WSJ: Consumers Having a Tough Time with HSAs

An article  in today’s Wall Street Journal will no doubt have opponents of health savings accounts (HSAs) hyperventilating about how HSAs have failed.  But the difficulties that consumers are experiencing are predictable, if not welcome, and some dissatisfaction with HSAs is no doubt a good thing.

Vanessa Fuhrmans writes [$]:

President Bush and many big employers have hailed “consumer-directed” health plans and savings accounts as an effective weapon in the battle against runaway medical costs. But several years after the plans got off to a fast start, the approach appears to be stumbling – largely because of consumers’ unease in using them…

[L]ow enrollment and low satisfaction among workers who are offered them raise the question of whether consumer-directed plans will stall before they ever hit the mainstream.

In a paper responding to common criticisms of HSAs, I argued that some of the inevitable consumer dissatisfaction is necessary, but much of it can be mitigated by expanding HSAs:

There are good reasons not to draw any firm conclusions based on current survey research…First…none of the surveys measures consumer satisfaction with HSAs alone, or at their full potential. Second, some dissatisfaction inevitably stems from unfamiliarity…This source of dissatisfaction can be expected to dissipate over time…

Finally, HSAs may be unpopular for reasons that should not sway policymakers… HSAs are designed to eliminate inefficiencies and hidden cross-subsidies. If that causes some dissatisfaction, it means that HSAs are achieving their purpose, not that they should be abandoned. If we stop robbing Peter to pay Paul, Paul’s dissatisfaction should not persuade us to change course…

Nonetheless, HSA supporters should be very concerned about the frustration HSA holders feel with (1) the lack of information to help them be cost conscious consumers and (2) the complex rules and restrictions that come with HSAs…

HSAs will have to reach a critical mass in the marketplace before they can be expected to effect a systemic change like widespread transparent price competition…The quickest and surest way to build that critical mass and a political constituency for HSAs would be to allow them to be coupled with any type of health insurance…

To open an HSA, millions of Americans would have to give up their current health insurance. HSA supporters can and should make HSAs simpler by removing that requirement.

None of the consumer satisfaction surveys tells us what we need to know most: the types of insurance and medical care consumers would choose if they controlled all their health care dollars and all their health care decisions. To find those answers requires expanding HSAs and removing all restrictions on HSA holders’ insurance choices.

It’s also worth noting that lots of people love their HSA:

A survey by the Blue Cross Blue Shield Association found that individuals with HSA-compatible insurance were consistently more satisfied with their coverage than those in traditional plans.

And many people support the HSA concept even if they’re dissatisfied with their particular HSA product.  I fit squarely in that camp.

But the most telling line in Fuhrman’s article might be this one:

Enrollment [in HSAs] is growing faster on the individual market and among sole proprietors, but that may be because the plans are often the only affordable option.

And what might that tell us?

Here’s to You, Mrs. Swedenburg

Juanita Swedenburg, the Virginia winemaker who took her battle for economic liberty to the Supreme Court and won, died June 9 at the age of 82. Clint Bolick, who argued her case as a lawyer for the Institute for Justice, discussed it in his new book David’s Hammer:

My curiosity was sparked, however, during a visit in the early 1990s to a small winery in bucolic Middleburg, Virginia.  The proprietor was a striking older woman, Juanita Swedenburg, who owned and operated the winery with her husband.  She produced several good wines, including a chardonnay with the toastiest nose I can remember.  We got to talking and Mrs. Swedenburg asked me what I did for a living.  When I told her that, among other things, I challenged regulatory barriers to entrepreneurship, she exclaimed, “Have I got a regulation for you!”          

Most states, it turned out, prohibited direct interstate shipments of wine to consumers.  So that if tourists from another state visited Mrs. Swedenburg’s winery and asked how they could obtain her wines back home, she would have to reply, “You can’t.” …

As a descendant of settlers who fought in the American Revolution, Mrs. Swedenburg was outraged that such a stupid law could exist in a nation with the greatest free-enterprise system in the world. 

Eventually, Bolick writes, the Institute for Justice took Mrs. Swedenburg’s case to the Supreme Court. He argued against a New York law, and Stanford law school dean Kathleen Sullivan (who also spoke recently at the Cato Institute) argued against a similar Michigan law. The Court ruled 5-4 that such laws “deprive citizens of their right to have access to the markets of other States on equal terms.” When Bolick launched his new book at the Cato Institute in April, Mrs. Swedenburg was sitting in the front row.

Juanita Swedenburg was the kind of citizen a free republic needs. After a career in the foreign service, she and her husband “retired” to a Virginia farm that had been in business since 1762. They set up a winery and worked seven days a week to make it a success. As the Washington Post says, “Mrs. Swedenburg did not take the Constitution for granted.” She knew that there was something wrong with a law that prevented willing customers from buying the fruits of her labors, wherever they lived. And when she found a lawyer who shared her enthusiasm for both wine and constitutional liberty, she pressed him to take the case on behalf of her and her customers.

Like John Peter Zenger, Rosa Parks, Allan Bakke, Michael Hardwick, Bill Barlow, and many others, Mrs. Swedenburg made our constitutional rights real by using them. Raise a glass to her memory.

Canadian Journalists Can’t Swallow SiCKO

Michael Moore’s new film SiCKO praises the government-run health care systems of such countries as Canada.  Moore claims the film was warmly received at Cannes by Americans from both sides of the political aisle. 

Canadian journalists, however, were a little more skeptical.  Here’s how Peter Howell, a film critic for the Toronto Star, described their response to SiCKO:

Michael Moore is handing out fake bandages to promote his new film Sicko, an exposé of the failings of the U.S. health care system.  But he may feel like applying a couple to himself after the mauling he received yesterday from several Canadian journalists – present company included – following the film’s first viewing at the Cannes Film Festival.

“You Canadians! You used to be so funny!” an exasperated Moore said at a press conference in the Palais des Festivals.  “You gave us all our best comedians. When did you turn so dark?”

We Canucks were taking issue with the large liberties Sicko takes with the facts, with its lavish praise for Canada’s government-funded medicare system compared with America’s for-profit alternative.

While justifiably demonstrating the evils of an American system where dollars are the major determinant of the quality of medicare care a person receives, and where restoring a severed finger could cost an American $60,000 compared to nothing at all for a Canadian, Sicko makes it seem as if Canada’s socialized medicine is flawless and that Canadians are satisfied with the status quo…

Other Canadian journalists spoke of the long wait times Canadians face for health care, much longer than the few minutes Moore suggests in Sicko. Moore, who has come under considerable fire for factual inaccuracies in his films, parried back with more questionable claims…

Sicko, to be released in North America on June 29, is by turns enlightening and manipulative, humorous and maudlin. It makes many valid and urgent points about the crisis of U.S. health care, but they are blunted by Moore’s habit of playing fast and loose with the facts. Whether it’s a case of the end justifying the means will ultimately be for individual viewers to decide.

On June 21 – the day after the D.C. premiere of SiCKO – the Cato Institute will help viewers decide when it hosts a screening of clips from SiCKO and short films by independent filmmakers who are more critical of Canada’s Medicare system.  Click here to pre-register.  And arrive early: seating is limited. 

Republicans for Government-Run Health Care

First it was Mitt Romney supporting a HillaryCare-style health care reform in Massachusetts. Now Tommy Thompson, who as secretary of health and human services was responsible for the Medicare prescription drug debacle, is attacking Missouri governor Matt Blunt for cutting Medicaid spending. Thompson told the Associated Press that states should expand access to Medicaid because the federal government pays most of the cost.

Thompson apparently has not read Michael Cannon’s terrific paper, Medicaid’s Unseen Costs, that shows how increased Medicaid spending drives out private health insurance, increases dependency on government, and drives up costs.

With Republicans like this, who needs Democrats?

Live Free Or Not

NH sealIn this age of galloping leviathan, one cause for joy is New Hampshire’s continued willingness to thumb its nose at various dictates from Washington, D.C. In some cases, the state’s federalism obstinacy prohibits it from receiving Uncle Sam’s largess — a penalty that many Granite Staters consider a sign of honor.

But the joy of New Hampshire was muted a bit this spring when the state’s General Court (the legislature) flirted with giving up one of its most celebrated examples of recalcitrance— the refusal to adopt mandatory seat belt laws for adults. A bill mandating the wearing of seat belts made it through the state’s House of Representatives before stalling in a Senate committee. What’s more, proponents scored a victory by placing a “seat belt policy exploratory committee” rider on a completely unrelated piece of legislation.

The standard justification for seat belt laws — that government is looking out for your well-being — would have little truck in “Live Free or Die” New Hampshire. So bill proponents tried a different tack; as noted in an AP story, they claimed that they’re simply looking out for the taxpayer:

“Live Free or Die would be great but you expect everyone to pay for you,” said Rep. Jennifer Brown, the bill’s prime sponsor. “The state has to pick up the medical bills and it could be for the rest of your life.”

State. Sen. Maggie Hassan said mandating seat belt usage is just as much about her rights as those who don’t like the idea.

“People like me who use my seat belt will wind up paying for people who don’t,” she said. “This is about my rights.”

Notice the strange conception of “rights” assumed by this argument: Because government offers a benefit, government — acting on behalf of “taxpayer rights” — can dictate people’s behavior because of the possibility that some people who engage in that behavior might use that benefit. (This is different than, say, work requirements for welfare — in that case, people choose to accept a benefit, and government is placing a condition on the receipt of that benefit.)

The slippery slope problem of such thinking is obvious. Because government provides an education benefit to children, can it mandate certain behaviors for adults of child-bearing age? Because government provides some health benefits, can it regulate everyone’s risk-taking behavior? Because government provides retirement benefits, can it dictate people’s employment decisions?

This should prompt good civil libertarians to look skeptically at any proposal to create or expand government benefits. Laocoon’s warning can be updated: Beware of politicians bearing benefits.

“Michael Cannon Is Dead Right”

So says Matthew Holt of The Health Care Blog

Although, I’m not sure I wrote what he’s crediting me with writing.  Specifically:

[T]he only rational way to start groping towards a management of the insurance market that makes some kind of logical sense…must by definition involve a mandate and severe restrictions on the cherry-picking activities of insurance companies.

So I’m going to assume that Holt meant I’m dead right when I write that Jonathan Cohn is dead right when he writes that RomneyCare and HillaryCare have a lot in common.

Oddly, Holt thinks that forcing consumers to purchase health insurance is an important part of making sure no one takes advantage of them.  Funny — I think that if I wanted to take advantage of consumers, the first thing I would do would be to take away their right to say no.