Wise consumerism will help market forces balance prices

I agree that transparency is a good start to address rising health care costs, but it isn’t sufficient. Health care consumers must have skin in the game to motivate them to shop around, just like they comparison shop for almost everything else they buy.

Currently, health care consumers who likely know the price of a dozen eggs, or a new outfit, or a car, have no idea what their doctor charges for a physical. Without skin in the game, the only questions they ask are “is it covered?” and “what’s my co-pay?” With skin in the game, they might ask: Why do I need 11 blood tests? Can we start with the five most likely beneficial and do the other six if the first five provide no answers? (Or) If I don’t treat my condition right away and wait six months to see if it resolves itself, what’s the likelihood that I’ll be doing permanent damage to my health? … (Or) Doc, I see the brand new experimental treatment you’re recommending would cost $300,000 while possibly extending my life for only four months. I think I’d like to keep my deductible and forego the treatment so my wife isn’t burdened by my funeral expenses five months from now.

Low-income health care consumers can absolutely have skin in the game. Americans could have a $5,000 catastrophic high deductible health insurance plan with a maximum annual out-of-pocket cost of $5,000 plus the premiums. They could also have a health savings account whereby their contributions up to $5,000 were fully tax deductible off the top, and employers could tax-deductibly contribute to those accounts, if they so choose. …

Low-income consumers could receive an annual deposit to their health savings account from the federal government. The account would be restricted in use by access only with a debit card that is limited to qualified medical expenses. The amount deposited by the government could be anywhere between $0 to $5,000 per year, depending on progressive lowincome thresholds. Any leftover funds in the account would be rolled over to future years and then, at age 65, they could make tax-free withdrawals of any accumulated leftover money, for any purpose … . If someone dies, the money could be bequeathed to a spouse or other loved one and maintain its tax-free status. The availability of these funds at age 65 will be each person’s reward for being careful stewards of valuable, but finite, health care services.

This wise consumerism will also relieve some of the pressure on the low supply of health care providers we have in New Mexico. …

The high deductible plans will also avoid the need for insurance companies to spend money to settle millions of small claims per year, thereby lowering the overhead costs associated with administering millions of accounts.

Critics will argue that letting consumers keep leftover money in their health savings account will encourage them to skimp on health care for them or their children. While some people can always be counted on to make foolish decisions, the criticism is generally belied by our instinct for self-preservation and for a parent’s instinct to do what’s best for their children. …

We can see that when health care is not covered by insurance, costs do not rise as fast as other health care, and often declines. Cosmetic surgery, Lasik corrective lens surgery and veterinary pet care are common examples. These costs remain constrained because there’s no third-party payer to pick up the cost of outrageous and uncompetitive price increases.

When we empower consumers to spend their own money in the way that’s best for them, only then will market forces balance the price, the supply and the demand for health care. …