Posted on 02/28/2006 6:36:48 AM PST by kiryandil
OK, I apologize but it's taken this long & travels to many web sites to see it specifically written that there is no cap on the HSA.
I think flex accounts are fine for expected expenses such as Orthodontia, or certain chronic conditions.
Other than that, I would say run away as fast as you can!
I also suspect that an enormous part of escalating costs is not due to supply/demand issues but to malpractice insurance costs. I have heard that in PA the Almish pay cash on the spot and will not sue - and when they pull their buggies up to the hospital they pay something like 20 cents on the dollar for medical services. Can anyone confirm/refute? thanks.
Sure, insurance costs are a problem, but consider this... If you were to completely eliminate the insurance cost (which is a fixed cost), then the price of healthcare would still not go down unless it had the effect of attracting people into the profession, and increasing the supply. A reduction of fixed costs has no impact on price, except thru increased supply. That's basic economics. If you don't get the increased supply, then the reduction in fixed costs simply flows to the bottom line of the physicians. Of course, increased income to physicians might increase the number of people becoming doctors and increase supply, but if the government is preventing that from happening, then it won't.
They restrict supply in a large number of ways, but the one that is most significant is this: They've created a bottleneck at the medical schools. They limit the number of students who can go to medical school. The state governments require medical schools to be certified by the AMA, and the AMA is very careful about restricting the number of medical school admissions by restricting the schools.
This is not new. They've been doing it for more than 50 years. On the other hand, the problem has gotten much worse over time because while the demand for healthcare has grown, because of the use of health insurance and government health programs, and also because of increased incomes, population, and technology which has created treatments which were not previously available, the supply has not been keeping pace with that growing demand.
Another way they do it is by restricting capital investment. They don't do this as much as they used to, but most states require hospitals to get regulatory approval before they can build new facilities or buy equipment. Their logic is that capital expenditures are driving up costs.
The problem with the logic is that it assumes that prices reflect costs. That would be the case if we were dealing with a perfectly competitive industry, but this industry is far from that, due in large part to the high entry barriers caused by government regulation. Of course, you can look at the cost structure of these hospitals and conclude that it's out of whack. For example, you see a bill for your heart operation, and they've got a piece of gauze listed on it for $25. You know that it did not cost that. What they've done is they've taken the high bill they've got to send you, and they've allocated portions of the amount of the charges to specific items, usually without rhime or reason. It has nothing to do with their costs. It merely reflects that this is not a competitive industry. The charges do not reflect their costs.
The real reason for the wasteful capital investment in the industry, though, is that hospitals can't find physicians to adequately staff their operations, and when they do, they've got to pay thru the nose to get them, so it is to their benefit to find ways to make every second of physician time count, and one of the easiest ways to do that is to have expensive equipment that does things that make physicians more productive. Of course, when they buy that equipment, the bureaucrats think that the cost of that equipment is driving up prices, when in fact, it is usually reducing prices.
I would like to contend one issue - You say that the fixed cost of insurance doesn't have an impact on price. In a text book example, no - because it is fixed by definition and doesn't impact the supply/demand dynamic. But I think it is a bit absurd to say that medical prices would not be reduced by lessening insurance costs. In your last example the hospitals seem to be amortizing their costs across everything on the bill, thus driving the cost of gause to $25. I expect that many of these are "fixed" costs. If these fixed costs were reduced the gause would cost less, no?
Yes, you are right. To some degree it's not a fixed cost.
Actually, I'm not in medicine, but I have an economics degree, and spent a couple of years doing my honors thesis at Michigan on the problem. That was about 25 years ago.
The problem really hasn't changed much since then, except it's gotten worse. And it's gotten worse despite the promises of many healthcare economists who said that if we only further restricted the supply of healthcare, costs would go down. That's exactly what they did, and the costs have exploded.
If you review the economics papers on this industry, you will be shocked by how pathetic they are. The economists who work in this field tend to be supporters of socialized medicine. They work for the government or for the industry. No one represents the interests of the consumers in this exercise.
And frankly, the Democrats are delighted to screw things up, and then blame it on the capitalist system, even though capitalism has absolutely nothing to do with the problem. To the Democrats, failure is good, because it brings them closer to a government takeover of this industry which they dream about.
The GOP, on the other hand, is either not smart enough to figure out what the problem is, or it's too reticent to take on the healthcare lobby in an effort to fix it.
I guess in a sense, you can't blame them. Afterall, if you look at the education establishment, and see how fruitless their efforts to reform that institution have been, due in large part to the NEA, and then you realize that reforming the healthcare industry would probably be ten times more difficult, you understand why they might not want to even bother to go down that road.
Thanks for the links. My health insurance changed drastically this year. Of course less benefits and higher deductible. I am considering opening and HSA. Makes sense to me, currently looking into where to open it. Thanks again for the links!
Demonically?!?! Thank you for the good laugh. Poor, poor Froma. How horrible that Americans may keep more of their own money and control their own healthcare!
During a time when I was poorer than dirt, MSAs and HSAs enabled me to still provide for my own health insurance instead of free-loading off of taxpayers. It is a great program that should be expanded as quickly as possible.
It's our darling little Froma, from the The Providence Journal Co. (projo.com). Blue than blue can be. ;-)
Don't try clouding the issue with facts, D. ;-)
If I understand this right, it actually, for the first time, starts to allow for direct purchasing of health care from the providers - cutting out the insurer. At least this is potentially the case.
This then leaves the cost of the malpractice insurance as another large cost factor in all of this.
If we ever do a postmortem on why quality of care went south, we're going to discover that it began when third party payers removed the incentive for the best physicians to make primary care their career. Choosing that profession now is the equivalent of taking a lifelong vow of poverty.
The financial incentives drive the bright guys to specialties, and as a consequence the kind of issues that family doctors used to routinely handle are ending up in specialists offices. Primary care physicians who take the time and effort to properly diagnose and treat their patients suffer financially.
There's a interesting guy in Ventura County, California who's started a private primary care practice. He collects an annual retainer from about 250 patients, then also bills their insurance for reimbursement for their visits. For the retainer, the patients get a free full physical each year, same day visits, weekend availability, and an understanding that they can spend as much time with the physician as they need. Essentially, the retainer just buys them a return to the doctor/patient conditions that used to exist in the old days. So far, it's worked quite well for both the doctor and his patients. But it's kind of sad that it's come to this.
Boy, that is the SAME conclusion that I reached!
The only reason there is linkage, in my opinion, is so the insurance companies can make investment earnings from my premium! If I take the risk for the up-front deductible, then the government and the insurance company should butt-out.
TONY SNOW, TONY SNOW, RUSH LIMBAUGH, RUSH LIMBAUGH
Wow. Thanks for that insight. Sadly - none of it is surprising. I still believe the consumer needs to be more accountable, and for their own sakes, people need to educate themselves and learn to work with doctors to choose courses of medical action (I went through my baptism of fire on this when my daughter had a long illness). But after considering your last post I suspect that medical accounts will not drive down costs nearly as much as desired unless the areas you cite are addressed with them.
Bingo!
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