Monday, January 23, 2006

HSAs: Horrible, Stupid, Asinine

So, the word is out that King George will be focusing part of his SOTU speech on HSAs, or "health savings accounts." If you're like me, just the fact that Dubya likes them may be enough to put you right off them, but if you prefer a more knowledge-based response, you can't do better than Ezra's piece over at TAPPED. Really, truly, do go read the whole thing, but here's a sampling:

The idea here is simple. 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.

Kevin's got some good stuff on this topic, as well. Don't be fooled: if this idea takes off, it's gonna get real personal, real fast. Staying informed will be the best way to fight back!