Looking For The Silver Bullet

Once again, the presidential sweepstakes are off and running, with candidates alternately relating how terrible things are and extolling the virtues of their own proposed solutions to all our ills. One thing you can always count on is the denigration of our health care delivery system and the magical cures the candidates will offer up. The problems with the system are not usually clearly defined; rather, we are left to ponder the time-worn clich?s that punctuated previous election cycles. I have also observed that you usually hear more about these alleged solutions before the election, than after it is over.

One such solution that was the hope of candidates in previous elections was the concept of Health Savings Accounts (HSAs). Early indications are that HSAs will continue to be featured in one form or another by some of the present field of candidates. This, despite the fact that a June 12, 2007, lead article in The Wall Street Journal stated that HSA plans are starting to falter. The article points out in 2006, 2.7 million workers were covered by HSA plans versus 2.4 million in 2005 – a very slight increase, given the attention given to this product.

The article goes on to point out that most workers who are covered had no choice in the matter. Where an HSA was offered as an option, only 19% of workers chose the plan. The most striking example of this can be seen in the health care plan for federal workers where an HSA is an option: out of 8 million covered workers, only 50,000 chose an HSA, according to the article. The Wall Street Journal article also cites the experience at Osram Sylvania, where only 5% of the employees enrolled in their HSA in 2006, their first year.

Interestingly, 25 years ago, I thought about using such a concept for the 135 employees then covered by the NALU health insurance plan. I contacted several insurers and requested bids on a high deductible plan (bottom coverage to be provided by employee and employer contributions into a savings account). I could not get enough of a discount by going “high deductible” to justify changing the present plan format – so I discarded the idea.

Other writers have pointed out there is a big risk in an HSA not often considered. In their deal to build up a savings account for later use, employees and their dependents may skip or ignore minor medical conditions that may later become major problems and more expensive to treat – or worse yet, prove to be disabling or fatal. To be fair, it is also possible people would be more judicious in the use of the fund if it were their “own” money. I am sure there would be some of both factors at work.

Rudy Giuliani says he will have a proposal to deal with the so-called health care crisis. Exact details have not yet been disclosed, but enough hints have been dropped to suggest he is being given bad advice on the subject. It would appear that the central thrust of his plan would be to shift health insurance from employer plans to individual coverage. This, I believe, is a severely flawed concept.