Consumer-driven
health care has the potential to be a powerful force of
change in the health care system. By instituting
competitive pressures, encouraging greater price transparency,
and rewarding consumers who are proactive about their
health, the growing adoption of Health
Savings Accounts will help make health care more affordable
for everyone.
In
an article entitled “Health Care in the 21st Century”,
published in the New England Journal of Medicine on
January 20, 2005, Senate Majority Leader Bill Frist,
M.D., made several suggestions on ways to provide all
Americans with lifelong, affordable access to high-quality
health care. Senator Frist graduated from Harvard
Medical School in 1978, and was a surgeon before entering
politics. One of the key aspects of his vision
is a system that is responsive primarily to individual
consumers, rather than to third-party payers.
This concept is known as consumer-driven health care.
Today
most health care is paid for and controlled by third
parties such as the government, insurers, and employers.
Consumers rarely compare prices or quality of service
when shopping for health care – partly because
this comparison is usually very difficult or even impossible,
and partly because the price often just doesn’t
matter to the consumer, who is only responsible for
a moderate co-payment. Frist notes “a consumer-driven
system will empower all people – if they so choose
– to make decisions that will directly affect the
most fundamental and intimate aspects of their life
– their own health. This empowerment gives
people a greater stake in and more responsibility for,
their own health care. Health care will not improve
in a sustained and substantial way until consumers drive
it.”
A
key aspect to enabling consumer-driven health care was
the creation of tax-free Health Savings Accounts (HSAs).
This legislation was part of the Medicare Modernization
Act (Public Law 108-173). “HSAs, coupled
with affordable high deductible insurance policies,
give individual consumers more control over their health
care choices and hard earned dollars. HSAs give
people a greater stake in their own health care.
The accounts can move with employees from job to job
and can be rolled over year to year. HSAs should
increase demand for greater information and transparency.”
What
Senator Frist is suggesting is that people with high
deductible health insurance plans and HSAs have incentive
to keep their health costs low, since any money they
save on health care expenses stays in their Health Savings
Account, and grows tax-deferred, like an IRA.
Thus there is also incentive for the consumer to demand
information about health care pricing. No system
has yet been devised in the history of mankind that
does more to increase quality and lower prices than
a competitive market system. As more and more
consumers begin to own health savings accounts, health
care providers will be forced to compete for their business
by providing better quality service and better prices.
The
other factor in play is the financial motivation the
individual will have to stay healthy. The vast
majority of health care spending today is due to degenerative
diseases such as high blood pressure, diabetes, metabolic
syndrome, cardiovascular disease, and other modern ailments
that are primarily the result of lifestyle choices.
The consumer who wisely spends his HSA dollars on preventive
care (which can be done tax-free) and pays attention
to diet and exercise could be rewarded with a substantial
amount of money in their Health Savings Account by age
65.
Consumer-driven
health care has the potential to be a powerful force
of change in the health care system. By instituting
competitive pressures, encouraging greater price transparency,
and rewarding consumers who are proactive about their
health, the growing adoption of Health Savings Accounts
will help make health care more affordable for everyone.
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