Wednesday, May 05, 2004
DID YOU KNOW…
…that John Kerry served in Vietnam? My latest at the Spectator.
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KRUGGY IS BACK AT IT
Don Luskin catches you-know-who in a you-know-what.
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HOW DO THEY KNOW THAT?
The Des Moines Register also has an editorial (two actually) on the Dixie Shanahan case. Aside from overlooking a few details (see Jeff at Tusk and Talon about those), the Register makes this head-scratching comment:
The sentence is the same, whether one is guilty of a pointless murder in the commission of a crime or a tortured woman who withstood unspeakable abuse from her husband before she finally snapped and did something she would never be in a position to do again.
Never? Do the Register editorialists know for certain that she would never again get married to a lout? I didn’t realize that they could predict the future. Hmm…maybe I should call and see if they know who will win the World Series this fall.
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SO MUCH FOR THOSE SCARE TACTICS
Remember last January when Governor Vilsack claimed that “3,900” teachers would be laid off if the State Legislature didn’t approve his tax increases? And you almost certainly recall all the editorials in the Des Moines Register decrying the crisis in our schools (for a list go here). Indeed, the Register was at it again over the weekend.
Well, the State Legislature managed to pass a budget without raising taxes, and now there is an article in the Register examining the coming lay-offs. How many so far? 300. And a lot of those are part-time positions. Uh, that’s a far cry from 3,900, and about .9% of the total.
Who would have guessed that the Governor and the Register were peddling hysteria?
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Tuesday, May 04, 2004
GETTING HSAs WRONG
Well, it didn’t take long. Barely six days after praising Hillary Clinton’s approach to health care (i.e., government-run), the Des Moines Register editorial page ran another mini-diatribe on the U.S. health-care system. Guess that dead horse needed another beating.
(For more on that Hillary Clinton piece in the New York Times, see Thomas Sowell and Don Luskin.)
This time the Register has Health Savings Accounts (HSAs) in its sights. And they get their first thing wrong in the sub-headline, “The health-care hodgepode just got hodgepodgier.” I hate to burst the Register’s bubble (okay, no I don’t) but health insurance should be a hodgepodge, a hodgepodge of coverage options. If it functioned like a true free-market, health-care consumers would have many different options to choose from when deciding which health insurance to buy. That’s how it works in a true free market: consumers have options. I have many options in the computer market, the car market, the food market, etc. because those operate like true free markets. Our health-care system has been hampered by restrictive tax laws and government mandates which limit consumers’ ability to choose their health insurance. HSAs offer consumers another insurance option.
An HSA offers people a chance to choose a policy that has a high deductible (of at least $1,000) and a low premium. The money in the HSA is used to cover the deductible. Any money not used during a year is rolled over and can be used in the next year. Better yet, money in a HAS can be invested and thus earn interest.
But according to the Register,
This option is a departure from the concept of health insurance, which is to pool the sick and healthy to balance risk and cost. Workers who choose the savings plans will likely be the healthier employees who don't use many health-care services. With these healthy people withdrawing from insurance pools, premiums will be driven up for everyone else.
I don’t think the Register understands how an HSA works. The employee still pays a premium, to cover catastrophic care. So he will not be completely opting out of the insurance pool. Furthermore, premiums will drop for everyone if the insurance pool expands—that is, more people purchase insurance. And that is exactly what is happening with HSAs: Scott Krienke of Assurant Health (formerly Fortis Health) says that 30% of those who have signed up for HSA accounts since January 1 were previously uninsured.
The Register is also overlooking two other ways that HSAs will help control costs: by making health-care consumers more cost-conscious. Under the current third-party payer system, consumers have no incentive to hold down health-care expenditures as they perceive that some “third party” is paying the cost. With HSAs, consumers will become more frugal with their health-care dollars. As a result, demand for health-care will drop, and as demand drops, so will the price.
Second, as consumers now pay for routine medical costs out of their own pockets, they will demand that health-care providers advertise their prices. This will increase price competition among health-care providers, thereby reducing the price of health care.
Nor is it only the young and healthy who are likely to sign up for HSAs. In February the Galen Institute organized a briefing on Capitol Hill about consumer-directed health care. Among the findings:
-Enrollees in consumer-directed plans are more likely to be older and sicker, not young and healthy.
-Despite this, consumer directed plans do lower costs.
-Utilization of preventive services increases by as much as 60%.
-Patients choose generic drugs up to 50% more often.
-Satisfaction and re-enrollment rates are high, up to 98%.
(For more on the Galen Institute's briefing, go here.)
The accounts will allow employers to consider their employees "insured," while shifting more, if not all, of the cost to those employees. About 40 percent of employers offering the accounts don't plan to contribute money to them.
Umm, I hate to break it to the Register, but employees are already picking up the cost of health insurance when their employers don’t provide health insurance. Also, while some employers may not contribute to the HSA, that doesn’t mean they won’t pick up part of the premium (again, I think the Register’s misunderstanding of how an HSA plan works plays into this part of the editorial). I suspect that the way it will work for most employees is that some of the money they already contributed to health-care premiums will be diverted to the HSA. I also suspect that it will result in more employees who do not have coverage finally getting some coverage because their employers will be able to afford these HSA-type plans.
Alas, the Register’s lack of economic knowledge and its religious adherence to a government-run health-care system has led it to misunderstand a new health-insurance option. So, what else is new?
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