vol. XVII no. 1

				Health Care continued MORE, FOR LESS One of the current priorities in health care insurance is: consumers get the best health care at the lowest cost? There is a widespread feeling that we can get the same amount care at a lower price than we're currently paying," Custer notes. Some proposals advocate a privatized national health care delivery system. Others propose reducing the amount of health insurance carried by consumers, thereby giving them more financial stake in their own health and encouraging them to pursue less expensive care, when available. Another emerging solution is evidence-based medicine, which approaches disease from the most proven, cost-effective point of view. The health care system that everyone wants, of course, is one that costs little but offers lots of choice. But choice, Newman points out, comes at a price, The government and private industry are both searching for solutions to the conundrum. In December, President Bush signed a new Medicare act into law, significantly enhancing the Medicare program with new prescription drug and preventive benefits. Along with these benefits, the law allows people with high health care deductibles, regardless of age, to use pretax dollars to cover health care costs by contributing to a health savings account (HSA). Tad Ransopher, assistant professor of accountancy at the Robinson College, believes the law may have more effect on taxes than on health care. He offers two examples of how HSAs may impact taxpayers. In the first, a high-income, high-saver individual with a high-deductible insurance plan spends $5,000 on health care and receives a $2,000 tax break. If that person is in the 40 percent bracket, he reduces his taxes by $2,000, if this individual doesn't spend all of the money in the account each year, it accumulates and grows tax free, and at the person's death, it passes to a designated beneficiary. In the second example, a low-income person with a high deductible is unable to save ahead for health care expenses. If he has a sudden $3,000 medical expense, he must borrow money to put into his HSA, only to withdraw it immediately to cover the current emergency The lower-income person is in a lower tax bracket and won't reap the same percentage savings as the higher wage earner Also, he is unlikely to have income left over in an HSA that will roll over each year Ransopher sees the potential of unintended consequences in the new law, leaving open the possibility for abuse without addressing the problem of providing insurance to low-income people. In a worst-case scenario, an individual who has accumulated substantial funds in an HSA could make unpenalized withdrawals to cover, say, a "therapeutic" spa in Europe or other quasi-medical services. Also, the new Medicare law favors corporations by providing them a 28 percent subsidy for offering a prescription drug benefit, according to Ransopher "If, for example, a company pays $1 million to cover prescription drug benefits for employees, the company gets a $280,000 subsidy in addition to the ability to deduct $1 million from taxes, resulting in a whopping 43 percent benefit." "The law encourages individual responsibility for health care," Ransopher says, "but I'm uncertain these benefits will not end up costing us a lot of money." CANARIES IN A COAL MINE Another cost to society - one that is independent of the new Medicare law - is the problem of uninsured Americans. From January to June 2003, the CDC's National Health Interview Survey found that 14.8 percent of the U.S. population is without health insurance. That translates to 4 1.9 million people of all ages, 6.9 million of them children. In Georgia alone, 1 3 million people lacked health insurance for some part of 2002, and more than I million people were uninsured for the entire year, according to an annual survey done by Custer and colleague Patricia Ketsche. Who are these uninsured? They aren't just one group, says Newman. They include children, the homeless, the working poor, minimum wage earners as well as the self-employed who can't afford health insurance premiums. The uninsured are less likely to seek health care. When they do, they often are more severely ill. When they seek care, someone has to pay for it. ''We call this cost shifting," says Newman. "If someone doesn't pay, someone else somewhere else has to pay." "We are all paying for the uninsured, often in inefficient ways,'' Custer agrees. "Collecting numbers of the uninsured provides us with a canary in a coal mine. It gives us a glimpse of how close we are to imminent disaster." How to provide health insurance to more people, to get the best health care for less, to build tax incentives to encourage individuals to take responsibility for their own health are all controversial issues. There is no one answer and no easy answers. Only the surety that health care and the economy are intricately bound together in a life-and-death struggle and that the evolution of health care continues. "We are at the beginning, not the end, of the debate," says Custer. "Clearly, we won't have the same system in 20 years that we have today." Top | Back to Beginning Back to main "A Sign of Four" page.

Copyright © 2004 Robinson College of Business/Georgia State University.