Saturday healthcare blogging pt. 2
Now compare this to Singapore-style Health Savings Accounts. Let’s say you have 10% of your income deducted from your paycheck and that goes into your HSA (or “Medisave” account), and another 5% deducted as a health tax. This is a flat rate, and the numbers are purely hypothetical. You are responsible for your health care costs up to the amount you contribute to your HSA. So if you make $50,000 you have a cap of $5,000 and you decide where those dollars go, and if you don’t spend them you get them back with your tax return or can choose to redirect them tax-free into a personal retirement account. Maybe you don’t get them all back so that you are sure to spend a minimum on preventative care, but you get most of them. This incentivizes you to not overspend on health care. And unlike a mandated purchase of health insurance, it allows you to spend the dollars you save on cheeseburgers and travel if you so desire.
Indeed, it takes the insurance company out of the picture altogether, allowing consumers a direct line to their health care choices. (Case in point, we just had some semi-elective medical expenses and we had no idea at the time how much they would cost. The bill that we got after insurance was a lot more than we expected, and if we’d been aware of that cost, we probably would have put it off for a couple years. But health care consumers are rarely aware of the cost.)
Above that cap a single-payer system kicks in for necessary procedures and coverage, as well as catastrophic coverage. This means that for healthy people they might only spend the minimum for preventative care. For sick people or those who face accidents, etc. there is fairly sensible cap to their expenses. They aren’t bankrupt. This blends two philosophies – the libertarian idea that we will spend less if we understand the costs, and the highly touted HSA’s that make this happen, along with a very progressive payment system. If you make $500,000 a year, you’re responsible for your first $50,000 in health care spending and you contribute significantly more to the health tax than someone making $20,000 a year.
For elective procedures like face-lifts and such, you’d obviously be on the hook. But if you got cancer or some other high-tab medical problem, you’d be okay.
And best of all, this sort of system contains costs. People are loathe to spend money on health care that they could spend on big screen TV’s. So they do their best to stay healthy and not have to spend their own dollars. This means that the single-payer side of all of this only kicks in when it’s needed, and for the poorest among us. This contains costs much better than when people rely on abstractions like insurance. And if you have to spend some of your contribution, you may as well spend it, and that’s going to be on preventative care and check ups. This is the key difference between other single-payer models, which allow people to use as much of the system’s resources as possible, effectively forcing government rationing when self-rationing works so much better.