AFAIK, there are 3 known routes to keeping health care costs down;
- Euro-style government-managed health-care with rationing. Britain, Canada, France. government provides payment for services. Market mechanisms work. Government decides what care happens. 9-12% GDP on Health care...and growing at the same rates as US systems.
- Kaiser-Permanente style HMO+Hospital coop. You pay insurance, coop pays doctors based on results, rather than procdures. Provider incentives to be efficient. Germany seems to spend ~8% on Health Care, and also still growing.
- Singapore-style Health Savings Accounts. Individuals put aside pre-tax money into HSA...+ Catastrophic insurance. Individuals spend from HSA as needed on health care, and if bills > 20% annual income, insurance kicks in. Massive consumer-side cost-pressures. 4% GDP on health care, and not growing.
I am, as we all know, a BIG fan of Singapore's HSA-style system. I can tolerate the KP-style approach, though it reduces consumer choice. And I personally HATE #1, where the government decides what treatment you get. What I want to know is why we're using system 4?
- Government gives tax breaks to encourage employers to hide the true costs of health spending from employees.
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Why not just a more simple solution? Buff everyone's personal exemption by 6k or so and make health insurance fully taxable. Adjust the deduction for medical expenses exceeding a reasonable fraction of your income. Focus your laws on making health care costs transparent. Decide as a culture what sorts of 'bad luck' medical conditions we're going to subsidize, and for who, and do it with honest welfare transfer payments rather than trying to foist it off on insurance companies (and therefore to those of us who pay the premiums). Let insurance actually be...well, insurance.
Why is the US system so crazy?
Two words: Path dependence.
Same as social security. If it had just been started as a pension, rather than a pretend insurance, you would have far less trouble.
eg. Many countries have introduced means tests and asset tests on old age pensions. Because it's a pension, not insurance. The NAME makes that much difference.
Tell me everything you know about HRAs. Not HSAs, HRAs.
We have this option at my new job, and don't know what to make of it. (I know to jump on an HSA)
Mark
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