The health care debate hinges on the question asked in the second presidential debate: Is health care a right or a responsibility? In America we have a few rights, and we have many responsibilities. Without meeting our responsibilities, we lose our rights. I recall my eighth grade teacher, Pauline Abel, admonishing us "Kids, kids, cooperate. Democracy is sharing responsibility." Life, liberty and the pursuit of happiness are the rights upon which our nation is established, and they are what we fight for. We must exercise responsibility to preserve these precious rights.
It is enticing to make health care a right because it relieves us of the burden of satisfying one of our human needs. However, it seems ludicrous to make health care a right when other needs such as food, clothing and shelter are not guaranteed by the government and are satisfied only by exercising individual responsibility.
Social Security was established to ensure the means to purchase food, clothing and shelter for older and disabled Americans. Have you ever heard of wasteful spending of Social Security benefits? No. Yet one hears a lot about wasteful Medicare spending. It's not surprising since, after all, someone else is paying the tab. Government attempts to control Medicare spending using diagnosis-related groups and managed care have not been highly successful. Responsibility at the government level has been a failure.
We have seen the ravages of lack of responsibility when government encourages risky mortgage policy in order to achieve a social goal. Simply put, "There ain't no such thing as a free lunch." When government fails to exercise responsibility, many suffer financially and health-wise. That is exactly what will happen if health care is made a right and not a responsibility.
So how does a health care system, thoroughly embroiled in our employer-based, third-party-payer system and Medicare and imbued with a lack of individual responsibility, extricate itself and move toward individual responsibility and solvency?
This is where the Health Savings Account (HSA) comes in. The HSA concept is a three-part system for payment of health care, namely a combination of insurance, out-of-pocket expenditures and personal savings. For instance, based on the IRS 2007 rules for a family, a HSA plan includes a $2,200 minimum deductible insurance plan, an $11,000 maximum out-of-pocket expense and a $5,650 maximum contribution to the HSA.
The HSA concept was first introduced by former AMA economist Jesse Hixson and subsequently developed by John Goodman and Gerald Musgrave of the National Center for Policy Analysis. Goodman and Musgrave presented their ideas in the 1992 book "Patient Power: Solving America's Health Care Crisis," credited by some as the driving force that derailed the Hillary Clinton health care plan.
Goodman and Musgrave had already proposed a Health Bank IRA to solve the Medicare problem in 1984. At that time, 19 years after Medicare was initiated by Lyndon Johnson as a weapon in his "War on Poverty," Medicare was clearly in trouble. It became a pay-as-you-go system headed for bankruptcy.
Currently there is no assurance that future workers can pay the future Medicare benefits of today's workers. In the early years of Medicare, the elderly benefited without having to pay into the system. Young workers, on the other hand, pay more than they benefit. Blacks and Hispanics with average life expectancies of 65-66 years pay in for all their working years and then infrequently receive a dime back since death occurs before the payout years. In reality, Medicare takes money from the working poor and gives it to the retired, relatively wealthy. Is it an effective instrument in the "War on Poverty"? Certainly not.
The Health Bank IRA proposed by Goodman and Musgrave embodies the concept of the HSA. The proposed Health Bank IRA was intended to solve the long-term Medicare problem, giving individuals the option of building a Health Bank IRA to be used during retirement years for all but catastrophic health care coverage. Catastrophic coverage would be assumed by Medicare. The Health Bank IRA would be funded by a refundable tax credit to cover the Medicare tax. This would enable everyone, including the working poor, to accumulate a Health Bank IRA. It would be part of the patient's estate, passable to heirs. It would be optional; not all patients wish to manage a Health Bank IRA. Choosers of the Health Bank IRA option would manage their own health care dollars, thus creating individual responsibility. Patients who are frugal and careful would stimulate competition in the health market and potentially pass the savings to their heirs. To date, the Health Bank IRA plan has not been enacted by Congress to help solve the Medicare problem.
The concept of the HSA followed from a 1990 NCPA task force of researchers from 40 think tanks and universities in which their report advocated self-insurance for small medical bills through savings accounts. This lead to the Goodman and Musgrave 1992 book "Patient Power: Solving America's Health Care Crisis." The same year Congress introduced legislation to establish HSAs. The initial HSA was disadvantaged by taxes on the deposits, though unspent funds could be rolled over and earn tax-free interest. Then, in 1996 Congress created a pilot project of tax-free HSAs for small businesses and the self-employed. Congress placed a cap at 750,000 plans, but only about 75,000 were purchased due to numerous restrictions.
Since then, Congress has relented somewhat so that today about 6 million Americans have an HSA. Congress has yet to give individuals a tax deduction for purchase of non-employer based health insurance. When this happens one can expect the number of HSA's to grow and the number of uninsured to decline. Better yet, an HSA coupled with a voucher will both cover the uninsured and lower health care cost (see "McCain health plan funds universal coverage and lowers cost").
Any serious discussion of resolving the health care crisis must include consideration of options that encourage individual responsibility such as the HSA.
Dale Vaslow is the president of the Boone County Medical Society. This column was first written for the group's monthly newsletter, Prescriptions.