A lot of attention has recently been given to the slope of the health care cost curve and how to bend it down. There is really only one way to bend the healthcare cost curve down; people must make a choice to spend designated healthcare dollars on something other than healthcare. A major barrier to making these choices is that too many healthcare dollars are paid by a third party. Therefore, all too often, the perceived cost of healthcare to the consumer is unrealistically low. For example, ten dollar co-pays are an unrealistic price to pay for a common office visit to a doctor. As a general rule, we are unaware of the true cost of healthcare. If we bought food the way we buy health care we would have a run on filet mignon.
It is well known that many chronic health care diagnoses like diabetes, high blood disease, or heart disease, can be greatly affected in a positive way by lifestyle choices such as diet or exercise. How can an individual make the difficult choice of changing his diet or going through the hard work of exercise if the options for spending his money are basically out of his control due to the presence of a third party? He would not benefit from the choice but the third party would. These third parties where originally started as a tool for the provider rather than the consumer. What would happen if the consumer could use the savings from making and following through on the hard choice to exercise and eat better for themselves? These benefits could include spending money on a better education for his children, deciding to help the low income without health insurance, or just save the money to better prepare for an increasingly unpredictable future.
In addition to private third parties, the government also insulates the patient from the true cost of healthcare. A recent story in Business Week told the saga of a patients’ illness. Over four years, the total charges for the care were over $600,000. The patient responsibility was less than $10,000. Unfortunately we are all on the federal dole in some way or another and no one wants to give up his benefits such as tax deductibility, tax credits, or other programs. It is not easy to take individual responsibility and make difficult choices once you have been shielded from true economic reality. However, if we want to bend the health care cost curve downward , the most helpful path involves individuals stepping up to the plate and make individually responsible intelligent economic choices.
Recent experience in the State of Indiana is an example of such a move. They have proven that the cost curve can be bent down. They have offered to all state employees the choice of a high deductible HSA option. This year over 70% of state employees have selected the HSA option and the states health care costs have been reduced by 11% solely due to the HSA option.
Can the American people who want free market capitalism accept the responsibility to take fewer government benefits and take the hard road to individual choice and personal responsibility? A personal tale illustrates how hard the task is. Many years ago I fulfilled my military obligation by serving in the commissioned corps of the Public Health Service within the bureaucracy of HEW. The job was interesting and I stayed on past my required tour of duty. However, I was increasingly concerned about the reality of our Federal debt and the harmful effect it would have on our future. Experienced federal workers referred to the massive government buildup of the HEW bureaucracy in the 1970’s as the gravy train. I experienced generous federal employee benefits. I saved up 60 vacation days. Further each year I was given an additional 30 days or 6 weeks. If I was creative, I could use these 30 days in combination with the numerous federal holidays and take over 7 full weeks off during the year. In addition I had unlimited sick leave, flexible station leave, and retirement in only 20 years. In light of these excessive benefits and the financial plight of our country, I wrote a letter of resignation and asked the President to abolish my position certain that there was plenty of excess capacity to absorb my work. Since then, I have worked in the private sector. To my surprise our Federal financial plight has only gotten worse. This story reminds me of how hard it is to bend the cost curve. The only way to turn the cost curve down, is by making difficult economic tradeoffs, and live in financial reality. Now is the time to ask ourselves these hard questions. It’s the spending, stupid!