Leader Blues

Wednesday, February 08, 2006

SATURDAY EDITORIAL >> Changing the subject

Perhaps it is just as well that President Bush did not deliver on the White House promise that his State of the Union address would unveil major new initiatives to deal with the burgeoning crisis in health care. They were to be the same initiatives that he had proposed in past years, but they were to be the centerpiece of his address, the same heavy emphasis that he gave Social Security privatization in 2005.

He spent less than three minutes on the subject. No doubt he concluded that people need not be reminded of the Social Security blunder or the more recent one in health care, the Medicare prescription drug program. The Arkansas state government as of early this week had shelled out more than $3 million to cover for the federal governmentís ineptitude in that farce and the tab keeps rising.

So the president changed the subject to the energy crisis ó the cannibalistic rise in gasoline prices. He wanted to end the nationís dependence on imported oil, although, like those on health care, his proposals would do nothing to achieve that worthy goal.

Either emphasis, were it real, would be good news for Arkansans, who bear a heavier burden on both counts than almost anyone in the United States.

A higher percentage of Arkansans have no or inadequate health insurance than people in almost every state and, owing to our rural commuting habits, we consume more motor fuel on average than people in nearly every state.

But let us at least consider the presidentís oh-so-brief pitch for health-care improvements. He wanted to address the major problems, the diminishing medical coverage of people and rising medical costs.

Philosophically, the presidential and Republican solution to both problems is simple. Force people to bear more of the costs of their medical care, which will in turn force them to be more careful about going to the doctor or the hospital every time they feel a little lousy. It also would force people to shop around when they feel bad to see which doctor or pharmacist will give them the cheapest care.

In theory, people would go to the doctor rather than the hospital emergency room and save money. This consumer shopping would wring costs out of the medical system by introducing greater competitiveness into the medical marketplace ó or so this theory goes.

You can picture how it will work. You have severe chest pains. You call around among the cardiologists in the community to see how much they would charge to fix whatever is wrong with you. You can imagine their answer.

Anyway, you decide that itís likely to be too steep for your budget, so you live with it.

The mechanism for achieving this reform would be expanded tax-free medical savings accounts. You would subscribe to a commercial insurance policy with a very high deductible, which would be very cheap and invest money every month in the medical savings account, which you would use to cover your ordinary medical expenses. The money you put into the savings account, which would be like a 401k, would not be taxed.

Medical savings accounts are available now, but the response to them has been underwhelming. Arkansas state employees, who were offered them last year, spurned them, and that has been pretty much the situation nationwide.

The low-cost policies may be appealing to the young, healthy and well-to-do (not to mention banks, which can collect management fees on the burgeoning accounts). They would have some coverage for catastrophic illnesses, but meantime their incomes would be high enough to handle the normal medical expenses.

But medical savings accounts are primarily a tax shelter for those who can use them. That is not most of us.
President Bushís great failing is that he assumes that nearly all Americans are just like him and his friends.

Most working families will find it awfully hard to save money for the tax-free accounts every month and to accumulate assets in them.

But the Bush plan would not be merely neutral with them. It would increase their burden if more of the healthy and younger among us opt out of regular insurance programs for the high-deductible, savings-accounts plans.

Traditional plans will be left with only people who are older and more prone to sickness, and the premiums will go much higher.

That will drive more and more employers to shed employment-based insurance altogether or to shift more of the costs to workers. Comprehensive coverage for workers and their families will be harder and harder to obtain.

Perhaps the presidentís decision at the last minute to de-emphasize his partyís health nostrums means that he realizes that they would make the life-and-death struggle for good medical attention worse for most Americans.
We can hope.