Health Savings Accounts (HSAs) Making Progress

Two recent studies conducted by CIGNA and HealthPartners, a Minnesota-based health plan, show that people with Consumer Directed Health Plans (CDHPs) – the kind that are coupled with an HSA or HRA, paid about 4% less in medical expenses than those with traditional HMOs and PPOs.  Additionally, CIGNA showed that overall medical costs in the first year a patient switched were 12% less.  This is encouraging: it is significant progress and proof-of-concept for the consumer driven health care movement.

Consumer-driven health care presupposes that individual consumers will be better at managing their own non-catastrophic risk than a large insurer.  Giving someone economic incentives (say, tax benefits) to manage their first $2,500 of health care risk, encourages them to take an active role in preventative medicine.  Put another way, they participate and manage their own wellness, instead of having to seek treatment for chronic disease they’ve gotten from years of neglecting their own wellness.  Type-II Diabetes comes to mind.

These studies show that people are more engaged in managing their health…and that’s a great thing.

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Selling Your Kidney???

A Wall Street Journal article today discusses the crusade of Dr. Arthur Matas, a Canadian-born transplant surgeon who is arguing that people should be able to sell a kidney to someone who needs it, in a government-regulated market. The ethical implications of commoditising human organs are very complex, and there are arguments on both sides. However, the arguments in favor of trying it seem to outweigh the arguments against it. I encourage you to read the article and other blog postings on the subject. Here’s a brief summary of some of the arguments:

Pro:

(1) Demand far outweighs supply: there are 70,000 people on a kidney waiting list and less than 20,000 donors. Last year 4,400 people died on the now 6-year waiting list (increasing daily) for a kidney. If a trial period increased the number of people receiving kidneys – it would save lives, plain and simple.

(2) Kidney sales are common in some developing countries, where screening processes are substandard. Desperate people might be forced to seek transplantation someplace else. This is the old, “we can’t stop it from happening” argument.

(3) There are already monetary incentives in place, including tax credits, for kidney donors. The differences between a tax credit and flat-out monetary compensation, are, in a word, “none.”

(4) There is evidence to suggest that it would save money in the health care system. The cost of dialysis and treatments for diabetes outweigh those associated with donors managing one kidney…even after being paid sum of, say, $95,000. Dr. Matas has published a paper in the American Journal of Transplantation that outlines these findings.

(5) The philosophical argument that it is immoral to put a price on human tissue is out the window. It is legal to sell one’s sperm and eggs.

(6) Not really a logical argument, but if you had a family member that needed a kidney, and neither you nor your family qualified as donors, you would probably support the idea.

Con:

(1) The poor and disenfranchised would over-represent donors, and the possibility of exploitation would be eminent. Put plainly, unscrupulous brokers could trick people into selling an organ when it is against their best interest.

(2) It seems immoral for someone to be able to buy life-expectancy from another person.

(3) Making a market in kidneys might turn altruistic donors into “vendors”…meaning the psychology of donating an organ would change by making it a for-profit sale. This change in thinking might cause would-be donors to become would-be capitalists.

I’m sure I’ve left plenty of fantastic arguments out of this piece. Please enlighten me.

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Steve Case endorses consumer driven health…

Steve Case, co-founder and former CEO of America Online, has exited AOL and made his new passion consumer-directed health care.  Steve started a company called Revolution Health, and blogs regularly on the company’s site.

In a recent post entitled “Sicko,” referring to the Michael Moore documentary film, Steve outlines why consumer driven health care can help us as a country.  I recommending reading the post, which is pithy and short, but here’s a summary of his points:

(1) most (70-80%) of the multi-trillion dollar health care budget goes towards treating and managing chronic diseases brought on or exacerbated by lifestyle choices.

(2) telling people they should change their lifestyle choices (e.g. lose weight, stop smoking, etc.) doesn’t work.

(3) people must have the right incentives to change their behaviors.

(4) by encouraging people to get involved in their own health care, they will make more informed choices and put less financial burden on the government, their families, and themselves.

Steve sees a light-handed government and de-regulated health care administration industry as a way to spark innovation.  He cites the telephone industry as an example.  Back when the government controlled telecommunications, Bell System was pretty much the only phone company.  Phones were expensive and ugly…  When the system broke up in 1984 after de-regulation, there was a torrent of innovation that hasn’t slowed down in 23 years.  Today we have cheap, functional cell phones and PDAs.  If the government had done to telecommunications what it is doing to health care, we certainly wouldn’t have cell phones.  We’d probably be communicating fairly similarly to the way we did in 1984.

Now think about what could be done with medicine with a little more healthy competition…

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