you don't go to the dealer to get your oil changed ... unless it's under warrarnty and you don't have to pay for it. You go to the local shop that charges you $15 instead of the dealer that charges $30. But when you need something major fixed, you might just take it to the dealer, and you'll have the additional monetary resources that you preserved saving money on all those simple oil changes.

Every example you cited is a felony. I know it seems odd but that is the law. Your analogy of walmart vs. macy's doesn't hold the way you stated it. It really should be primary care(wal-mart) vs Macy's(specialist) and those prices do correspond well. Would you really want a slickdeal with your health? Come on guys Dr. X ran an add in the paper that is wrong lets go get a good deal.

One more thing I forgot to mention. Doctors usually don't set prices it is the hospital they are affiliated with. Not to mention, the fees may seem high but after 11-16 years of training and several hundred thousand dollars in debt some compensation is necessary.

I think the problem with Health Care is that everyone thinks they are entitled to it.

1. How to pay for it given our society?
2. Why in the world do you think you are entitled to it?
3. Why don't you try out Canada's health system.......oh, there's nothing wrong with theirs......

Quote from SomethingsRight : I think the problem with Health Care is that everyone thinks they are entitled to it.

Thats exactly what John Kerry says in one of his current ads here in Florida.
I wont quote him since I can't do it word for word. But he says its a "right" not a "privilege".