Color Me Unconvinced


I do this at great caution, but I'm not certain I agree with the line of argument starting with Kevin Drum and echoed by Cowen at Marginal Revolution: Health Savings Accounts don't work because they "appeal more to healthy people", and that the "whole point of healthcare is to take care of sick people".

I was under the -- perhaps naive -- impression that preventive care is one of the most important aspects of health care, as well as being among the most cost-effective. Engaging in better habits, visiting doctors more often, and including check-ups in your routine means identifying problems early, when they are generally more treatable with less expensive measures.

From a CDC report:

"Approximately 95% of the $1.4 trillion that we spend as a nation on health goes to direct medical services, while approximately 5% is allocated to preventing disease and promoting health. This approach is equivalent to waiting for your car to break down before you take it in for maintenance. By changing the way we view our health, the Steps initiative helps move us from a disease care system to a true health care system."

If this is true, then couldn't it be considered an improvement over the current system to incentivize the more routine use of less-expensive preventive care? Also at issue, then, is the fact that the poor might well have worse general health outcomes because of a lack of attention to preventive care. (By only seeing doctors when insurance is certain to cover the visit -- acute problems, emergencies, etc -- poor people may be opting away from spending on preventive options.) I'm not sold on HSAs either, but I'm not at all convinced that the reasons Drum cites (and Cowen points favorably towards) are strong knocks against them. Health care isn't really only about "taking care of sick people". That turns the profession into some sort of trauma-response system.

Drum notes that "adverse selection is a bitch" when citing an article that talks about more healthy than sick people opting into HSAs. But one can't ignore the fact that healthcare insurance carries its own massive adverse selection issues as well; insurance also includes massive moral hazard problems. I've never found a good refutation of the argument that people, knowing they have insurance to cover problems, engage in riskier behavior. Indeed, returning to the possibility that the poor don't spend time or money on preventive measures at the same level as the better-off, the insurace system seems to promote only the use of the most expensive kinds of health treatments, driving up the cost (premiums) for everyone. If HSAs shift some of the incentives into finding ways to not spend health dollars, i.e. opting for cheaper preventive care, I'm not clear how this could be viewed as a failure, or even really a step down from the current system.

The article the Drum post cites, is troublingly slipshod in its entirety. That people are rational is used as an argument to limit their access to self-governance in health care provisions; one paragraph later, it's our lack of rationality that requires governmental intervention. Adverse selection is, at one point, a major flaw in HSAs. But when it occurs in health insurance usage, it's a symbol of tried-and-true US ideology since sharing burdens of cost among people -- and having those who don't use the service pay for those who do, including shouldering increases as the entirely predictable result occurs and expensive trauma or old-age care makes up the vast majority of spending -- is unquestionably the right thing to do. However, I will leave it to you to read the whole article and decide for yourself.


Interesting take. I generally don't agree with the stats for preventive care, but there are those who do believe in it. If you are one of those people, your criticism is right on the money.

My other comments are located here:

I just wanted to mention that although these are all good points raised against the original article, it still doesn't address how HSAs could help the already-sick. Yes, preventative measures are much more cost-effective and much money would be saved if we shifted to a preventative-care system, but what of the people who have already been diagnosed with this illness or that, and already are forced to commit to outrageously high medical bills every month/year? Preventative care may do well for them to prevent any further illnesses from occurring, but will do nothing for their present conditions. And HSAs just simply would not help them because their bills would most likely already exceed the deductible.


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This page contains a single entry by published on November 1, 2005 10:02 AM.

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