Bush’s HSAs are a slow, hanging curve, over the middle of the plate

January 30, 2006

Part of the Dems’ message problem, it seems to me, is the too-many-balls-in-the-air problem. The party believes it needs to keep the focus on Bush’s warrantless-search program. And Abramoff. And Medicare. While also articulating a clear national security message. And a vision for how a Dem-run Congress would operate. If Dems narrow the focus to one or two controversies, they’re leaving out key political targets. If Dems emphasize everything, they have a muddled message. It’s tricky.

With all of these targets, it’s sometimes hard to adapt and switch gears when something new comes to the fore. But when it comes to Bush’s Health Savings Accounts, Dems need to be ready to pounce. The president’s plan is a gift. It’s a slow, hanging curve, right over the middle of the plate.

The accounts are seen by proponents as part of a larger effort to create an “ownership society” in which financial responsibility for retirement and health care costs shifts more to individuals and away from government and employers.

Proponents, who include some of Bush’s economic advisers, say the system of spending accounts paired with high-deductible policies will make people more judicious users of medical care because they will have to pay a greater portion of the costs themselves.

Critics say many Americans are already struggling to pay for health care, so promoting higher-deductible polices will leave the poor and the chronically ill in worse shape. Critics, who include the Commonwealth Fund and Consumers Union, also fear the accounts will attract mostly healthy people, leaving sicker and more expensive patients in traditional insurance, whose costs will then rise. Overall, they say, the accounts won’t save the nation money on health care.

This has been compared to Bush’s Social Security privatizations scheme, but the reality is this is worse. And an even bigger political opportunity for Dems. Consider this gem from a recent LA Times article:

Most conservatives — including those in the administration — believe that the root cause of most problems with the nation’s healthcare system is that most Americans are over-insured.

As Josh Marshall noted over the weekend, Dems simply need to repeat what their opponents are saying amongst themselves.

[T]he core premise of the policies the president is about to lay out is that Americans are over-insured when it comes to health insurance. Over-insured. Got too much insurance. […]

So the president thinks the problem is that people have too much health insurance. People are over-insured. I don’t think that’s how most Americans see the problem, do you? I’m confident that they don’t. Really confident. But let’s let them decide.

Indeed, we should let them do just that — while using this issue as a political cudgel in a campaign year against anyone willing to embrace the president’s plan.

The New York Times had a good item over the weekend explaining a bit about Bush’s approach, particularly with HSAs.

Where Mr. Clinton favored a larger role for government, Mr. Bush has a fundamentally different philosophy, built on the idea that placing more responsibility in the hands of individuals will create market pressure to hold down costs.

The long-running debate has taken on new urgency as more and more companies find themselves struggling to pay for employee health benefits. Health care costs have been a big factor in the troubles of the domestic auto industry, among others.

But some policy experts, Republicans and Democrats alike, say the Bush proposals, which are built around tax breaks, may further drive up health spending and costs by fueling the demand for health care.

It’s all about shifting burdens. The president — who believes you have too much health insurance — believes more burden should be on you. You know all of those useless medical exams your pesky doctor keeps recommending for no good reason? When you’re paying for them, you won’t want them. Problem solved!

The fact-huggers point out that there’s no real proof that Bush’s plan will expand access for anyone, or do anything to control health care costs, but that’s not the real flaw. The real problem is political — anyone who hears about this plan for 30 seconds will know they don’t want it.

Ezra recently summarized the deal in a nutshell.

Conservatives believe Americans have too much health insurance, that they spend heedlessly and wastefully on care, procedures, and medications they would simply forego if insurance plans didn’t pick up the tab. Ergo, HSA’s, which end risk pooling, forcing care to come directly from pockets. Newly responsible for their medical bills, consumers will be spurred by the Magic of the Market to make smarter decisions, show more prudence, lead healthier lifestyles, smile more often, and smell springtime fresh. It’s gonna be awesome.

At least if you’re healthy. Because what HSA’s really do is separate the young from the old, the well from the sick. Currently, insurance operates off of the concept of risk pooling. Since health costs tend to be unpredictable and illness isn’t thought a moral failing, we all pay a bit more than we expect to use in order to subsidize those who end up needing much more than they ever thought possible. The well subsidize the sick, the young subsidize the old, and we all accept the arrangement because one day we will be old, and one day we will be sick, and no one wants to shoulder that alone.

But HSA’s slice right through this intergenerational, redistributionist arrangement: they’re a great deal for young, healthy folks because they don’t force subsidization. Just don’t get sick. And if you’re already sick, don’t think you can hide by remaining in traditional insurance plans: when the healthy rush towards HSA’s, older plans will hold only the ill, and insurance companies will send premiums skyrocketing to recoup the difference.

The president is sincerely going to tout this approach, in public, in the State of the Union. It’s almost as if he doesn’t want anyone to vote Republican anymore.

I don’t care how many issues are on the front burner right now — if Dems don’t hit this hanging curve over the fence, they don’t deserve to be in the majority.

Bush wants everyone to be more responsible for themselves? When was he ever responsible for anything?

  • I don’t think the Dems will have to try too hard on this one. After Iraq, Katrina, Social Security, the Prescription Drug Act and all the rest of it, this is just another firestorm waiting to be unleashed.

    And Bush still doesn’t even see it coming. Absolutely astonishing. Even I, who constantly rail about the incompetence of this administration, am dazzled by the breathtaking stupidity of everyone involved with yet another losing policy initiative.

    They never, ever seem to learn, and are surprised every single time when their ideas crash and burn like a meteor over the Pacific. It’s just beyond belief how willfully incompetent these people are.

  • Yeah, too bad the press will give him credit for having a plan, and repeat the talking points and the Dems willl never boil it down as effectively as you or Ezra.

    Too negative? Pessimistic? I’m waiting for the Dems to stop taking pitches. Swing away goddamit.

  • “Overinsured”?

    I’m sure that this will make the GOP’s insurance lobbyist overlords r-e-a-l happy.

    Don’t worry, Mr. Furious, the corporate-owned media will drag this plan through so many mudpits and barbed wire that its own mother wouldn’t recognize it after the media gasbags get done with it.

  • Hmmmn.

    To figure out what works best, we need information about what works best. There are things that sound rational in discussion, and may be correct, but we’re still better off if we can add actual examples or case studies, statistics, polls, historical analysis.

    One of the easiest ways to apply such a thing is to simply look at what the Republicans have been up to which first culminated in the election of Reagan and Gingrich’s Congress, and which has continued with their virtual lock on running our government, despite the election of a moderate Democrat (Clinton) and their partial takedown of him, during the ’90s.

    Conventional political wisdom also says that Bush should never have won with the economy down and an unpopular war, and yet he did. These Republicans have done an amazing job at marketing their product. How?

    Sometimes it’s useful to apply substitution techniques. Imagine that Reagan and Gingrich, et al, were actually people with a liberal agenda — how would they have marketed that?

    I’m asking more questions than I’m answering. Offhand, without my having done much research, I would say that members of their party formed a bond with each other — a sense of team spirit —- no doubt solidified by having each others’ back. That they enlisted people not only in politics, but in business and the media and the social institutions of our society. That driven with a sense of zeal and mission. That these energized people didn’t just carefully pick their targets, but picked on everything of the opposition. The way they picked on everything, however, was to emphasize just a few slogans or points at each of these opportunities, whether or not the slogan entirely applied or whether or not their accusation was particularly accurate at any given moment. Tax and Spend Democrats was one of those slogans. Democrats are the party of Big Government, helping those welfare cheaters and helping criminals get off scott free. Democrats don’t believe in the values of church-going members of our society, because they hate prayer in school, they like gays, they’re pro-abortion, and they want to raise your taxes. They’re the anti-war protesters who disrupted everything in the 60s, causing riots, promoting gangs, burning flags, and wanting to dismantle our defense, so that other countries could push us around. They’re anti-business and want to put so much money in the hands of unions that the US can’t be competitive any more. Instead of being the powerful nation that we have been, the Democrats want to turn us into a weak country pushed around by all of the others.

    That’s the message they have been selling for the last 20 or 30 years. In my opinion, the Democrats would do well to test out a variety of messages through pollsters to learn which of them strike a cord with the majority of Americans and which don’t. It’s no good to craft a message that will only appeal to the far left, as Kucinich’s people did in the last campaign. We’ve got ample material for that message. Armed with that message, we need to build within the politicians, members of the media, business, and churches a sense of dedication and purpose and zeal and cameraderie, with functions that are satisfying to the people involved and give them a sense of belonging to a club and motivate them to act for that club. I think we can do all of that without the kinds of lies and distortions and controlling the media to prevent non-partisan coverage, the way that the opposition has done. I think we can do it fairly, yet rigorously, and as a result give Americans the better government that we need.

    But there are ways to go about these things, and those involve doing the research and then putting that research into action. I think we’re getting somewhat smarter about this, but still have a long way to go.

  • The deconstruction of the HSA’s rings familiar in my ears. Replace HSA with School Voucher and there you go. More Choice, more responsive schools, more flexibility. I do not see voucher programs thriving across the country, The Dem argument in that debate should be used in this one. It was made a couple of times in the analysis above. All voucher and HSA’s do is concentrate the sick/dumb and allow the rich/smart to find better places to go. Let’s not fix the problems with schools or with healthcare. Let’s just allow people who can afford it to get out of a bad situation.

    Market forces are powerful and have applications. Healthcare should not be a tthe whim of the market. On the other side of the coin, oil prices (see Exxon record profits story) is exactly the kind of area where market forces should be applied. High gas prices should equal reduced consumption and a searxh for alternatives. Instead the free market republicans feel they should subsidise oil companies.

    The only group more ridiculous than Republicans in the government are the Republicans who put them there. I can’t wait to see this one crash and burn.

  • I’ll be short, snarky and to the point. Do suppose Dick Cheney would say that his problem was being overinsured? After multiple heart procedures I wouldn’t think so.

  • We need point people (“attack dogs”, even) for each issue. That lets the party as a whole focus on a manageable number of issues, but we still keep all the issues in play. There is a cumulative benefit, albeit in a negative sense, to coming at them from all sides (what? yet another area the Republicans have fucked up?).

  • “I don’t care how many issues are on the front burner right now — if Dems don’t hit this hanging curve over the fence, they don’t deserve to be in the majority.”

    You hit that one out of the park, CB.

    Having once been an executive and chief actuary
    for a national life and health insurer, I can tell you
    with some degree of authority that this wretched
    plan of Bush’s is the most cynical response to
    a national crisis that humankind could possibly
    come up with. It is an abomination. My face is
    purple with rage over what these bastards are
    willing to do to further their ideological madness.

    I can’t even express my outrage over this one.

  • This is basically another gift skewed heavily toward the well to do. I have one of these….why? Because Im self employeed and it was available with the insurance I buy. I can tell you from direct experience that the goals they purport that this type of savings account would help attain are complete PR BS. Here is how it works :

    I put money (up to about $2000) into an account that grows around 2% a year. When I have medical bills to pay, I get some amount of discount from my insurance, but then the rest of the bill is paid by me, up to my high deductible, which is inescapable if you want one of these accounts. The deductible is typically about $2000 as well, but there is some choice – the higher deductible, the lower the premium. Anyway…now that I have the account, making a pittance of earnings, you may ask why I keep it when I could invest that money. Well, the reason I keep it, is that I get to deduct the contribution on my taxes, and at my highest bracket, the deduction is pretty good, so that means, of the money I spend on my deductible, which for a healthy person, you never reach, Im paying essentially with pre-tax dollars. Now, ok, let’s see, I have a graduate degree education in economics and finance, and I can kind of estimate that this works for me in term of saving me money. But why in the world would it change the decisions I make about how much medical care to get? Im sick, I go to the doctor. The doctor says here is what’s wrong. Does this account somehow make me any wiser about the medical care I need? Of course not. In the many years I had employer insurance, vs the two years of HSA, there is no differnence at all. I get the care I need to stay healthy. In the end, am I paying more or less for that care? Well, that depends on so many things, that its very hard to actually figure it out. So, while this seems to work for me financially, it doesnt change how I view medicine one bit. Its just a tax break for me, and I get the same care at the same cost of service. Ive never thought once, hmmm, I dotn know if I should go to the doctor, or I dont know if I should take that medicine or have that surgery, because my high deductible means I might pay mroe out of pocket, but pay it with tax free dollars that are earning interest. This policy is so laughably stupid as a fix to the health care problem that it makes me almost need a trip to the frickin doctor for hysteria. But the thing that is really f-ed up about it, is that for the 45 million uninsured, it makes no difference at all. And for the many many others who are barely insured, or living on tight budgets, do you think they have $2000 laying around to put into an account earning 2%? Give me a break. The dems should bitchslap this policy into next week. It sickens me, really.

  • I guess the thing is, we don’t want to have a different singular reply for each of the wrongs. We need to see the patterns that exist in the wrongs, so that we can answer a slew of wrongs with the same response, to pound home a message. If, for instance, in response to Brown’s performance on Katrina, we say “The Bush Administration was really bad about responding to Katrina,” we’re just following around, muttering in their tracks, without putting a message out. The Administration only has to say we’ve fixed that, and there’s nothing left to say. But if we say, “Republicans are the party of cronyism of incompetence,” and everytime we see an example of it, we shout that loud and clear and ask the question, when will Americans vote again for someone they can trust to do what’s right for America, instead of what’s good for their political pals — well, that’s the path to success.

  • and of course, I neglected to mention, that since the primary savings here is through tax avoidance, the benefits accrue disproportionately to anyone with income that falls into the higher tax rates at the upper income brackets. I cant think of a more cynical approach to a backdoor taxcut disguised as help for a growing national disaster. Excuse me while I wretch…

  • Anyone consider that this topic is a ruse? That Bush will spend the time on national security and terrorism and a nuclear Iran or some such crap, and the Dems will be left, mouths agape, sputtering about health insurance…?

    Just wondering…

  • Its not a ruse, its just more awful policy, packaged to look like it might address one of the many situations in this country that have deteriorated under this administrations mismanagement. Another gem from Turdblossom, the master of policy mishaps.

  • No Dem should talk about this issue without calling Bush’s plan the “Just Don’t Get Sick Plan.”

  • Here come the sick, the weak, the poor, the disenfranchised …. third world ghettos of unmet need that will blossom in New Orleans style all across our land. Brownie, get ready because Bush has another heck of a job assignment for you… the perfect HSA administrator.

  • I take issue with the underlying “Ownership Society” meme. In response, we should insert this into speeches:

    “The Republicans will tell you how this promotes an ‘Ownership Society,’ and how great an “Ownership Society’ is — and every time you hear it, understand that what they want to own is you. They want to own your government in the sense that it is bought and paid for. They want to own your secrets, your privacy, your health, your ability to retire all to do with as they please. That may be to enrich Jack Abramoffs clients, or let Halliburton waste money in Iraq. That may be to listen to your phone calls to see if you dare to voice a contrary opinion. That may be to convert your money into tax breaks for Ken Lay and Enron. Or it may be to protect big drug companies and HMOs from having to spend any money to keep you well. Ownership isn’t so great when it is you that is being owned. Ownership Society meanrly means George Bush and corrupt officials like Tom Delay own the society. You should see through this and oppose it every time you hear those words.”

  • There is a Democratic Party platform, and it addresses health care as well as many othe rissues. It’s not a greatly progressive document, and the current edition avoids many tough issues–like Iraq. But the point is that Dems DO have a vision. The difference between the parties is that the GOP behaves as if it exists to promote its platform, with W playing the willing tool of the ideacrats, whereas the Dem Party behaves as if it exists to promote its candidate, with the platform treated as window dressing. Maybe Chairman Dean should put together a bommunications team to actually promote major platform points, including education, healthcare, international relations. It’s all there.

  • To me, the real issue that needs addressing is the high cost of insurance that has for me been increasing at a steady annual rate of about 17%. Without getting out my daughter’s high school math book, I think this means that my premiums are doubling about every 4 years.

    Now, say you are self employed, middle class, and married with two kids. You start out with a private health policy about 10 years ago and you are paying about $2000 per year in premiums with a $2000 deductible. Pretty soon your premium rises to $4000, so you increase your deductible to $5000. That helped for a couple years but the premium cost catches up again so you increase your deductible to $10,000. And pretty soon your premium is closing in on $10,000 per year. You are caught in a trap. Then your insurance company offers a new HSA high deductible plan and you have a chance to lower your premiums by about $7500 per year. You gonna sit on your ass and pass that up because your moral compass says it sucks? Of course it does. I did apply for a new HSA plan and was damned lucky to be accepted without any exclusionary waivers written into the policy.

    Look, the real issue here is the high cost of insurance as reflective of the high costs of medical care. The self employed have been in this trap for at least 10 years. The HSAs will provide us some temporary relief but will not do much to improve the big picture. In fact they may hurt by increasing the cost of coverage for those left in the older plans. This may create more uninsured for the rest of us to carry through higher costs of insurance, medical care and taxes. Any tax savings I might gain from the HSA is tiny compared with the costs of my self employment tax.

    I am being forced to ask more about the cost of treatments or doctor’s visits before I make an appointment. I have been quite surprised that the cost of some care can be outlandish and far exceeding the value of the treatment to me. So, there may in fact be some self rationing of care involved. But who is smart enough to ferret out the good from the bad, the necessary from the unnecessary? Those with the best access to the information they need will be those who will already be in the best shape to pay for whatever care they need.

  • Your comment of too many balls in the air is correct. But until the incompetence of this administration is repeated enough, it will not stick with the public.

    The democrats need to get their talking points in order and focus on getting a cohesive message out to the American people. REPETITION has been an extremely effective strategy used by the right wing machine. Every time the MSM asks a question to a Democratic representative, senator, aide or whomever; the response should be FRAMED with consistent talking points: [if they can’t memorize it they should put it on a card and carry it around with them]

    Whether the question is about the SOTU, HSA, the weather or who is going to win the super bowl, the answer should be framed with talking points. (For example)

    Preface:
    The President, through his own admission, led us into a pre-emptive war based on false intelligence; this President, on September 1st, said “No one anticipated the levies would break”, now we find out the White House was notified 36 hours before the storm that the levies would break and the handling of Hurricane Katrina has been a disaster; this President is responsible for a failed prescription drug program, one they said would cost $400 million but the true cost of over $600 million was hidden and this program is now denying needed drugs for our seniors; this President, as part of his transition team, had a lobbyist (who now turns out to be an admitted felon) over 200 logged entries into the White House and at the center in perhaps the largest influence peddling scandal ever, claim he doesn’t know him!! Look, if someone comes into your house 200 times, there is a good chance you might know him. And now you’re asking me why we would….could….. should…….don’t……..

    [answer question]

    Conclude:
    With the pure incompetence, incompetence that is inseparably linked with the secrecy of this administration: this administration has not earned the trust of the congress or the American people.

  • The comment of too many balls in the air caused me to think of a visual mosaic where on the left side you saw a beautiful protected earth, smiling happy, healthy children in well-funded schools, elderly who were calm and cared for… the other side you saw pollution, high piles of money behind hoarders, crime, starvation, homelessness, evangelicals carrying around hate signs… it seems like a no-brainer to a democrat who has their heart in the right place.

  • I just don’t get how placing more responsibility in the hands of individuals will create market pressure to hold down costs. Do I have some synapse missing that prevents me from get from a (responsibility in the hands of individuals) to b (hold down costs)?

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