A recent Health Affairs post by Uwe Reinhardt explains why the government’s support of health insurance with high deductibles and copays is just a form of rationing based on income, benefiting the wealthy at the expense of everyone else. Indeed, a recent Gallup poll confirms that one in three Americans are postponing care because of the cost. Reinhardt illustrates how the politicians who support these high-cost health plans hide behind spin. Rather than openly admitting that high deductible and high copay health care is their preferred way of rationing care—based on income—our representatives in Congress give it a preposterous name “consumer-driven health care.” And, the media is quick to adopt it.
When you think about this euphemism for more than a second, you realize it makes no sense. On one hand, we have always been able to choose whether we get care. On the other hand, these high-cost health plans actually restrict our choice of care when we can’t afford it. Moreover, as Reinhardt points out, since information on price is scarce and information on quality even harder to find, the idea that we have a way of making a rational choice on our own is absurd. Smart consumers, who could afford their care, generally would choose to have their doctors help them decide what care they need; isn’t that why we visit the doctor? And, shouldn’t smart “doctor-patient-driven care” be the goal?
If these high-cost health plans weren’t harmful enough to average Americans, the tax code reduces health care costs for wealthy Americans at the expense of others through “tax preferences”. As Reinhard says, granting tax preferences is economically akin to raising taxes on some people to grant other people a subsidy.” Flexible Spending Accounts and Health Savings Accounts enable wealthy Americans to pay less, through pre-tax income, for their non-covered care. This benefit comes on top of their ability to get employer-sponsored coverage, which is generally pre-tax. People without employer coverage—generally lower income Americans–must pay for their health insurance with after-tax income.
So, next time you hear members of Congress insisting on protecting the federal budget through cuts to government health care programs, call them on it. Suggest they cut some of the benefits they confer on wealthy Americans. According to Reinhardt, the lost tax revenue from tax preferences for the wealthy would more than pay for the subsidies for lower-income people under the new health care law.