New Year for Choosing a Health Plan
By Scott Holleran
January 10, 2005
For many
workers, the new year initiates a process called open
enrollment—when many employees designate a health plan through their
employer—that’s as comprehensible as the tax code. During the annual
cattle call, employees are pummeled with bureaucratic jargon about
co-pays, deductibles, and out-of-pocket maximums.
Though some
employers have discovered a relatively simple alternative that’s far
superior, open enrollment in a health plan gets more confusing—and,
for everyone, more expensive—each year. Understanding why requires a
basic grasp of health policy history.
The
widespread bureaucratization of medicine was developed during the
20th century, when the government began to intervene in the medical
profession with a range of regulations. From changing the tax code
to punish individuals buying their own health insurance to
socialized medicine for those persons over age 65 and an employer
mandate to offer something called an HMO, the concept of force is at
the core of today's health financing system.
The
individual was first discouraged from buying insurance in 1942 when
employee health premiums were made tax deductible to employers—not
to individuals. Congress created Medicare in 1965, making individual
insurance for those over 65 obsolete. Subsidized, unrestricted
health care for seniors lead to a frenzy of spending by patients and
doctors.
Predictably,
as costs went up, those on the left, including then freshman Sen.
Ted Kennedy, insisted that government pay for everyone’s health
care; they promoted the idea of a health maintenance organization, a
term coined by a left-wing college professor.
President
Nixon appeased the left and proposed the HMO Act, which Congress
passed in 1973. The law created new, supposedly cheaper health
coverage with millions of dollars to HMOs, which, until then,
constituted a small portion of the market. Combined with Medicare,
the HMO Act eventually eliminated affordable individual health
insurance.
Employers,
forced to offer HMOs, stopped offering a choice of plans, making
real insurance more expensive for the individual. The government had
instituted HMOs—and their cousin, PPOs, which were also instituted
by the state—at the insistence of the left and the capitulation of
conservatives.
The result
was quasi-socialized medicine and, as with every compromise of
capitalism and socialism, capitalism was blamed for the resulting
disaster. Advocates of socialism, such as Sen. Kennedy, merely
became opponents of the monstrous hybrid they had concocted.
Since Nixon’s
and Kennedy’s HMO Act was passed, the individual has become a
prisoner. Covered by an employer and herded into managed care, the
individual is powerless. Under managed care, the patient wanders the
maze of managed care, awaiting treatment approval, hoping not to be
refused or delayed treatment.
It’s money
for practically nothing. Premiums deducted from a paycheck for a
managed care plan do not pay for medical treatment decided
essentially between patient and doctor, adjudicated by insurance
companies using objective standards; premiums pay for the management
of care, i.e., health maintenance, by a third party.
Unrestricted
free choice in medicine—insurance chosen, provided and paid for by
the individual—has practically vanished. But a new concept in paying
for medicine, the Health Savings Account (HSA), offers the first
real opportunity in generations.
Combined with
catastrophic insurance, the Health Savings Account offers a choice
to purchase health care as an individual—neither through an employer
nor through government. Using money from the HSA, which, unlike a
401(k), the employee owns, the patient can pay out of pocket for
health costs or leave the money alone to earn interest.
Once the
HSA-compatible health plan’s deductible is reached, the insurance
policy kicks in, typically with free choice of doctors and
hospitals, though HSA plans vary. Imagine medicine without networks,
percentages, thresholds, co-pays, generics and pre-authorization
from a nurse practitioner at a phone bank in Idaho—that’s the best
of the Health Savings Account plans: free choice of treatment, 100
percent of costs above the deductible, real, name-brand drugs and
less restrictions on medicine, that plus tax-deductible
contributions which earn as much as four percent interest.
The notion of
a tax-advantaged savings account to which the employer and the
employee may contribute is a knockout punch to higher health costs
for lower quality care. It beats the bureaucratic open HMO/PPO
enrollment in which embattled employers bear the burden of higher
premiums while their employees suffer under arbitrary restrictions.
The lack of a
market in individual health insurance, not a lack of regulations,
led to today’s open enrollment mess. A better health plan, such as a
Health Savings Account policy, preserves the right to choose—and pay
for—one’s own health care. It is becoming an option at last and, for
many workers and the businesses that employ them, the faster, the
better.
Scott Holleran is a freelance writer in California.
Copyright © 2005 Americans for Free Choice in Medicine. All rights reserved.
For reprint permission, contact AFCM.
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