Reinhardt on HSAs and having "skin in the game"

Economist bashes Bush HSA proposal
United Press International
February 6, 2006

President Bush's health savings account (HSA) plan will mean income-based healthcare rationing, an economist said Tuesday.

"Should healthcare be cheaper for high-income people?" asked Princeton economics professor Uwe Reinhart at the National Health Policy Conference in Washington. "Is this a faithful reflection of America's social ethic?"

Assuming a premium rise of 8 to 10 percent over the next 10 years, the cost of keeping an average family healthy--including insurance premiums, deductibles and co-payments--will be $21,000 per year, far more than low-income families can afford, he said.

And giving a tax break for HSAs will help the wealthy, who pay a relatively high tax rate, but do little to alleviate the problem of soaring healthcare costs for the poor, who will likely be forced to forego medical treatment.

Saving the maximum allowed by HSAs, which could be increased to as much as $10,000 per year, is "easy when you make $200,000, harder if you make $30,000," he said.

It is also not clear if patients will be willing and able to gather information and make informed decisions about treatments, as they would be called on to do in a transition to a system of individually-based health savings accounts and high-deductible insurance, Reinhart added.

Finally, if paying for medical expenses out of pocket is really about consumers taking charge, he asked, why do corporate executives always negotiate for excellent insurance as part of their compensation packages?

"I propose that coronary bypasses for corporate executives cost $1 million," he said, "so they can have skin in the game and be empowered."

Comment: By Don McCanne, M.D.

You hear it everywhere. Health care consumers need to have "skin in the game." HSA advocates from the very highest levels, even The White House, are calling for empowering patients by requiring them to have more "skin in the game." Every time I hear that, I cringe.

The greatest crisis in health care today is affordability, for the uninsured and many of the insured as well. A significant number of the 20 percent or so of people who have significant health care needs have already depleted their reserves. To suggest that they need "skin in the game" conjures up thoughts in me of, "Oh my God, they're going to skin them alive before they get more health care." I don't actually envision much blood and gore, but I do see hapless people stretched to their limits, having to make choices about which of life's basics should be forgone.

I am grateful to Professor Reinhardt for giving me a new mental image that appears in response to having "skin in the game." My image actually goes further than the million dollar coronary bypasses for the corporate executives. I see a new health-care funding system tailored to the policies supported by the leaders of the consumer-directed health care movement. To be sure that everyone with health care needs would have "skin in the game," we'll make fees flexible and set them at a level that would deplete a person's assets, leaving them with just enough so they have to make decisions about such basics as food and housing.

What a relief. A vision of Uwe Reinhardt is so much more pleasant than a vision of Hannibal Lecter!