Who Should Control Your Healthcare?
July 6, 2006
Vol. 2, Issue 6
As health savings accounts grow in popularity, there is growing fear among those who want to nationalize healthcare that they will not be able to put the cat back in the bag. There are already over 3 million HSA owners, and by 2010, the Treasury Department estimates as many as 45 million Americans will be covered by HSA plans. They will have billions of dollars invested to cover future medical expenses, and by then it will be politically impossible to take that benefit away.
The Free Market vs. The "Single-payer" System
I currently insure my family with a high-deductible health plan from Blue Cross Blue Shield. I have a health savings account with several thousand dollars invested in a mutual fund that has been doing quite well. Over the next twenty-two years I plan to continue to fund the account, and fully expect to have over $500,000 in the account when I retire. I'll be able to use this money to pay for my healthcare in whatever way I please, tax free. I can go to the best surgeons, or the least expensive doc-in-a-box. If I decide to treat my condition with acupuncture, homeopathy, or psychic healers, I can do that too. Whoever offers me the best deal will get my business, and since I'm the one paying, it will be my choice. I have healthcare freedom.
My son Wiley IV, who is currently 3 years old, might not be so lucky. If proponents of a single-payer system were to ever have their way, he'll be at the mercy of a government bureaucrat when it comes to his healthcare. To see what this may look like, all one has to do is look at the state of health care in Canada, England, New Zealand, and the parts of Europe that have not yet abandoned single-payer systems.
The Canadian/British Model
Proponents of a single-payer system tend to point to Canada or England as countries that cover all their citizens with quality healthcare, while spending less money per person than the U.S. But if we look a little more closely, we see that these publicly financed health insurance systems are breaking down, the quality is low, and the costs can be quite high. Here's what Canadians have to deal with if they need medical care:
- Long waits. Hundreds of Canadians go to Detroit and other U.S. cities every year for procedures like CAT scans, for which they can obtain treatment in a matter of days. In Canada, the wait is typically six months. Currently 876,000 Canadians are on waiting lists for medical procedures.
- Difficulty in getting life-enhancing procedures done. If a Canadian is having a heart attack, they will be treated right then. But if the surgery is considered "elective" (meaning that possible death is not eminent), the wait could be months or years. Average wait for cataract removal is 18 months. Average wait for a knee replacement is one year.
- Increased risk of dying. The average Canadian waits eight weeks to see a specialist, and another nine weeks before getting treated. This is even the case with conditions that are likely to get much worse if there is any delay in treatment. For example, the median time for a mastectomy is 14 weeks, enough time for the cancer to spread to other parts of the body. In fact, 28% of those diagnosed with breast cancer in Canada die from it, while the mortality ratio in the U.S. is 25%.
Things don't look any better across the ocean. Each year the British National Health Service cancels 410,000 surgeries because of resource shortages. According to the London Sunday Times, there are currently over 1 million Brits awaiting elective surgery. Thomas Cook, a British travel agency, is even considering offering "sun-and-surgery" packaged trips to Indian hospitals for British citizens fed up with low standards and long waiting times for surgery.
The British and Canadian governments have the power to make healthcare "free", but they are unable to control its costs. So the costs become longer (and potentially fatal) delays, and fewer innovations.
Its not surprising when you think about what is happening. Universal health insurance systems always encourage over-consumption by patients, and such over-consumption always leads to financial crises. The result is inevitably broken promises about universal access and quality care. Because there are always limited resources, single-payer systems tend to overspend on primary care for the healthy, while denying more expensive specialist care to those with serious medical problems. This is because most people (voters) are healthy most of the time, and the sick and dying are less likely to be able to organize into a political force.
With Independence Day just passing, this is a good time to reflect on what makes our country great. If I had to boil it down to one word, it is "freedom". Though our freedoms seem to be constantly under attack, there is still no nation in the world that has the freedom of the press, freedom of religion, freedom of association, or the free markets that we have in the United States. As anyone who understands even a smidgen of economics knows, free markets encourage competition and innovation, which lead to lower prices and better quality.
Though the U.S. system of health care can not really be considered a "free-market", it is certainly much more free than any single payer system. Some of the benefits we see as a result of our current healthcare system include:
- U.S. medicine produces the best outcomes for virtually every patient, from premature babies to elderly cancer patients.
- American companies are the chief source worldwide of new treatments and procedures which each year are used to save millions of lives.
- U.S. medical training and research facilities are the best in the world.
The Power of a Free Market
Though Canadians might have to wait a year or two for hip replacement surgery, they can get the same operation done on their dog in less than a week. This is because veterinarians are competing for that business, finding innovative ways to deliver service more quickly and less expensively. Another example is laser eye surgery, a procedure that is rarely covered by insurance, so laser eye surgeons must compete on the basis of cost and quality. While costs for most medical procedures have been going up every year, the cost for this procedure has dropped by 80% over the past decade.
Unfortunately, U.S. policies still tend to limit competition, restrict consumer's freedom to choose, and discourage consumers from shopping for value. Thus, there are too few choices and there has been little attention paid to price and quality of service. The answer is clearly not more government intervention, but instead letting competition and the power of the marketplace drive down prices and increase quality and access to care.
Health Savings Accounts are the Solution
There is increasing recognition that third-party payers are actually a major cause of escalating medical costs and a decline in the quality of service. The increasing adoption of HSA plans has already begun to cause greater transparency and competition in the medical marketplace. There are now physicians available by phone, medical kiosks setting up in malls, doctors that accept only cash (and who charge significantly less), and others competing directly for the consumer's healthcare dollar.
Don't be fooled by the politicians who advocate a single-payer system, claiming their only concern is the uninsured. If a single body (such as a government bureaucracy) controls healthcare, they control one seventh of the national economy. And everywhere in the world that central control of the economy has been tried, it has been a colossal failure.
As public policy reforms centered on individual choice continue to gain wider footholds, I believe the result will be greater prosperity, greater choice, and a better value for all. The culture of dependence and entitlement will begin to fade, as millions of individuals demand further policy reforms that will reinstate the values of freedom and personal responsibility that helped establish this great nation.
As more consumers turn to health savings accounts, the market will respond. Innovative providers will begin to compete more on price and quality of service, and those that provide the best value will get wealthy doing so. And all consumers will benefit. And the idea of a return of "Hillarycare" may finally be behind us.
P.S. - If you do not yet have an HSA-qualified health insurance plan, you can find complete information, instant quotes, and applications on our website, www.HSAforAmerica.com. If you have friends or associates who are still overpaying for underutilized health insurance, please forward this to them. The more people who have Health Savings Accounts, the better off we'll all be.
P.S.S. - Next month I'll get back to the practical - how to save money on your doctor visits. Many times you may want to talk to a doctor, but don't really want to set an appointment and spend $125 just to get some questions answered. I'll cover some of the new physician telephone consultation services that are now available, and how they can save you a lot of money.