Does Consumers Union Trust Consumers?

Commentary by Pete du Pont

You would think that an organization that thrives on providing consumers with information to help them make good choices would apply that same thinking to health care.

However, Consumers Union, publisher of the consumer-oriented Consumer Reports, has been one of the chief opponents of Medical Savings Accounts (MSAs), a health care reform proposal designed to bring the consumer back into the health care system. The Consumers Union argument boils down to: we don't think health care consumers are smart enough to make their own decisions.

Last year, Congress made 500,000 tax-free Medical Savings Accounts available for those under age 65 who work for a small employer or are self-employed - an action that angered Consumers Union. This year, as part of the budget deal, 390,000 seniors - a little more than 1 percent of total Medicare recipients - who choose to will be able to switch from traditional Medicare to a Medicare MSA. Now, Consumers Union is really miffed. Why in the world does Congress think it can trust seniors with their own money?

Under a Medicare MSA, a senior can choose a high-deductible policy, say, between $2,000 and $3,000 and have money left over to deposit into a tax-free Medicare MSA. For example, according to one analysis, a $3,000 deductible policy in 1999 would cost Medicare about $4,300, leaving a balance of about $1,500 of the senior's federal allotment to be placed in a Medical Savings Account.

The money for the MSA deposit comes from the federal government, not the individual. The first time a senior needs to see a doctor, get preventive or primary care, or even buy a prescription drug, he or she could use the Medicare MSA money for those purchases. If the senior spends the whole $1,500 within the year, he would have to make up the next $1,500 out of pocket. But since the MSA funds not used in a given year roll over to the next year, within a few years most seniors would have well above the deductible in their account. As a result, they would have no out-of-pocket expense.

MSAs encourage people to make sure they are getting value for their health care dollars. Of course, there are times when people have medical emergencies and must be rushed to the emergency room, just as there are times when the car breaks down on the highway at midnight and you are subject to whatever tow truck or mechanic you end up with. However, most health care is not emergency care. If seniors had a Medicare MSA, they would have a financial reason to make sure they are getting value for their money. That means that they would probably ask their doctors questions:

How much does this procedure cost?

Do I need this procedure, or is there a less expensive but effective alternative?

Is it possible to get a generic drug rather than a name brand drug?
They may even begin to act like real consumers and ask doctors if they will discount their services for cash payment up front.
There is nothing new about such discussions. Before health insurance came along, patients frequently talked with physicians about the cost of procedures and their ability to pay. That was a time when the doctor-patient relationship was much stronger than it is today precisely because the doctor worked for the patient, not a third-party insurer.

Nor is there anything new about people buying high-deductible policies. Most self-employed people - who have to pay for health insurance policies themselves, rather than having their employer pay for it - purchase high-deductible policies. They want health insurance in case there is a major accident or illness, but they pay smaller expenses out of pocket.

As we move into the Information Age, consumers are going to want information. There are already several sources of health care information, either on the Internet or by phone, through which patients can find specific answers to medical questions. Consumers Union could be at the forefront of this information dissemination, just as it has been with so many other fields. Unfortunately, where MSAs are concerned, Consumers Union has only disseminated misinformation.

It is time that Consumers Union and other MSA critics quit patronizing consumers with regard to health care. There is very little reason to think that people who are prudent shoppers in every other sector of the economy suddenly become babbling fools when it comes to health care. Do you think "babbling fools" is too strong? Congressman Pete Stark (D-CA), who used to be head of the health subcommittee of the House Ways and Means Committee, said that patients either considered themselves "invincible" when feeling well, or "absolutely irrational, brain dead, sniveling, begging and fantasizing ills and pains."

I think the critics are wrong. With 390,000 Medicare MSAs available to seniors, and 500,000 MSAs available for those under 65, we will find that consumers, young and old, can be trusted to make good health care choices. Informed consumers making good choices - Isn't that what Consumers Union is supposed to be all about?