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.
