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Jewish World Review
Jan. 12, 2007
/ 22 Teves, 5767
Consumer-directed health plans taking off and get a boost from Congress — HMO's are losing favor
By
Drs. Michael A. Glueck & Robert J. Cihak
http://www.JewishWorldReview.com |
As the New Year 2007 begins there is some good health news for consumers who
want a say and choice in their own health care. HMO's are dying a slow
painful death (their just due) while consumer-directed health plans and
health saving accounts (HAS' s) are becoming healthier and flourishing.
According to a recent Mercer survey of 3,000 U.S. employers,
consumer-directed health plans tripled in 2006. Compared with a managed-care
plan such as an HMO, they reduce the annual cost per employee by a
bout
$1,000.
While small businesses were first to take an interest, larger businesses are
beginning to take notice also. The Houston Independent School District has
offered two consumer-directed options for the past three years, with
excellent results. The annual health benefit cost per employee rose by only
$270 rather than the expected $1,500, from $5,500 to $5,770 (Brett Brune,
Houston Chronicle 12/18/06).
A provision rushed through Congress just before adjournment makes the
funding of health savings accounts much more practical. Employers will be
allowed to roll over balances from a Health Reimbursement Account (HRA)
and/or Flexible Spending Account (FSA) into the H S A of employees who are
switching. The allowable HSA contribution has been raised and will be
indexed to inflation. Previously, it was limited to the amount of the
deductible, but in 2007 can be up to $2,850 for singles or $5,650 for a
family. See www.ustreas.gov/press/releases/hp209.htm.
Democrats generally opposed the provision, which was pushed through by
outgoing House Ways and Means Committee Chairman Bill Thomas (R-CA). When
economist John Goodman, founder of the National Center on Policy Analysis
began pushing for the idea of tax-favored medical savings accounts 16 years
ago, only about five Congressmen would listen to him.
Goodman thought that nothing but market forces could tame rising medical
costs.
A recent Rand Corp. study showed employers report saving 10 percent on
health benefits costs, and plan participants appeared to trim spending
between 2 percent and 15 percent. Some worry that people are skimping on
necessary as well as unnecessary care.
But Goodman says: "Someone is going to have to choose between health care
and other uses of money. If you want someone else to make those choices for
you, you can join an HMO. But if you want to make those choices for
yourself, these accounts give you the financial ability to make them"
(Christopher Lee, Washington Post 12/28/06).
While HSAs are growing, customers are bailing out of HMOs in record numbers.
Patients complain about restricted choice. And the promised cost savings
have not occurred. The average HMO premium cost per person paid out by major
companies is projected to jump to $8,151 in 2007, a 64 percent increase from
$4,979 in 2002 (Bruce Japsen, Chicago Tribune, posted by sunherald.com
11/22/06).
A previous Association of American Physicians (AAPS) News of the Day release
in March, 2006, noted there had been a seven-fold increase in individuals
covered by HSA-type insurance between November 2004 and December 2005 (Data
from the American Health Insurance Providers for a U.S. Treasury Department
fact sheet).
As these writers have often railed against managed care since the 80's we do
take some satisfaction in seeing its proper demise. As we said then, "There
is no way a healthcare corporation can provide more care, better care, at a
lower cost while the patient wants all the latest expensive technology (but
prefers not to pay for) while the corporation and stockholders want a
greater return on their investment." This was not economic rocket science
then nor is now.
HMOs and managed care were doomed to fail. When "for-profit" corporations
offer potentially unlimited services for a flat fee (plus the usual
co-pays) they reach a point where the only way they can make money is to
withhold care.
Managed care, in these writers' opinion, was and is a cruel experiment on
America's patients which provided Wall Street opportunists and
non-medically-trained corporate presidents and officers with immoral obscene
profits while the sick, elderly, disabled and mentally ill suffered.
Ironically corporate run managed care has been around just long enough for
its lethal genes to rise up and destroy itself. We should never again allow
such a deadly experiment with patients as guinea pigs.
Editor's Note: Michael Arnold Glueck III, M.D., wrote this week's
commentary
Every weekday JewishWorldReview.com publishes what many in in the media and Washington consider "must-reading". Sign up for the daily JWR update. It's free. Just click here.
Michael Arnold Glueck, M.D., is a multiple award winning writer who comments
on medical-legal issues. Robert J. Cihak, M.D., is a Discovery Institute
Senior Fellow and a past president of the Association of American Physicians
and Surgeons. Both JWR contributors are Harvard trained diagnostic radiologists.
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