The Crock of Health Savings Account
Pierre Tristam/Daytona Beach News-Journal, November 8, 2005
That crapshoot called health should never be the dividing line between comfort and poverty. In the United States , a health-industrial complex designed to punish the sick as it cures them is poverty’s cruelest recruiter, and the middle class’ gathering economic threat. For ordinary families, the last five years are a story of compounding tax increases masked as health costs and of disintegrating social and economic security masked as benefits of an “ownership society.” The result is a society poorer in health, poorer in social mobility and opportunities, and much poorer in decency—what a few forked tongues called compassion.
Here’s compassion’s toll: The number of the uninsured is up to 45 million. According to the Kaiser Family Foundation, insured families have seen their premiums increase 73 percent since 2000 while inflation increased 14 percent and wages 15 percent (that is, a net, almost meaningless 1 percent above inflation). Deductibles have risen from 74 to 142 percent, depending on the plan, and drug co-payments have increased 70 to 106 percent. For the 1 million American families who file for bankruptcy in any given year, medical debts average $12,000. Insurance is no barrier against hardship. No less than 68 percent of those families filing for bankruptcy have medical insurance, which has become a maze of exceptions and fine-print deceptions and exorbitant deductions.
The system is broken. Nothing but universal health care, preferably through a non-profit, single-payer system, will begin to fix it. Those who pretend to be fixing it through other market-enslaved means are making matters worse. The solution of the 1980s and 1990s was managed care, a scheme that reduced individual choice and gave insurance companies more power to decide who deserves what care and where. Aside from a few years’ reprieve in the mid- to-late-90s, managed care did nothing to stop the cost spiral upward or the consumer satisfaction to spiral hellward.
The latest scheme is something Marie “let-them-eat-cake” Antoinette might have proposed had she been a member of the current administration. They’re called Health Savings Accounts. Here’s how they’d work with a typical employee. Let’s call him Mr. Gullible. He makes $38,000 a year (that’s the average national wage, by the way). He can open a tax-free health savings account and divert up to $2,650 a year into it. The money, which Gullible is free to invest anywhere, can only be used for medical expenses. Left-over dollars can be carried from year to year. In exchange, although it’s not much of an exchange, Guillible’s company provides cheaper health insurance, but with deductibles that must be $1,000 or higher ($2,000 or higher for families), and with benefits that may not be nearly so generous as before. Gullible’s company saves a bundle in premium costs. Gullible himself may save, too—so long as he doesn’t get sick.
The scheme assumes that most workers have money to save. The nation’s negative savings rate (lowest since 1934) suggests they don’t. The scheme assumes that the average family can afford $2,000 in out-of-pocket expenses on top of drug and premium costs. Stagnant wages suggest there’s no room for such assumptions. The scheme assumes not only that most people can “shop around” for the most affordable care, but that affordable care exists—an absurd assumption in today’s marketplace. The scheme also assumes (wrongly, as all available evidence suggests) that people will pay for preventive care out of their pocket rather than spend the money elsewhere and risk getting sicker.
What it comes down to is this: Health savings accounts assume sickness is a choice, cures exclusively a personal responsibility, and insurance a sort of add-on luxury. That’s not an ownership society. It’s an indifferent society. The whole point of insurance is to be part of a big risk pool that helps cover one’s costs in case of sickness. It’s not to design a tax shelter and pray you don’t get sick. Health Savings Accounts up-end the risk-pool side of the equation. Sure, wealthy people can splurge on those accounts. They can afford the exorbitant out-of-pocket expenses and set aside big sums in their tax shelters. But most Americans can’t, the chronically ill and families with young children especially. A health savings account for them makes no sense. But as more people buy into health savings accounts and fewer people buy into traditional insurance, premiums for those who still need traditional insurance will skyrocket, because there’ll be fewer people to share costs with.
If that sounds as familiar as the administration’s harebrained scheme to privatize Social Security, it’s because it is. The philosophy is the same: Shift the cost of benefits to workers while replacing guarantees with risk. Health care isn’t improved one whit. What’s been gained? For companies, some savings, at least for a while. For workers, it’s a gamble wrapped in a time-bomb.