Friday, January 27, 2006

I guess our health-care system wasn't inefficient enough. I guess the money being siphoned off as drug- and insurance-company profits wasn't making the system sufficiently expensive. I guess we just had to take even more of that money and use it to help another rich industry get even richer:

... Banks, credit unions and money management firms are now quietly positioning themselves to become central players in the business of health care, offering 401(k)-type accounts to cover future medical expenses.

Bank of America, J. P. Morgan Chase, Fidelity Investments and hundreds of others are hoping to capitalize on the latest wrinkle in medical care paid by consumers: health savings accounts, which have been around since 2003 but are moving to the fore of the national agenda in anticipation of the State of the Union address on Tuesday.

These supercharged checking accounts, which must be linked to a high-deductible health insurance plan, allow consumers to invest their own money for current and future medical expenses and have it grow tax-free.

... Banks and others are drawn by the promise of lucrative fees they can generate by offering consumers mutual funds and other investment vehicles as their account balances grow. Most also charge $50 to $75 to set up a health savings account, and they collect perhaps $40 or more each year in maintenance charges and service fees.

Not since the creation of the individual retirement account in the mid-1970's has such a potentially huge mountain of money landed in the lap of the financial services industry.

"Billions of dollars that used to be written in the form of checks with insurance companies' names on them would instead go to credit unions, banks, and long-term investment houses," said Dan Perrin, the publisher of H.S.A. Insider and executive director of the H.S.A. Coalition, a lobbying group backed by 70 small-business and medical industry groups as well as the American Bankers Association. "You know America: you see a financial opportunity and it sets off a gold rush." ...

Lovely. And the point of these accounts, of course, is to discourage workers from obtaining medical care we don't need (allegedly all that "unnecessary" health care we're said to seek out with regularity, but in reality, I suppose, preventive care like dental checkups and mammograms) by making us pay for our care out of pocket up to a very high dollar amount every year:

...In essence, health savings plans are high-deductible insurance policies that people can obtain through their employers or buy independently from insurance companies. In exchange for paying at least the first $1,050 of their medical expenses each year (or for families, a deductible of the first $2,100, consumers are supposed to benefit in two ways: lower monthly premiums and the ability to put pretax dollars into a savings account that grows tax-free....

But in many cases, people have evidently signed up not because they are eager to direct their own medical spending but because the plan looked cheap or they had no other insurance option. And at least half of those enrolled have not put money in their health savings accounts. So there will be no money building up for next year's out-of-pocket expenses....

If you had an account like this, there are a lot of reasons you might not be able to build up reserves. Obviously, the less money you make, the less you can afford to contribute. Just as obviously, if you have excessive out-of-pocket medical expenses one year -- say, if you have a child with a serious chronic condition -- you won't be able to contribute much (or anything) for future medical expenses. So, in that way at least, these accounts would seem to do less for you the more you need them. Which is kind of the opposite of what you and I think the word "insurance" means.

Is there going to be a massive transition to these accounts over the next few years? Are a lot of us going to go through what they're going through at Banta Corporation in Pennsylvania?

Stacy Ryan, the benefits manager at Banta, said the company saw the plan as "the new wave of health care." Banta added health savings accounts and eliminated company-subsidized health benefits for its 4,000 nonunion workers this year.

I imagine the answer is yes. It's certainly what Bush wants. And he thinks you'll like it.


UPDATE: Ezra Klein points out that health savings accounts are even worse than you think -- i.e., even more of a scheme to transfer money from struggling people to banks:

Here's how it works: About half of HSA holders don't put any money in their accounts. Many of the others sock away only paltry funds.... So when health emergencies hit, HSA users, faced with massive deductibles and no stored wealth to combat it, charge them. Hospitals, ERs, and doctors now take credit cards, allowing health care costs to become interest-gathering debt. Indeed, in an effort to take maximum advantage of the trend, banks and health care companies are offering health credit cards with interest rates of up to 23 percent. So, for many, health costs won't merely be the original expense, but the years of accumulated interest payments afterwards....

For the lower middle class, to say nothing of the genuinely poor, that's what HSAs will look like: periods of financial calm interrupted by medical catastrophe that rapidly transforms itself into crushing, long-term debt.


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