Health Savings Accounts have Not Created Shoppers

Consumer driven healthcare has been the mantra of the Bush Administration and Republican presidential candidate Senator John McCain. The term “consumer driven” usually refers to the combination of a high deductible health insurance policy with a Health Savings Account (HSA). The Wall Street Journal “HSA Users Find Hassles Amid Savings” reports on the difficulties in using these plans as intended.

Politicians originally envisioned consumers shopping for medical services when they would be required to pay out of pocket. The reality turned out much different. Medical service providers either out right refuse to provide cost information or say it depends on what the doctor wants to do. The insurers do not provide policy holders access to a catalogue of their negotiated rates. Policy holders are only required to pay the negotiated rates; they just can’t use this information to shop. The WSJ reported that some doctors charge patients full retail because they do not understand the plans. Some medical service providers even want payments upfront. Both the insurance companies and the medical community do everything possible to prevent consumers from shopping for medical care.

With shopping impossible, why are any people enrolling in high deductible plans? Two reasons become clear: arbitrage and asset protection. At the low end, high deductible plans can have an $1100 deductible for an individual and $2200 for a family. A deduction of this magnitude could be less than the additional premium for a higher cost HMO or PPO. These patients often know they will top the deductible anyway, so why bother shopping?

At the highest end with a $5000 deductible, patients simply defer all but the most necessary care. True high deductible plans exist for people with assets to protect, not to encourage any preventive care. These patients try shopping, but get frustrated. There are not enough of them for doctors to care.

True high deductible policy holders have the most conflict with the medical community. These insured do not want to pay for any preventive care; they just want their doctor to “fix” their current problem. I address this in detail in "Are GP Doctors Obsolete?"

The WSJ concludes that the only money saved through HSA and high deductible policies is through deferred care. Not surprisingly, United Healthcare (UNH) agreed in their most recent conference call.

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