WASHINGTON, July 20 (UPI) -- In Part 2 of an interview with United Press International, John C. Goodman, president of the Dallas-based National Center for Policy Analysis and sometimes referred to as the "father of the health savings account (HSA)," argues that conventional healthcare plans provided by employers give workers carte blanche for out-of-control spending that can be effectively reined in through the "paternalistic" HSA model.
Q. The most commonly heard criticism of the HSA is that it only works for people who can afford to set money aside for healthcare. Are HSAs a realistic option for a cashier at Wal-Mart?
A. The opposite is true. The wealthy individual doesn't need a (HSA). If the wealthy individual wakes up in the middle of the night and his stomach hurts and he wants to go to the emergency room, he doesn't have to worry about whether he's able to pay. (HSAs) are paternalistic devices. And they're created with the person in mind who lives paycheck-to-paycheck and is not very good at saving for medical costs.
All of the money that goes into HSAs from an employer could easily have been paid in wages. (Employers) want people to make good choices, but they don't want people to go without care because they don't have the money.
Q. But isn't a conventional health plan a better choice for these workers?
A. With a conventional healthcare plan, either we cover the emergency room visit, in which case (the low-paid worker) goes to the emergency room too often, or we have a deductible, in which case she might not go when she should because she didn't have the cash. There's no better person to make a decision like that than the person who wakes up in the middle of the night (with an emergency health problem). So you want to empower people to let them make decisions that only they can really make.
Q. But critics of HSAs say low-paid workers simply can't afford to give up money from their pay to put into an account. How would you respond?
A. One thing I know for sure is that employers have to compete for labor and whatever they spend on their employees, they're going to try to create the most attractive benefit package. So if all of the workers would rather have the money in wages, than that's what going to happen, but that has not been the experience.
Q. Unions, particular the United Food and Commercial Workers, have not warmed up to the idea of the HSA. Jill Cashen, head of UFCW, recently said, "Expecting hourly wage workers to have to make good choices about healthcare is dangerous. People are going to choose not to get treatment because they don't think they need it or because they simply can't afford it" Any comment?
A. That's exactly the attitude of a person who thinks the average citizen cannot make good decisions about the important things in their lives, and (who) wants government or some bureaucracy to regulate where all their money goes. There's no evidence that people don't make good decisions. Of course, there will be cases when they don't, but on average, people tend to be self-interested and when they manage their own healthcare dollars, they manage to do a pretty good job of it.
Q. In criticizing HSAs, Cashen also said, "Putting the burden on the individual to make choices based on finance rather than real need is a losing proposition." How would you respond?
A. I don't think she understands healthcare. We just went through the whole problem with arthritic pain drugs (like) Vioxx and Bextra. It turns out that most people who were taking Vioxx shouldn't have, and the best predictor (of whether a patient would choose Vioxx) was if an insurance company was paying the bill. Well, what's the alternative to these prescription drugs, which not only are costly, by the way, but have these risky side effects?
The alternative is ibuprofen. Vioxx (had) cost about $800 a year more than ibuprofen for the arthritis patient. Drugs affect different people differently. How can any one of us make a decision for somebody else about whether the extra cost and risk is worth $800 a year? They can't. Those are exactly the decisions that people need to make on their own, and they need to be able to (benefit financially) when they make decisions that save money.
Q. You don't think a person might forgo needed treatment because the money has to come out of a limited savings account?
A. What are you calling "needed" treatment? How do I know that the person "needs" Vioxx or "needs" ibuprofen? Only that person can say how much relief he or she gets from the different pills and that has to be weighed against the money.
Q. But what if a person doesn't go to the emergency room when he or she needs to because there's not a health plan backing them up?
A. What we want is for the money to be there, so no one should not go to the emergency room because they can't pay the bill. But they should understand that (the emergency room) is an expensive way to get healthcare, so if they're going spend a thousand dollars in the emergency room, then they need to understand it ought to really be worth a thousand dollars. If it's something that can be put off until the next day, and for a tenth of that cost (at) the local clinic, then they shouldn't be in the emergency room.
We have all these studies that show that half of the people in the emergency room should never have been there in the first place. And half the people in a typical doctor's office don't need to be there. And there's no way we're going to solve these problems unless individual patients start managing their own money and start thinking about the alternatives.
Q. Do you know of any studies showing that people over-utilize medical care because they have a conventional health plan through their employers?
A. It goes both ways. They over-utilize and they under-utilize. There's nothing efficient about the way it's working right now.
Q. Do you know of any studies to back up the theory that people will be more frugal if they're "using their own money" for healthcare?
A. Yes, all of the studies from the insurance companies and the employers suggest that people do common-sense things. They make fewer trips to the doctor and they tend to, on the whole, buy fewer drugs. Half the drugs that people (buy) they never take. They switch from brand-name drugs to generic drugs. They just do common sense things that save money.
Q. Do you think it's fair for companies to eliminate conventional plans altogether and offer only HSAs to their workers?
A. Nobody ever asked if it was fair when these (workers) were being pushed into the HMOs and into other plans by the employers. ... People are suddenly bringing up this argument that never occurred to them back when employers were making unilateral decisions for other kinds of plans. So I don't know whether it's fair or not, but we have an employer-based system, and if employers don't do things that make their workers happy, they're going to lose the workers.
