Hilzoy does some excellent health care blogging. Tonight she’s put up a good post on health savings accounts in which she (echoing Kevin Drum) identifies the absurdity of shopping around for health services:
Shopping for medical services is different: hours spent finding and tracking down the relevant physicians and getting through their daunting office staff; price discussions with hospital administrators who don’t want to tell you exactly how much anaesthesia you’ll need without an exam, and so forth. The thrill of the chase! The call of the wild! By comparison, ordinary shopping is a tame and pitiful facsimile, like shooting cage-raised quail when you could be hunting grizzlies.
You might be thinking: silly hilzoy! You can do this already! But that just shows how little you know about the thrills of shopping for medical services. It’s just no fun without a little skin in the game: the sort of skin that you only have if your medical insurance won’t cover your bills. And that’s what Bush is offering us: the chance to have the shopping experience of a lifetime, and to have it under the most deliciously grueling conditions: with our own dollars on the line, when we’re desperately ill. It’s a vision as bold and rugged as America herself; and that’s why we love our President.
Hilzoy cuts right to the core of one problem with HSAs, and that’s that the world of American medicine is a horribly hard one to navigate and it’s far worse when we’re very ill. Seeking out alternative physicians means getting another entire exam, assuming you can find someone and get in the door: Wait times to consult specialists or to get an introductory appointment with a new primary care doctor, especially in medium or small cities, can run into weeks. Negotiating costs? If pressed, some physicians will discount the rates for their own time, but they can’t control facilities and materials expenses; $2,000 of labs, material, and room time in the outpatient surgical unit of a hospital will still cost $2,000. Moreover, the possibility of a discount on physicians’ time depends on communication between the docs and the billing and records staff. Even when doctors are sympathetic to problems of cost, this negotiation doesn’t simply happen while the patient is in the office, and it certainly won’t happen reliably if a practice’s billing isn’t handled in-house. I once received a bill for medical services that I had already paid for. I had the receipt stamped PAID, but the billing outfit, in West Virginia, didn’t have the record—which was in a file, in the hospital, in Tucson.
It’s clear that the way things operate from the service provision side of things are distinctly not conducive to shopping around. The next problem with HSAs is apparent if we think of insurance as a way of making health care affordable rather than saving on taxes. The problem with insurance is that it’s too expensive as it is, and HSAs will do very little for people who can’t already afford insurance. There are two significant pieces of the puzzle. The first are the problems of getting and paying for care.
Karen Donelan and colleagues present some revealing survey data in a 1996 JAMA paper. They find that the uninsured consistently reported more problems getting care and paying bills, but that nearly sixty percent of respondents who were fully insured reported problems paying for their medical bills. The reasons most frequently given for the problem of paying bills among the insured? High copayments and deductibles. High-deductible insurance plans are going to do nothing for this concern. And, among the insured, between 75 and 85 percent of respondents facing problems getting and/or paying for care reported that the consequences of that problem were serious. If paying the bills when one does have insurance is an obstacle, how can we possibly expect that making that insurance more expensive will aid those who do not have any coverage?
The second piece of the puzzle returns us to the shopping around, and it involves the conjunction of three crucial social facts: The poor tend to be underinsured; the poor tend to be sicker; and the poor tend to be at a disadvantage when it comes to navigating medical bureaucracies. Since it’s such a key part of the HSA plan, a bit of elaboration on the last of these, the bureaucratic systems that are sometimes referred to as systems barriers. Looking for alternative providers takes time that’s hard to come by without a flexible schedule; it takes comfort with opaque and complicated bureaucracies; it takes inserting oneself assertively into a system that frequently regards the poor as second-class citizens. On top of those hurdles, shopping around requires logistics such as transportation and child care. All of these are disproportionately problems of the poor. For people who are already sick and already concerned with the problems of paying for the care they can get, HSAs just offer nothing.
So neither the already insured, nor the poor, nor the uninsured get much of value from health savings accounts. And as Hilzoy points out, HSAs won’t bring costs down overall, so there’s not much longer-term silver lining for proponents to point toward. I’ll wrap up by asking the same question that Kevin Drum did at the conclusion of his own post: Who can possibly win with HSAs?