Dear President Bush,
In January of 2005 you set the stage for one of your signature health care reforms. In a speech you said:
But health savings accounts all aim at empowering people to make decisions for themselves, owning their own health care plan, and at the same time, bringing some demand control into the cost of health care. Our view is, is that if you're a consumer of health care and you're in the marketplace making health care decisions, it is more likely that there be more cost control in health care than a system in which the consumer of health care has his or her health care bills paid by a third party provider.
Your February 2006 Economic Analysis chapter titled Incentives in Health Care cites “first dollar” health insurance as major driver of health care cost increases. A subsection titled “First Dollar Insurance Inhibits Consumer Cost Consciousness” begins on page 91. Seven pages detail the impact of this premium coverage.
The problem is “first dollar health insurance” is mostly a fiction perpetuated by your advisors. An economist should be embarrassed to have their name associated with your report. Page 92 says:
“Unlike most other types of insurance, health insurance in the United States often includes first dollar coverage of the cost of even routine, predictable services….Health insurance policies have this unusual first dollar coverage feature in large part because the tax code makes it cheaper for people to purchase health care indirectly through insurance than directly through out of pocket payments (refers to a box highlighting employer tax breaks for health insurance premiums).”
A recently released report from another governmental agency shows these comments about widespread “first dollar” health insurance to be untrue back in 2003. It analyzes out of pocket health care costs for both insurance coverage and health care services using 2003 data. It reveals 43% of people paid over $2,000 in out of pocket costs, while over 14% paid $5,000 or more for insurance and care.
The private group category includes most employer sponsored health plans. Within this segment over 55% paid $2,000 or more for care. The private non group category includes most self employed or individual policies. Over 77% of these folks had $2,000 or more in out of pocket costs. Over half, 54% in this segment paid over $5,000 in insurance and health care costs.
When AHRQ's analysts looked at 2003 -- the latest year for which MEPS data on this topic are currently available -- they found that nonelderly Americans with private, nongroup coverage were the most likely to have high family-level health-related spending, reflecting the high premiums and high deductibles common to such policies
It appears back in 2003 people had significant out of pocket health care costs. It also seems one segment already was accepting a greater portion of their health care costs via higher deductibles. This is a key part of the solution you market today
What are your thoughts about a 2006 economic analysis being eclipsed by data from 2003? Do you have any reactions to the market forces of insureds paying a greater portion of their care having been in place for 3 years now? How did premiums escalate so greatly the last few years with a fundamental market shift already in place? What does this portend as your strategies become more widely adopted? From here it looks like much greater out of pocket costs for all groups, except employers getting that 30-40% break by switching to high deductible health plans.
And why did you remove the link to your 2006 Economic Analysis from the White House Website? It used to be on the Economy page, but no more. If you did it because you are embarrassed about the health care section, I can understand why.
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