When I was a Congressional staffer during the early 1990s national health care debate, one of my peers was on the Clinton Task Force. She told me then what most in the industry will tell you now: if we could all eat right and exercise, never break a leg, and eliminate our bad genes or family history of disease, we could cut over half of our current health care costs.
Add into the mix, a clumsy American process for "end of life" decisions, and you get a whopper. Not the sandwich, though that might harm you too, but the majority of long-term health care costs - the stuff that moves the economic demand curve permanently upward - are caused by things we either choose to not deal with or things we have no control over.
Now sit tight everyone. Because if you regularly read the John Torinus business column in the Milwaukee Journal Sentinel, you might be fooled into believing there is some government conspiracy brewing in Madison to take a bad situation and make it worse.
And, big surprise, the last two columns from Torinus have trashed a plan to cover every Wisconsin resident and restrain the growth in costs that are forcing people to drop coverage, stay in crummy jobs, and/or eat up a larger and larger share of their paycheck (or credit card debt) just to keep themselves alive and healthy!
Argh, never mind such hardship. According to some, survival of the fittest is in full force. Consumer-driven health care is what the 1980s brought to the American worker, coupled with a national political movement toward what's been called the devolution of the federal government – the Reagan Revolution.
What those genius chapters in American history have delivered is actually quite tragic and devastating. We now can boast the largest ever divide between the haves and have-nots and a nation increasingly unable to handle even the most basic crisis of the 21st century: roads, schools, rivers and bridges are rotting; health care and energy costs are sky-high with the burden hitting the working class and senior citizens the hardest; and an overarching moral crisis of national identity and distrust of public institutions.
What Bush, Reagan and John Torinus have in common is a never-ending love for lecturing us all about the power of markets, how consumer choice will save us from big government, and how there is zero connection between the consumerism they peddle and the resulting nation of lazy, overweight kids playing video games, low-income workers eating lunch at the drive-thru, or seniors living their last years in the fear, confusion and scam-fest known as entering into a nursing home.
So you see, the "business community" wants everyone to start acting like health care consumers, like we are consumers of other products and services in a market economy. But is taking care of diabetes or depression, the same as buying a dishwasher? Is falling down the stairs the same as buying a pair of shoes?
Here's the kicker though: the same "consumer in driver's seat" mindset is exactly the kind of "business knows best" garbage that we were fed during the 1980s. Back then, the political landscape was different. Iranian hostages were just freed by Reagan, federal budget deficits were for the first time doubling every year, and state/local governments were being required to pick up more and more of the bill for public services. At least gas prices were cheap.
Another component of the new Federalism was less popular over the last 25 years, but the "don't trust government" crowd has tried at every chance they get: eliminate the New Deal-inspired programs of Social Security, Unemployment and Worker's Compensation (all three programs were born in Wisconsin), and starve the living daylights out of Medicaid and Medicare health care programs to avert European or Canadian-style "socialized medicine."
Back in the efficient and all-knowing private sector, we were greeted with another byproduct of the big thinkers of that age: HMOs. If anyone has an old newspaper around, they might remember employers dropping traditional insurance plans for workers and retirees in favor of health maintenance organizations (along the same time pensions were dropped for 401k plans). HMO is a buzzkill, so now we use words like "consumer-empowerment" or "managed care" or my favorite, "health savings accounts." That feels better now doesn't it?
HMOs were set-up to incorporate a fiscal and physical gatekeeper known as your primary care doctor. Charitable hospitals, usually run by religious groups, would shift from "not-for-profits" to business models that actually parallel that of a massive, for-profit corporation. And good old-fashioned insurance firms, like Blue Cross Blue Shield, would need to keep up with the times and join the for-profit movement so they can "invest in life-saving and quality improvements … blah blah blah."
So thanks to these trends, we now have some of the highest health care costs in the world, yet we collectively as a society are getting sicker. Specialized doctors, expensive technology and drugs, hospital systems that keep building and building new and more expensive facilities, and a fragmented primary care system characterize this awful lifestyle choice.
Yes, I said choice. We have already chosen the route that Torinus and his buddies want us to embrace now. It not only has failed, it has (like New Federalism) put states like Wisconsin at a competitive disadvantage with other states and other nations in the world. It is how one explains spending nearly twice per capita on health care services and still having high rates of infant mortality, widespread chronic yet preventable disease, and people who are middle class or working class feeling economic insecurity that rivals the 1930s.
That's why Democrats are working on health care reform, that's one of the reasons I chose public service as a job and it's why I don't sleep well at night sometimes. God did not put us on this planet to just enjoy or entertain ourselves, that is… to "consume."
And our nation did not get built to just replicate a colonial mindset that some people deserve better outcomes in life because of their blood line, regardless of work ethic or moral compass. No, we in America want better. And if I can purchase a quality health care plan with the dollars paid for by the people that I serve … then so should they!
Representative Josh Zepnick is a Democrat representing the Ninth Assembly District on Milwaukee's south side.




7 Comments
Josh,
Consumer driven health care works.
Let me give you the best examples: No health plan covers LASIK eye surgery. This is clearly a medical proceedure. Since the only way for patients to get this proceedure is to pay for it, significant price competition has driven down costs. You can choose the level of quality you are comfortable with, and the type of equipment that is used. The newer equipment with upgraded technology costs more. Consumers have driven the pricing down.
Many other cosmetic proceedures have reduced in price, since they are optional to the consumer. Either spend the money on a vacation in Florida or get rid of those spider veins. This type of choice reduces all costs.
Now look at HSAs. Walgreens charges about $18.50 for 30 days of my blood pressure medication. Sams's club charges $11.40 for 100 days. I had to ask my doctor to prescribe the medication 100 at a time vs 30 days at a time. Because this money was coming from my HSA-so it is really my money-I became a more price sensitive consumer.
Before I had an HSA, I didn't even realize that my $15 co pay every 30 days was more expensive than just buying the stuff at Sam's Pharmacy. I never checked.
We do not go to the doctor for small ailments like sinus infections, sprained ankles(usually requires an X ray)colds etc. since it costs us real money. If everyone could pick the type of insurance they wanted and had some idea of costs, you can bet that the marketing department at Aurora Health Care would soon be advertising their high quality. And some other health care group would be advertising their low prices. Consumers could pick.
Create legislation to give me more choices.
Oh, lastly, stop calling your job "public service". You "public servants" have been ripping off the public with compensation programs, benefit programs, retirement programs, and expense reimbursement for years. Please don't create more government programs till you fix or end the ones we already have.
Right, Art. How fortunate you are to be able to afford to save money in HSA and be able to pay your high deductible if something happens. Unfortunately, millions of working middle class families are not. How arrogant you are. Glad you got yours, so the heck with the rest. People like you are one of the reasons this system is so messed up in the first place. HSAs are a joke. They work if you're wealthy and you're healthy. It's time to rebuild this system from the ground up. It doesn't work!
Which is a better plan? One with copays for office calls and pharmacy charges, and a $500 deductible with typical 80/20 cost sharing after that; or, a HDHP/ HSA plan with a deductible in the thousands? Well, that depends on how you're going to use the plan. If you're healthy, the second... because your premium is lower and you probably aren't going to incur many claims. If you're sick, the second... because your maximum out of pocket is going to be less, you just get there faster. Oh, and your premiums are still lower.
If you move to an HSA and the premium contributions drop significantly, doesn't that free up money to fund an HSA? If an employer makes that change, don't they often deposit money on the behalf of the employees? Is every dollar you put in to an HSA "making" you 25+% because it's a federal tax deduction? The answer to all three is "yes".
"What if the employer makes this change and just pockets the premium savings?" Then it's just one more thing to consider when looking at different positions... commute time, working environment, vacation time, etc.
Speaking from first hand experience, we have seen HDHP/ HSAs work for investment bankers and attorneys, as well as foundry and childcare workers. Don't parrot the sound bite "healthy and wealthy" - it's bumper sticker talk for those that can't be bothered to check the facts.
Chris: I'd be willing to bet that YOU are healthy AND wealthy. You can afford to save thousands of dollars of year in an HSA, and you can afford a deductible of thousands of dollars. But people like you just don't get it. Millions of other people cannot. And the amount saved in a tax deduction to the working poor or the middle class is a joke. That's why HSAs are just a way to shift the costs of medical care onto the backs of employees, under the guise of supporting "consumer driven" health care. Except, there is no consumer-driven health care. There is no bumper sticker big enough to explain all the reasons HSAs are wrong.
Mr. Wolters, we have never met, and you have no idea of either my financial or health status. But since you think I am "healthy and wealthy", and therefore "just don't get it", you should know that I have incurred almost $25,000 worth of medical care thus far this year. (And don't 80% of Americans call themselves middle class?)
Had I been covered by an HDHP plan, I probably would have paid a $2,000 deductible, then 100% coverage (the most common plan design). That would have been lovely! But, I have a plan similar to the one I described above, with copays, a $500 deductible and coinsurance.
Get out your pencil for this one... thus far, I have paid a $500 deductible, another $3,273 (and counting) representing my 20% share after deductible, 2 primary care office visit copays of $25 each, 5 specialist copays of $35 each, 2 prescriptions at $15 each, and 9 physical therapy visits at $35 each.
If we assume that I'm paying 20% of my premium, and the average HDHP costs 30% less than the average copay plan, I've paid several hundred dollars extra for the privilege of paying thousands more in claims. And, if I had an HSA, all $2,000 would have been deductible. I really, truly wish I had an HSA.
Anecdotal evidence aside, remember what insurance is supposed to be there for... financial protection against catastrophic loss. Does your car insurance pay for oil changes, tire rotations and brake jobs after a copay? Does your homeowners policy pay for resurfacing your driveway, replacing a broken window or switching out a leaky faucet? Can you imagine what your premiums would be if they did?
Health insurance has evolved into prepaid health care... which, by the way, is what HMOs were, and I'm guessing you're not a fan of those, either. Healthy Wisconsin is a prepaid health plan, supported by a socialistic income stream, that will pay government instituted rates. Doctors already cost shift from Medicare/ Medicaid patients to private payors... what happens when there are no more private payors?
No industry is perfect, but I will always trust consumers and the free market, instead of the government, in all arenas that are within the purview of private citizens. I'll leave you with a quote from Thomas Jefferson, "I know of no safe depository of the ultimate power of society, but of the people themselves: and if we think of them not enlightened enough to exercise their control with a wholesome discretion, the remedy is not to take it from them, but to inform their discretion."
John,
Let's look at how my old health plan worked and how my HSA worked.
My company paid 50% of my health insurance for my family and me. That was about $500 per month. I paid $500 per month to cover my wife, 3 kids and me. When we needed medical care, we paid a $25 co pay for doctor visits or prescriptions. It was $100 to go to the emergency room.
Now my HSA is about $500 per month. I pay $250 and my company pays $250. My company adds $75 per month to my HSA account. Company saves $175 per month. I add $250 per month to my HSA account, paying the same amount for health care as I did before. The maximum out of pocket cost I can pay in 1 year is $5000. Once I hit $5000 in health expenses, everything is 100% covered, save the $25 co pay for prescriptions. I have $3900 in my HSA at the end of the year less prescriptions and doctor visits.
I get to keep whatever I save under $3900 and leave it in the account, for next year. let's say I save $1,000 which is very realistic in my experience. Next year I will have $4900 at the end of the year less prescriptions and doctor visits. After a few years, I would have the $5000 maximum amount I could spend in the account without any contributions required.
This $5,000 deductible is covered by my contributions through the year, and I am paying that amount in my regular health plan already, so yes, I can afford a high deductible. So can everyone who gets in this type of plan.
I think you know this already. I think you know how these plans work and you simply want to scare people without giving them the full information. If you have health benefits already, an HSA is a great alternative and it allows you and the company to reduce costs. If you are suggesting everyone should be covered, HSAs would be a better way to do it.
I know that I am very mindful of costs under my HSA. Costs I didn't care about under my old standard health plan. So I guess I am more consumer driven.
HSAs are the exact way to rebuild the health care system from the ground up! As for your comments about me being fortunate, I am lucky in so many ways it would be hard to count them all. As for the arrogance comment, yeah, you probably hit that one on the head. I didn't think it showed in my writing, but I am probably too elitist to notice.
When I managed a small company we found that an HSA with a $5000 deductible cost the company less than a so-called standard low deductible plan. We paid about $275 a month for the deductible and put $5000 a year into each employees account. That $5000 became their money, and they had what amounted to a zero deductible plan. Since the plan was with Blue Cross the employees got the contracted costs for care. The simple fact is that when people spend their own money they are careful. Our costs for the major med went down every year because Blue Cross found that people who managed their own care did not have major problems. The simple fact is that visiting doctors unnecessarily leads to unnecessary interventions. Doctors can't help wanting to treat anything they find. Since most illnesses are self-limiting, and most treatments have unavoidable side effects, it is wise to avoid excessive treatment. People who spend their own money tend to avoid unnecessary treatment.