A central focus of this conference is the problems of the uninsured (and underinsured)

1. A central focus of this conference is the problems of the uninsured (and underinsured) • 47 million uninsured in 2006 • 18,000 Americans die each year from lack of insurance • Results in financial distress and disaster for many Americans

2. But some argue a more important problem is “overinsurance” • The “consumer-driven health care” movement contends consumers must become responsible for health care purchasing • Consumers purchase too much health care now because they have too much insurance, and insurance reduces the cost of health care causing moral hazard

3. Insurance is necessary, but • Only catastrophic insurance is really needed • High deductible health insurance policies (HDHPs) should be accompanied by health savings accounts (HSAs)

4. HDHPs coupled with HSAs will • Limit consumer purchases to truly necessary care • Create competition at the point of sale of health care items and services • Encourage consumers to shop for quality and price • Make health insurance more affordable • Bring down cost while improving quality and access

5. The Medicare Modernization Act • Tax exclusion to employers and a deduction to employees for funds contributed to an HSA. • HSA must, however, be coupled with a HDHP • Deductible of at least $1100 a year for a single individual or $2200 a year for family coverage. • HDHP must also have caps on out of pocket expenditures, cannot exceed $5600 for an individual and $11,200 for a family. • Tax subsidies for contributions up to $2900 for individual coverage and $5800 for family coverage. • Penalty if not spent for qualified medical expenses. • Can withdraw funds at 65

6. HSAs have caught on • 6.1 million Americans covered • 1.5 million individual policies, 4.6 million group members • 7% of employers offer • 3% of employees enrolled

7. Successes • 46% over 40 • Significantly more likely to engage in preventive programs • More likely to track health care expenses

8. But reasons to be concerned • Disproportionately attracts wealthy, healthy, young, well educated • Coverage often limited • Many Americans can’t afford high cost-sharing • Many enrollees limit necessary care • Many end up in financial distress

9. Patients as consumers • Should patients be primarily responsible for controlling health care costs? • Rand Health Insurance Experiment found that high cost sharing caused decrease in expenditures, but for essential as well as inessential care • Sick patients are not well-positioned to make purchasing decisions • Cost and quality data are largely lacking • Consumers may not be the best care coordinators

10. Changes in the physician patient relationship • Informed consent? • Liability where patient chooses not to purchase care? • Liability of insurers for erroneous quality advice? • Liability of insurers to providers for erroneous quality advice?

11. Is there a place for CDHC? • Yes, empowering consumers is fine • But markets only work for those that have money • Purchasing necessary health care should not result in financial disaster • We need universal coverage first, then we can try to make those who have resources better consumers