Shopping for healthcare ...
PRESIDENT BUSH SPOKE ELOQUENTLY last week about the need for healthcare reform, but his concrete proposals are not unlike his plan for Social Security last year -- modest steps that affect individuals but don’t address the broader problem. Bush wants to help individuals shop for their own insurance and pay for more of their own medical expenses with cash from individual health savings accounts. The idea is that by giving patients more skin in the game, they’ll become better consumers and drive down prices in the process.
In theory, it’s not a bad idea, but it would be foolish to pretend that any of this will come close to addressing the profound structural problems afflicting the nation’s healthcare system.
It’s increasingly clear that the healthcare marketplace, which represents one-sixth of the U.S. economy, is not working. Nearly 46 million Americans live without health insurance, a fact that has vast social and financial implications for us all. Those with insurance have seen their premiums rise more than 60% over the last five years, and they can expect a similar increase by early in the next decade.
And across the country, rising health costs are eating away at money that cities and states might otherwise have spent on education, public works and social programs.
The recent turmoil at companies such as General Motors is also substantially about their inability to afford healthcare for their current and former employees. If grumblings about health costs from Fortune 500 companies and their shareholders aren’t being heeded, one wonders just what would force Washington to take the healthcare problem seriously?
On Tuesday night, Bush said that “for all Americans, we must confront the rising cost of care ... and help people afford the insurance coverage they need.” But what he offered as a solution -- mostly sweeteners for health savings accounts -- would help only a small share of the population.
Health savings accounts are mainly attractive to healthy people who can afford to pay high deductibles and don’t suffer from expensive chronic conditions. That’s because the accounts are like IRAs for healthcare: They allow people to save money tax free in a permanent savings account as long as they agree to sign up for a bare-bones health plan with a high yearly deductible.
The reason they aren’t attractive to many people currently going without insurance is that two-thirds of them live at or near the poverty line. Even the president’s idea of giving vouchers of $3,000 to poor families is no silver bullet. Such a voucher wouldn’t cover the premiums on most family plans, and even if it did, many people couldn’t afford the deductible.
In recent years, most politicians have talked about healthcare reform as though there is a one-size-fits-all solution out there that we haven’t thought of before. There isn’t.
The president should be commended for seeking to make the economics of medical treatment more efficient. But that must be tied to social programs that can help those on the margins. Extending refundable tax credits for health insurance to the working poor would be a good start.
It may be foolish to think that a president with about three years left in the White House can make substantial changes. But Bush, if he truly wants to take this on, needs to offer more ambitious reforms.
