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How health care could become like retirement
Many renters are having a hard time making their monthly payments.
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TEXT OF INTERVIEW
Tess Vigeland: Shifting more responsibility for health care on to the individual sounds a lot like what's happened with retirement over the last decade. We went from a pension system where decisions were made by employers to 401(k)s, where we are responsible for our own investments -- with mixed results.
Jacob Hacker is an expert on the politics of health and social policy at Yale. His book "The Great Risk Shift" explores the ramifications of making individuals more responsible for those financial decisions. I asked him how it's working in health care.
Jacob Hacker: We are paying a lot more of the cost of care out-of-pocket than we used to. I mean, just over the last 10 years, we've seen premiums from employer-provided health insurance more than double. And the share that workers are paying of that premium has risen by about 150 percent. So it's even risen more. Meanwhile, if you're buying coverage individually, those costs have been skyrocketing. So, yeah, we've got a lot more skin in the game in health care, but we're still a long way from having that kind of individual responsibility model that we have in 401(k) retirement pensions.
Vigeland: And yet you do hear people say that, for example, we need to be an informed patient and perhaps look around for where we're going to get the best deal on our health care. And so, some of that responsibility is now shifting as well, isn't it?
Hacker: It is, and there is some research on this question. And what it shows is that people do spend less when they have to pay more of the cost out-of-pocket, but they're actually not very good at distinguishing between necessary and unnecessary care. So they basically spend less on everything.
Vigeland: But the patient generally does not have an M.D. to make that decision.
Hacker: Yeah, I mean, we do have more information through the web, but we should be clear, most of the cost in health care for the really high-cost cases, where people are in emergency rooms or they're in intensive care units, they're not really in the position where they're going to be able to make these kind of informed decisions about how to spend their money. So, we should understand that although putting more of the costs onto people will probably deter people from seeking care -- especially people who have less money -- but we shouldn't be under the illusion that people will suddenly be able to make the kind of decisions that are often very difficult for doctors and other providers.
Vigeland: Then how is this whole debate going to shake out? I mean, we ended up getting a retirement system that is, by and large, placed on our own shoulders as individuals. Is it possible to compare that to health care? I mean, retirement is not life and death, but if you are having to make your own cost decisions for health care, isn't it possible that you're going to make the wrong ones, because you don't or can't pay what's expected?
Hacker: Absolutely, and that's the grand debate that we really didn't have with retirement. I mean, I would say, we think about health care a little differently than we think about retirement. Retirement is something that we're planning for decades, or we should be. Whereas health care is a much more immediate concern. And you know, just in the same way that there are very few atheists in fox holes, I think that there are very few people who advocate complete consumer control who are in a hospital. The most important thing to keep in mind is that we don't believe that this system of individual responsibility is working particularly well in retirement and we should at least take a look at why it hasn't worked well in retirement before we decide to head down that road in health care.
Vigeland: So do you foresee a great risk shift will happen in health care or not?
Hacker: I think a great risk shift has already happened. I mean, look at the decline in the share of Americans who have health insurance at all. Look at the amount of cost that have been shifted onto individuals over the last decade. I mean, the fact is that because our health care costs are so much higher and rising so much faster than they are in other nations, Americans have been bearing more and more of the cost, even as insurance has picked up a big share of the increase. So, somehow, somebody's gotta pay, and if health care costs keep rising at double digit rates, it's consumers, Americans who will pay.
Vigeland: Jacob Hacker, thank you so much.
Hacker: Thank you.
The hospital I work for is pushing hard this year for everyone to switch to the high deductible insurance plan with an HSA. The HSA is to be held by Fidelity, the same brokerage firm that holds our 401(k)s. The hospital is selling it so hard that they are giving everyone enough money this year to cover most of the deductible. The info from Fidelity is encouraging people to not actually use the money for current health expenses, but for future health care as we age. I am very troubled that it is asking employees to put the money in uninsured accounts, with no real option to have insured risk. There was also mixed info about how many fees would be assessed by Fidelity based on the balance in the HSA. If we as individuals are self-insuring thru this scheme, is it really beneficial to invest money like a real insurance company would or should we be able to keep it in a normal bank, credit union, etc. I think the investment company option is not fair to uninformed participants. The hook cash check this year is a disgrace. There is no guarantee there will be this kind of input by the hospital in the future. The hospital then made the EPO that most employees had so unattractive there was almost no option of changing. The PPO barely changed but there was no effort to compare the benefits of the PPO to the HD/HSA. Being single and having no chronic health concerns I ended up staying with the PPO.
