A tale of one health care plan

Indiana Governor Mitch Daniels – one of the potential GOP contenders for 2012 – made a case for consumer-driven health care reform in today’s Wall Street Journal.  Daniels calls for the incorporation of Health Savings Accounts, or HSAs, into health care reform efforts.  So does Michael Tanner, a senior fellow at the Cato Institute.  Though both are ostensibly arguing for the same thing, check out the subtle differences in how they do so.

(This is, by the way, a new and different type of call for health care reform than we have seen from most voices from either party in the past few years, and it’s a positive development.)

Daniels talks about his experience implementing an HSA-based health care program for his “co-workers” employed by the state of Indiana.  Recognizing public concern not only over health coverage but also cost, Daniels points out savings to employees as well as the state.  But the thrust of his argument is the benefit to the patient:

State employees enrolled in the consumer-driven plan will save more than $8 million in 2010 compared to their coworkers in the old-fashioned preferred provider organization (PPO) alternative. In the second straight year in which we’ve been forced to skip salary increases, workers switching to the HSA are adding thousands of dollars to their take-home pay. (Even if an employee had health issues and incurred the maximum out-of-pocket expenses, he would still be hundreds of dollars ahead.) HSA customers seem highly satisfied; only 3% have opted to switch back to the PPO.

Buried towards the end of Daniels’s piece is the argument that patients are more frugal when face with spending their own money – which is true, but not the strongest argument on behalf of HSAs.  Tanner, however, makes that a central part of his case.

If everyone were to receive a CT brain scan every year as part of their annual physical, we would undoubtedly discover a small number of brain cancers much earlier than we otherwise would, perhaps early enough to save the patient’s life.

But given the cost of such a scan, adding it to everyone’s annual physical would quickly bankrupt the nation. But, if they are spending their own money, consumers will make their own rationing decisions based on price and value. That CT scan that looked so desirable when someone else was paying, may not be so desirable if you have to pay for it yourself. The consumer himself becomes the one who says no.

Tanner’s point is strong an irrefutable, but it’s an academic argument rather than a political argument.  It’s as callous as it is true – saying, essentially, “Pay for your own doctor, Chet.”  When was the last time logic won a political debate?

Daniels’ vision of consumer health care isn’t a shift in burden, but about trusting the patient to steer their own course – without government or, for that matter, the vilified insurance companies.

It may not be an idea the American public is ready to accept quite yet, but the more people make the case as Daniels has, the more palatable patient-driven health care will become.

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