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Brooks Wilson's Economics Blog: Fever on the Health Care Bureaucracy

Thursday, March 4, 2010

Fever on the Health Care Bureaucracy

A guest, Fever, wrote in a comment titled, "No new bureaucracy will be necessary"
I don't care which cost savings idea you decide to back, if you create a massive new entitlement there will be bureaucracy and the entitlement will come at an additional cost. Furthermore, the reason the Democrats won't support your tax plan is because the people that pay out-of-pocket for healthcare are rich.
I thank Fever at for the comment and acknowledge some common ground: we both want a smaller government.  He wants to starve the machine and I would like to see it at least skip a few meals. 
As in my previous post, I am attaching a proviso to remarks.  My information source is the governor of Indiana who instituted the plan and his presentation of the program may be biased, but if his information is approximately correct, I stick by my statement that no new bureaucracy will be necessary to offer health savings accounts to all workers as a optional replacement of traditional preferred provider plans, Medicare and Medicaid.  These bureaucracies already exist and Indiana's experience demonstrates that it is less expensive to provide health care and manage payments with health savings accounts than traditional preferred provider plans.  In 2010, the state will save $20,000 or about $950 per state worker enrolled in a health savings account (70% of 30,000).  Health care costs are growing faster than the rate of inflation elsewhere.

A health savings account gives the insured a financial interest in rationally reducing costs as demonstrated by the experiences of Indiana state workers.  Comparing the gradual replacement of Medicare and Medicaid with health savings accounts to current reforms before Congress is a no brainer.  I trust people to make better decisions about their health care than a government committee.  I also trust people to spend their money more carefully than the government would spend it for them.  The real beauty of markets is that health care providers will adapt products to price conscious consumers. 

Should the government expand health care insurance to cover every citizen?  Given the massive size of the deficit and national debt, and the projected increase in these accounts due to unfunded government liabilities, I believe this is an odd time to ask this question.  Let's try to control costs before we increase enrollment. 


  1. I agree, switching people from preferred provider plans, Medicare and Medicaid to Health Savings Accounts will not add to the bureaucracy by any significant degree. But be careful, the Democrats are far more worried about providing health insurance to the uninsured and that will come at an increased cost. Furthermore, you will be hard pressed to find a Democrat that is in favor of HSAs. Keep in mind, another word for healthcare reform (at least the way the Democrats define it) is: how can we tax the rich and distribute free healthcare to the poor. HSAs essentially put up a huge roadblock to this ever coming to fruition.

  2. Patricia Gager7/3/10 9:53 AM

    I agree that utilizing health savings accounts gives the insured a financial interest in reducing costs. Many companies offer this to thier employees in Texas as well. Currently, it is a choice, but those who take it monitor the funds more carefully, because it is coming out of their pockets. On the other hand if the insured does not use the money they contributed to the the health savings account they lose that money at the end of the year. Is this fair? Perhaps some tweeking to this policy would draw more people into wanting to take this option. What happens to all the money that people do not use from their yearly contributions? Perhaps this money could go to those part time employees or temp service workers who do not get benefit options offered. I would much rather see this occur than those who continue to drain the current medicaid system who are able bodied, but too lazy to work like the majority who pay taxes.