The Health Savings Abomination

So here's an idea being touted, the Health Savings Account. People take money, earmark it for health care, and it becomes tax deductible. By some unknown method, this is supposed to help the rates of Medicare/Medicaid spending and health care in general.

It will do nothing of the sort.

Let's start with who is going to create these. Creating such an account in the first place means it is not created by people who live paycheck to paycheck, so that immediately rules out the poor, and likely just about anyone living below median income (roughly $47,000). They simply don't have the money, and if they get it, they're more likely to go the health insurance route. By definition, this 100% rules out every person on Medicaid. People on Medicaid don't have the money to spend on insurance, but they're expected to carry one of these?

The second group that won't be creating these are the already retired elderly. Their "income" is coming from Social Security and if they're lucky a pension plan, and the interest on what saings they might have. Again, no money to do this.

Who is able to do this? People who have insurance already and have means. In other wods, it is yet another plan to keep the money in the hands of people who have it. Now I understand that sentiment, I worked for that money, it's mine. Unfortunately, there's a fly in the health care ointment, two of them actually.

The first fly in the ointment is the current insurance system. Roughly one in six people in this country does not have health insurance. BY law, hospitals can't turn those people away for emergency care, but because they don't have insurance the ONLY care they get is emergency. Suddenly, those medical bills are getting handed off to Medicaid, which pays at a fraction of the charge, or to someone who ends up declaring bankruptcy (remember that little screw up? The vast majority of the old bankruptcies were caused by medical bills). Either way, the hospitals and doctors aren't getting paid, so they bump up their rates, charging people who have insurance more. Effectively, they're using a rate bump to subsidize the people who can't pay.

Now is where a problem starts. The hospitals charge more, the insurance companies pay more, and they pass that cost over to their customers, driving the insurance rates higher, which means fewer people can afford health insurance, meaning the hospitals raise rates again, more people lose insurance, and welcome to vicious circle #1.

It's not people suing doctors and hospitals that are driving medical costs, it the vicious cycle of insurance.

On top of that is a second leg driving the costs up, and it's big pharma. Every time someone screams about controlling the skyrocketing costs of drugs, big pharma screams back that they need the money for R&D. What they aren't telling you is their advertising budgets are TEN TIMES their R&D budgets. What they also aren't telling you is the primary driving force behind R&D is expiring patents making pharma go back in the lab becasue their cash cow just went generic.

The "Heath Savings Accounts" address neither of those problems, and in fact are a guaranteed loser. The rise in medical costs has gone up far faster than any return on investment, meaning if you drop 10K in one, and three years down the road you actually need to use that piggy bank, after adjusting for both the return and the inflation of medical costs, it will be worth LESS than when you put it in!

This is a boondoggle and a disaster. If you want to address the actual problem you need to either change how big pharma operates or go to universal health care, or ideally, both. What would I do? First, universal health care. Eliminate the problem of unpaid medical bills and the "spoilage" stops. Blue Cross Blue Shield might not like it, but it NEEDS to be done.

We have the most expensive medical system in the entire western world, by a wide margin, and it is also the worst, with infant mortality rates the worst among the "first world" countries. That needs to end. If that means a Canadian system or a British one, or a Swedish one, it needs to happen.

The second thing that needs to be done, prescription drug ads need to be limited to the medical journals. A six page spread for some drug in Time, or a Levitra spot in the Super Bowl costs, and costs a LOT. If pharma spent half as much on R&D as they did on ads, we probably wouldn't be anywhere near where we are now.

The current system is broken beyond repair and will only continue to get worse until it implodes. It needs to be scrapped completely.