Tag Archives: hdhp

Can Covering Preventative Healthcare Services WASTE Money?

As I study and think about the healthcare issue, I’ve had this feeling that one thing simply could not be right.  Proponents of Obamacare have argued, and many Americans seem convinced, that preventative medicine, those checkups, tests and procedures designed to find something wrong can save money by nipping problems in the bud, saving tons of money down the road after a situation has become more serious.  This thinking is so strong that even in high deductible health plans preventative services often do not conform to the deductible and are covered in full or part on a first dollar basis to encourage their use to save others lots of money and reduce premium costs in the long run.  Is this actually a fact or more fallacious nanny state thinking?

Let’s say a checkup does find something wrong, even in someone with no symptoms at the time.  Then what?  When available, treatments would be applied, medications or even surgery would be administered to address the issue.  Yet these treatments themselves are often very expensive and that cost must be spread across all insured.  Whereas, had the condition not been discovered early, by the time the patient experiences symptoms treatment may no longer be an option and expensive end of life treatments may be incurred followed by an early death.  Yet even in this situation, treatments (expenses) that could have prolonged life have not been incurred, and while expensive end of life treatment did occur, it occurs for everyone not experiencing a sudden death sooner or later.  Then too, at the moment of death (which none of us will escape), medical expenses for that individual immediately drop to zero forever.  This all makes avoiding preventative care seem like it could be the cheaper, if even fatal, option.

None of this is to suggest that we do anything to discourage preventative care either, as there isn’t much argument that such steps and discoveries can prolong life, even if at great expense over time.  The point, it seems to me, is that in a society that subscribes to individual liberty what business is it of mine what the next person decides is the right approach for them, especially if it turns out that encouraging greater use of preventative care does not in reality save money as is so often claimed.

Another consideration is that preventative services are at the lower end of what is affordable and as such should never be included in insurance at all.  Doing so defies the purpose of insurance to begin with, that being limiting the risk of encountering the otherwise unaffordable.  Additionally, in a truly free market, with prices mutually agreed by the provider and consumer, preventative services would be the most likely to be heavily discounted as they are gateway transactions.  Any discovery that would require further intervention would often take place at the point of the exam.  This has not been lost on Pep Boys or recently Meineke when they advertise they will diagnose that check engine light in your car for FREE!  Of course in our convoluted system any physician who accepts Medicare or Medicaid would be committing fraud for extending such an offer.

This then leads to the question of what about the poor who want preventative care but may not be able to afford it on their own.  Even here allowing market forces to work is a preferable approach.  Funding Health Savings Accounts to provide for normal health related expenses and allowing participants to eventually keep funds not used encourages wise spending and respects the poor’s discretion and dignity in making their own choices.

Of course the no cost preventative care of eating a balanced diet and exercising regularly is probably the most effective approach in reducing costs aside from direct payment and is not dependent at all on economic status or situation.  Yet here again respect for the liberty of others precludes requirements to exercise or eat a certain diet.  It is simply, although wise, not the business of others in a free society respectful of liberty.

Now you may and should ask if there exist any studies to support my thoughts presented here.  A Google search “does preventative medicine save money” says “yes”.  In fact there are so many sources in agreement that I will simply challenge you to do the search for yourself.  I’ll only note that sources include the New England Journal of Medicine, the Wall Street Journal, and ABC News among others.

The Unspoken Barrier to Real Healthcare/Insurance Reform

I often say “I blame conservatives for Obamacare” or even write it on signs to provoke discussion.  Oh, it is not anything I’ve ever seen conservatives do.  This is purely an act of omission that is part of a much greater deception that has befallen perhaps three-quarters of our population.  There are two things that reveal the depth of the deception and provide the basis for the direction of my thoughts.

First, in the debate prior to Obamacare, one lame conservative rebuttal went like this: “Surveys show that >80% of Americans like the Healthcare they have!”.  In the first place they really meant Insurance.  This was repeated over and over, and was a major red flag of misunderstanding.  Second is the fact that adoption of High Deductible Health Plans with Health Savings Accounts remains only a small portion of the market share (<10%) after 9 years of availability, being another sign that the issue is poorly understood.

So just what is this deception or misunderstanding?  Quite simply we have embraced a product and approach that encourages massive overuse and benefits no one greater than whoever sold it to you.  Any attempt to “insure” the everyday, the expected , or that within the ability to pay otherwise is a fool’s game that always does insure one thing, that the incentivized overuse of others will be in your premium.  That most young people face a greater unexpected risk to their finances by a major car repair than health issues still does not make the purchase of recent attempts to sell car repair insurance a good idea for most who buy it.  Yet Obamacare seeks to build on this fallacious and flawed approach,  aided immensely by the many who’ve already bought into it by accepting low deductible, cover everything, third-party prepayment schemes and calling it insurance.

To this day the gold standard of research, a brilliant piece written in 1994 is as relevant today as it was then.  CATO Policy Analysis No 211 Why Healthcare Costs Too Much by Stan Liebowitz examines the effects of what happens when we create the illusion of free or almost free with low or non-existent deductibles or small copay amounts.  His study put a staggering estimate on the cost of the overuse this causes.  The amount was $300 billion in overuse plus $33 billion in associated administrative costs, for a whopping total of 1/3 of a Trillion Dollars in 1994!  Notably Liebowitz suggested as a remedy the greater use of high deductible insurance and health savings accounts.   In the time since 1994, into this toxic soup has been stirred more and more state mandated coverages providing even more opportunities to overuse.  Some of these are as silly as marriage counseling or massage therapy, things that should be questioned as whether they are healthcare at all, yet they are in our policies and premiums with billing codes to support them and schools to train the billing coders.  Where does it stop?

Conservatives need to recognize the powerful truths that have been hiding in plain sight and promote the simple solutions that are at our feet.  In addition to the Liebowitz study and others we have the results of a real world example in the state of Indiana that gets too little mention.  By only offering a choice to their 30,000 state employees and then getting behind it with education, Governor Mitch Daniels in his March 1 2010 op-ed in the Wall Street Journal revealed the results of getting >70% of their state employees to elect a high deductible health plan by their choice.  He said that Indiana in 2010 would save at least $20 million as satisfaction was high with only 3% switching back to the traditional PPO plan after having discovered the high deductible approach.

The times when Obama did provide an opening by saying he wanted to see better plans if they were out there, the ammunition was at hand.  Somehow we got caught up in their argument and never went full-bore into what does work and why it works.  It is no more difficult than the restoration of a functioning free market that comes from increasing direct payment and limiting third-party payment to its rightful place in the shadows of absolute necessity.  The low deductible cover almost everything approach is an expensive false comfort accepted by too many and why this illusion stands as a barrier to meaningful reform.  Folks do not like to admit how wrong they have been.  By peeling away politics and legalities and emotion and lately religion, and getting to basic choices on the Smart vs. Stupid Scale, based on facts and then the constant promotion of these truths, real reform may yet be achieved.  The role of education should be obvious.  Let’s get on with it.

Note: This post shared to WatchdogWire-Pennsylvania