Daniels: Health Savings Accounts incentivize citizens
The central contention of a book I recently wrote is that our liberty depends on the personal responsibility and accountability of individual citizens. Unfortunately, many, especially those setting national policy today believe that Americans are too intimidated, gullible or dim-witted to make wise, informed decisions about the important issues affecting their lives, and need their benevolent betters in government to do it for them.
My experience in public life leads me to the opposite conclusion. I have seen that our citizens, properly informed of the facts, are fully capable of governing themselves.
There is no better example of this than healthcare. In this area of policy Indiana has pursued a path that respects the right of all our people to make their own healthcare choices, and trusts their ability to do so. In the process, we have restored the true concept of insurance and returned to it a measure of consumerism that presses for quality and cost control in every other economic sector.
Shortly after taking office I added Health Savings Accounts, personal accounts from which to pay medical expenses, to our state’s menu of healthcare plans, which featured the usual fee-for-service plans. HSAs challenge purchasers to think more carefully about services, which are no longer “free,” incentivizing citizens to look at heath care with a consumerist eye.
Despite resistance from the defenders of the third-party payment system and the proponents of a government-run, single-payer healthcare system, the HSAs have been an unqualified success. In 2006, the first year of availability for Indiana state employees, they were selected by only four percent of us. But over the next few years, this option grew in popularity: by 2012, more than 90 percent of state workers had signed up.
Real consumerism kicked in
Along the way real consumerism kicked in. Patients began avoiding emergency rooms for non-emergencies, and using generic drugs and preventative care at higher rates than their counterparts in traditional plans. Ultimately, the HSAs saved both the state and the employees money. Outside analysis showed double-digit reductions in the state’s costs compared to traditional health coverage. Meanwhile, employee premiums were much lower and HSA holders had accumulated savings in the amount of $54 million.
In addition to lowering costs for taxpayers and state employees, HSAs have also helped us bring the peace of mind that comes with health insurance to many low-income Hoosiers. The Healthy Indiana Plan (HIP), which we enacted in 2007, created personal accounts managed by participants and funded through a combination of modest premiums and state contributions. The accounts, which total $1100 per person per year, offer “healthcare you can control, at a price you can afford,” and have presented our state with a partial solution to the problem of the chronically uninsured.
Today nearly 50,000 Hoosiers are enrolled in the plan. When surveyed, over 99 percent indicated that they would re-enroll in the HIP. Members have lower non-emergency ER use versus the traditional Medicaid population, and higher generic drug use than a comparable commercial population. Unfortunately, despite this success, HIP’s continued federal authorization is in doubt, a consequence of the current administration’s preference for the traditional Medicaid program.
The crisis in American healthcare is the result of a system built for overconsumption and overspending. Most Americans are, in essence, using someone else’s credit card to cover medical expenses. But when it’s your money and not someone else’s, you will always be more judicious about spending it. As Indiana’s two programs show, by encouraging citizens to be more thoughtful about healthcare decisions, HSAs can bring skyrocketing healthcare costs back toward earth and provide affordable coverage for those lacking insurance.
Unfortunately, these virtues were ignored during President Obama’s recent healthcare overhaul. The idea of a form of insurance controlled by individual citizens, rather than a panel of experts, is anathema to the “reformers.” In fact, ObamaCare, with its avalanche of hastily written (and not yet written) regulations, not only limits the use of HSAs, but also purposely discourages insurance companies from offering them.
This is all too typical of our national policy, which refuses to trust Americans with decision making power over not only healthcare, but a range of other important issues ranging from education to consumer finances. As I wrote in “Keeping the Republic: Saving America by Trusting Americans,” this is the fundamental question facing our country. What type of people will we be? Objects of therapy, or creatures of dignity? Wards of the state, or a free people born to liberty?
Influenced by my experiences in Indiana, I’m betting on the latter.