Health-Care Cost Control — at Home

By Tami Luhby, Newsday, Melville, N.Y.

Feb. 12–The theory behind health savings accounts is that people will shop around more for medical treatment if they are paying for it.

The reality, however, may be very different, critics say, with Americans forgoing care because of cost or getting lost in the health care maze.

HSAs are savings accounts, funded with an individual’s pretax dollars, to pay for medical expenses; they’re coupled with high-deductible health insurance policies that carry lower-than-normal annual premiums. President George W. Bush is pushing HSAs as a way to control skyrocketing health care costs and make health insurance available to more people.

As part of his domestic agenda this year, Bush is hoping to make HSAs more appealing by increasing the amount people can sock away. Savings now are limited to the policy’s deductible ($1,050 for singles, $2,100 for families); Bush has proposed raising the amount to match the limit on out-of-pocket spending ($5,250 for singles, $10,500 for families).

Created in 2003, HSAs have attracted about three million participants. Individuals may obtain the high-deductible policies and HSAs either through their employers or on their own. Unlike flexible spending accounts, which also allow payment of medical expenses with pretax dollars, HSAs allow fund balances to be carried over into the next year.

Supporters say that if people had to spend more of their own money on health care, several changes could result: They would likely think twice before seeing a doctor for a minor ailment, and they would research treatment options and ask more questions about the availability of lower-cost alternatives.

“As people spend more money over which they have discretion, they’re going to be more concerned about spending it wisely” was the position put forward by Allan Hubbard, director of the White House’s National Economic Council, at a recent press conference.

For instance, consumers would be more likely to ask doctors about less expensive drugs or less radical and costly procedures to treat their conditions, said Greg Scandlen, president of Consumers for Health Care Choices, a Hagerstown, Md.-based group that supports consumer-driven health care.

But he said consumers should not expect to make all medical decisions on their own. Instead, Scandlen said, it should be a collaboration between the doctor and the patient.

“It’s not do-it-yourself medicine,” he said. “This is about being the final decision-maker for what’s appropriate for your family.”

Even though Gary Head of Glen Cove has two young sons who occasionally need medical attention, he thinks his family can take a bigger role in managing their health care spending. So he is looking into a lower-premium, high-deductible account — maybe one attached to an HSA — to replace the high-premium traditional plan the family has now. They pay their own premiums because he is disabled and his wife is a homemaker.

With the current policy, doctor visits don’t cost him much, and, Head said, he seeks care “every time our kids have a sore throat.”

But Head said he could entertain the prospect of delaying some visits for minor issues — assuming the condition weren’t serious — if he had a high-deductible policy.

“As an intelligent adult, you are going to go to the doctor when you need to,” said Head, who worked as a corporate recruiter before he had a stroke a few years ago. “If you are running a 102-degree fever, you are going to go.But you would hold off going to the doctor for every little thing.”

A 2005 study by the management-consulting firm McKinsey & Co. backs up these sentiments. It found that people with consumer-directed policies, such as high-deductible plans with HSAs, were more than twice as likely to hold off seeking care if their conditions were “not very serious” than those with traditional plans. And they were much more likely to ask their doctor or pharmacist about the cost of a medication and look for cheaper alternatives.

“They are seeking to get the best value from the different medical options available to them,” said Vishal Agrawal, a senior consultant at McKinsey and one of the study’s co-authors.

Other reports, however, demonstrate problems with HSAs and high-deductible plans. One published in December showed that people with health problems more often skimped on care because of cost and that many enrollees were not satisfied with their policies.

“That raises some concerns about the decisions people are making when faced with high out-of-pocket expenses,” said Sara Collins, senior program officer at the Commonwealth Fund, a foundation that co-sponsored the study with the Employee Benefit Research Institute.

For instance, 20 percent of those with high-deductible plans and health savings accounts didn’t fill prescriptions because of cost, compared to 16 percent of those with traditional plans. For those with a high-deductible policy and no HSA, the figure reached 26 percent.

Morever, forgoing basic care can lead to larger problems, experts said. When illnesses or conditions are not detected in time to be easily treated, a patient may wind up needing more costly procedures.

Holding off on preventative or primary care wouldn’t make much of a dent in total health care spending, Collins said, since most of the expense comes from serious medical problems.

Even an effort to contain basic costs would be difficult, experts said. Consumers can’t readily find out in advance how much treatment will cost or compare quality of doctors and hospitals, a charge even HSA proponents acknowledge. Obtaining the fee for an office visit would be easy, but getting prices for potential tests or treatments likely would be impossible, said Pat Schoeni, executive director of the National Coalition on Health Care, which advocates for comprehensive coverage.

“The bottom line is in today’s health care system the kind of price and quality information needed to purchase health care just simply isn’t available,” said Drew Altman, chief executive of the Kaiser Family Foundation, which focuses on health care issues. People “may delay some elective or routine care, but the idea that they will be cost-conscious consumers of care is more fantasy than reality.”

Even if such information were available, many people wouldn’t have the time or skills to wade through the data and make informed and cost-effective decisions, said Mila Kofman, an associate research professor at the Health Policy Institute at Georgetown University. “We can’t achieve cost savings by asking consumers to do what health plans and employers have not been successful at doing,” Kofman said.

Whether Bush succeeds depends on whether Congress has the appetite to pass another tax cut. While some Republicans have said they intend to introduce legislation, Democrats already are lining up against it.

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