HEALTH SAVINGS ACCOUNTS
December 7, 2005
In order to have a workable, well-functioning market for drugs, we need to fundamentally change the way we pay for health care, including the way we pay doctors, says John C. Goodman, president of the National Center for Policy Analysis.
The creation of Health Savings Accounts (HSAs) was step in the right direction. Instead of an employer or insurer paying all the medical bills, about 2.4 million people are managing some of their own health care dollars through these accounts and Health Reimbursement Arrangements (HRAs). Instead of relying solely on third-party insurance, people can now partly self-insure in this way.
How can patients spending their own money expect to pay the rock bottom prices for physician services and prescription drugs that large insurers negotiate using their huge buying power leverage?
- Part of the answer is that HSAs are always combined with high deductible insurance and HSA holders usually pay the same discounted physician fee that insurers pay. The same principle can, and should, apply to drugs. That is, when purchasing a prescription drug with an HSA, the patient should get her insurer's drug discount.
- Another part of the answer is that patients can often do better than a third-party insurer. For example, by using minute clinics, call-a-doc services, and by buying drugs and arranging for tests over the Internet, many patients will find they can pay less than their insurer would have paid under a traditional arrangement.
In an ideally constructed HSA insurance plan, patients will not spend a dollar on care unless they get a dollar's worth of value. Incentives under the new Medicare prescription drug law are far from ideal, but they are better than under traditional insurance, says Goodman.
Source: John C. Goodman, "Time, Money and the Market for Drugs," National Center for Policy Analysis, December 5, 2005.
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